"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


Thursday, November 6, 2014

Wild Volume in Overnight Gold Trade

Lions and Tigers and Bears, Oh my! Flash Crashes and Reverse Flash Crashes and Swings, Oh my!

That pretty much sums up what is happening at this hour as I watch the overnight trade. It is not only in gold, but I am seeing some very strange things occurring in the December meal contract as well.

Keep in mind what I wrote the other day about those in the gold perma bull camp who are always crying up their "Flash Crash" crap as evidence of some sort of price fixing conspiracy. Also, note that they are deathly silent on what I have sarcastically countered as "Reverse Flash Crashes".

Well, guess what? We got both in one evening, separated by 90 minutes! The first occurred on heavy volume of upwards near 6000 contract that dropped gold $10 in 15 minutes. The Reverse Flash Crash occurred on even HEAVIER VOLUME and completely erased the losses from the "Flash Crash" and then some.

There is currently staggeringly huge volume in the December meal contract taking place at the 10:00 PM Pacific Time Zone hour. There has been more volume done than what occurred during the final 15 minutes of the pit session trade in the grains and that is one of the busiest times of the day.

I have no idea what is taking place but I can say this with certainty, computers are going nuts this evening.

I have said it many times before and will do so again - welcome to the new normal in our broken markets. When the exchanges voted to move to electronic trade, they opened a Pandora's box of idiocy.


  1. Same in Silver. looks like a well executed trap trapping the latest bunch of shorts at the lows

  2. FYI :

    I'm out :
    - 1/3 of my gold short position at 1134 (we reached 1131, for me we touched the support area I was mentioning yesterday, it's enough for me to take some profit as I won't have the opportunity to watch / monitor prices throughout the day)

    - 50% of my silver short position at 15.20. Not on a technical support I saw, but rather because we were at 18 so recently...this is practically a 20% drop. Huge. So I'm happy with the move and I prefer to secure some gain right now.

    - 50% on Eur Usd short. Because we bounced on the expected support area exactly, at 1.2375 and the MACD 1 hour crossed higher.

    I keep some short because the trend longer terms is still there.
    As Dan mentioned, my idea is to wait for a rallye to add up to the short position. So of course, gotta make a profit and get rid of some short position at some time, and it seemed to me to be a good time for that.

    Have a nice day all,

  3. Computer versus Computer using those special programs to make fractions of profit with microsecond trading. After the dusts settles, the trend continues.

    The SEC allowed speculators to bet on foodstuffs. The Supreme Court allowed patents on foodstuffs. Congress stands idly by doing nothing so there is no rule of law to worry about. What do you expect to happen?

    Should be a good bounce soon in metals and miners as the bargain hunters never give up. Then back down within a 60 day time period.

    Watching Russia meltdown is a real hoot. In the background, I wonder if Poohin and China pegged their exchange rate agreement to the US$. You have to have a standard to measure against or you are going to be giving your products or your country's natural resources away.

    The US$ rising will slow overseas buyers of US products except maybe food. Ya gotta eat. Keeping warm may not be so costly this winter.

    1. I would guess your pointing to GMO crops?
      BUT - BT cotton has been a boon for India, making it the 2nd largest grower in the world + more than making up for its price in reduced pesticide costs.

      Fascinating, in my opinion aside. Genetic engineering's horizontal gene transfer mimics the natural process of endosymbiosis:

    2. Don't we just love the currency action > these Friday numbers?

  4. Question is, how much was short covering vs new buying

    1. Gilliom;

      tremendous amount of short covering taking place on the heels of that payrolls report.. plus it is the weekend and gold bears have cleaned up this week. Profit taking by bears in gold, euro and some in the yen..

      I suspect this rally will be a short lived one but we will see...

    2. This comment has been removed by a blog administrator.

  5. Thanks for the reply Dan. Why was silver halted this morning? It jumped all the way to 16, then halted, then promptly fell back. I didn't think the pms traded with limit up like the grains.

  6. Just out on Seeking Alpha.
    Ana analysis of GG cost to mine gold $1200 or so.

    What is interesting is the summation that the current price is too low.

    GG is likely near cash cost now and needs to cut back something or go BK.

  7. I have argued markets are broken for years, mostly due to HFT algos and greedy exchanges providing volume incentives which are counter to the interests of the companies listed. But I also recognize and acknowledge the interventions in markets (not just the gold market) by NY Fed and others nudging things here and there, its like things go bump in the night. The very odd actions at illiquid times do serve a duo purpose for sure. It's all part of same picture making risk assessment very difficult and technical charts almost useless leading to mal-investment of very large proportions. This is the most risky market I have ever seen and profits tend to be very fleeting with even very large hedgies having a hard time making money and many old traders simply have folded their tent as trying to use fundamentals and technicals is almost impossible. One good signal that still holds some water is capital flows but you better be quick and nimble which few are. I know very few successful traders these days and most that suggest they are simply not telling the truth as traders tend to do.


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