"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat

Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput


Friday, November 14, 2014

Another Gold "Reverse Flash Crash" Ahead of the Weekend

Don't expect to hear a peep out of the Gold Is Always Manipulated All the Time" crowd about today's massive short squeeze. Here is what a huge short squeeze looks like on a chart. Pretty impressive isn't it?

Don't expect to hear such pithy and insightful "analysis" such as: "Who would buy in such large size regardless of the impact on the market if they were really trying to obtain the best possible buying price? Surely this is 'proof' that our claim of market manipulation by sinister forces is true".

"These insiders and powerful forces are determined to drive the price of gold ever higher and are not even trying to hide their blatant attempts at upward price manipulation".

No, you will get none of that because in their world, this is just the "right and just and fair" thing for gold to be doing. When gold sells off sharply, it is "evil bullion banks acting as agents of the Fed" behind the move. When gold moves higher as computer programs go beserk to the upside, all is good and true and right on the world once more. it is Hallelujah time in the gold cult church! Breakout those hymn books and get those priests and prophets back up there in the pulpit once more to encourage the faithful to remain true and steadfast!

Putting all that foolishness behind us, we can once again see how much fear and panic buying can be created when a powerful short squeeze once again kicks off in a market. Just look at huge spike in volume. It has even dwarfed the massive volume that we saw in this same market exactly a week ago last Friday when that jobs report came in a bit lower than what the market was expecting and the Dollar encountered a sharp selloff.

Once more we are getting a sharp move in the Forex markets, this time being the Euro, which is getting its own version of a short squeeze as many traders are caught short the Euro and are getting out on the heels of a bit better than anticipated Eurozone GDP number.

So far the gold market is not backing down back under the $1180 level, which is the key for the bulls to have a legitimate shot at running this back up to try to put a "12" handle in front of the metal once more.  If they can close this market over that level, they have a very good shot at doing that next week although the 20 day moving average, which comes in near $1194 would be the first upside target to be bested before a test of $1200 would be in order. Stay tuned on this one.

I am going to be most interested in seeing what kind of numbers we are going to get out of that GLD once more after this squeeze. Will the ETF attract some new buying or will those looking for other pastures for their monies take advantage of the rally to liquidate. We will see soon enough.

I can tell you that some of the other markets I am trading today are seeing some very strange and bizarre swings occurring in them, notably the meal spreads. The Yen is volatile as well having hit a fresh seven year low early in the session but apparently the rally in the Euro against the Dollar is sparking some short covering in the Yen as well.

I will get some more up later on today after the dust settles. Suffice it to say for now, the gold bulls are seizing the day but they need to flex their muscles a bit more in the mining shares. The HUI is confirming the move higher thus far but has yet to really strongly exceed the peak made on last Friday's big up day.

Let's see what we get on the close - never a dull or boring moment in our modern markets is there?

Hey who knows, maybe some are now reading the lower energy prices, as stimulative in nature, much more so than any monetary stimulus measures that the Western Central Banks might be undertaking and are looking at that as a reason to put some money into commodities once more. Up until now they have all been part of a deflationary wave building in the commodity sector but sentiment is fickle, like the mob in the movie "Gladiator" and can change in a heartbeat.


  1. Come on Dan it hasn't happened in the middle of the overnight market when markets are easily moved.

    It hasn't happened on no news.

    And it hasn't happened for the nth time at precisely x'o'clock has it?

    You can't really compare this short squeeze which makes sense with all short positions added recently to flash crashes as you call them that seem to happen at a precise moment with no news behind them. Given the amount of fresh shorts this kind of squeeze was always likely given the right news.

    And like you say movements in other markets are confirming this move aren't they.

    If we saw strange jumps happening at 3 in the morning day after day with seemingly no news driving them then maybe you'd have a point.

    Either way certainly a great day for the bulls. Especially if it confirms next week. And not the several hundred dollar dive that many on here predicted following the loss of the long term support.

    I don't understand why certain posters on here are so bullish about the US economy given the structural problems that still exist.

    Have you seen Beppe Grillo's comments today? Powerful stuff!!

    1. Dominic;

      Please state specifically and list all the futures markets which you trade for all of us so that we can verify your knowledge and experience in the futures industry.

      When you can - then what you write will have merit to it. Until then you are merely regurgitating idiocy so I am going to ask you to stop insulting the intelligence of my readers as well as myself.

      Show me the proof of commercial bullion banks sales at that time of the day. Produce evidence to clearly demonstrate that the bullion banks HAVE NOT BEEN BUYING as the COT REPORTS CLEARLY STATE THAT THEY HAVE.

      How many charts and solid evidence must I produce before you people will accept it? Good grief - the denseness of this generation and its appalling ignorance and willingness to swallow anything is terrifying.

    2. NUGT up over 15%, GDXJ up over 6% Happy days :-)

      Mind you for balance Japan hedged fund up over 16% in the last week :-)

    3. COT reports are as bogus as any other instrument used today.

    4. day of reckoning;
      How did another one of your gold cult members get past security and invade the blog?

      Go away now and keep drinking more of your Kool Aid - I think you need some.

      Good riddance.

      Don't expect to see any more of your insipidly stupid posts here on this site.

  2. Dan, you left out how ISIS is going to start minting gold/silver coins and the Swiss gold initiative as reasons why this surge is taking place today. ;-)

    Hey, maybe a fistfight brokebout at the G20 today that's gone unreported.
    Consider that an unofficial internet rumor I just started on here. }:^)

    1. its the Chinese sneaking out if their hotel in the dead of night and snaffling up all the Gold while everyone else is asleep

      waiting in a queue in the rain to go into the 9pm sh
      of this artistic masterpiece


      which given that this is Belfast is about as surreal as it gets

  3. Dan I do agree with you, selling is selling, period. I was wondering if it would be easy to overlay the price gold with the holdings of GLD. Curious that's all. You are much more adept then I when it comes to charting.

    1. broke;

      I will try to construct one of those for you when I get a bit of spare time. I agree - it would be a very helpful visual. good suggestion - thanks.

  4. Silver and gold both breaking through some upside resistance levels. Livestock markets going "bonkers" today - lean hogs, and cattle. One day they will present a good shorting opportunity - but not today! Cattle have been defying gravity. A little scary to be on the long side of the cattle markets at these levels. Would prefer to wait for a short setup. Soybeans have been "brutal". Dan - trading ags can be a very humbling experience to say the least...Just when you think you have things figured out, the hedge funds come back in (or back out) and everything changes...again. The quirky fundamental factors affecting soybeans (record crop with a short term shortages) and the hedge funds computers add even susceptibility to "soybeanitis". The "Soybeanitis" post says it all.

    1. trinity - ag markets can make you old before your time. This is why I have to shake my head at those guys who look at the gold price and spin all kinds of bizarre claims based on big sell orders, or as is the case today - big buy orders, which we could make a big deal out of if I chose to. The facts are this is normal in the futures markets becasuse of the influx of such large amounts of computerized hedge funds.

    2. Dan the comparisons you so often make on this blog between the price action of gold futures markets and many other commodity markets pretty much dispel the arguments that erratic or "suspicious" trading is unique to gold or silver. Any rational person can simply pull up a minute chart of oil, live cattle, SOYBEANS, etc on any given day to see that erratic or unusual price action is not unique to Gold. I invite them to check out a 5 minute chart of soybeans over this past week...Is this chart proof the "agents of the Fed" are screwing with soybeans? Don't think so.

    3. Trinity;

      Yes, that is PRECISELY my point. These boobs put up their little charts of gold showing big moves down during the middle of the night ( it is morning elsewhere) as if that somehow PROVES "evil manipulators are at work acting as agents of the Fed to attack the pitiful gold market".

      The entire thesis is so utterly stupid to anyone who actually TRADES in the arena of the futures markets that it does not even merit a response from any serious individual. However, in the gold bug world, it has now become accepted as "gospel" and no one can dispute it because if they do, it just goes to show that they are "shills" for the powers that be. That is why I call it a cult.

      Mindless acceptance of that which is obviously false is the common glue that holds them all together.

      Speaking of the beans and wild price swings - did you notice the wild action in the meal spreads?

      Computers can drive any market up or down and will now result in HUGE intraday swings. That is the EVIDENCE that our markets are now totally dominated by HFT's and algorithms. It has nothing to do with "evil bullion banks acting as agents of the Fed" and everything to do with large powerful speculative interests who have BECOME THE MARKET.

    4. Didn't notice the spreads until just now- wow! Looks like the front month is still elevated compared to "normal" conditions.

  5. Mwuh ha ha ha.

    It was I, yes I, who manipulated the gold price higher today, buying up all the asks and short-squeezing mine enemies' curlies straight.

    Mwuh ha ha ha ha!

    I am drunk with power!


    That said, thanks for writing the articles you do, Dan. I find it a refreshing counter-balance to the perma-bull crowd. You are providing a useful service indeed.

    1. makes sense to me. I wouldn't expect the naked gardener to have any shorts.


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