"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, May 2, 2014

The Old Reverse Flash Crash

Well, the day we have all been waiting for, again - another Friday payrolls day. The number came in much better than the market expected and the result was instantaneous - gold promptly fell some $14 breaking through $1280 again but then, within less than a minute, the losses were cut in half. Within the span of an hour, it had recaptured all of its losses and then some.

NOTE - the website is not allowing me to post the one minute chart for some reason. As soon as it does, I will get the chart inserted so that you can see the extent of the huge price swing. It is quite graphic and further underscores the havoc that these infernal computers have unleashed on our markets.

What gives? who in their right mind would swallow up the entire string of offers regardless of price or the size of their buying. Did they not know that by so doing they would obtain the worst possible buy price? Obviously this is horrible and it proves that gold is being manipulated on the buy side by a sinister force out to punish the shorts for daring to sell gold with such impunity. These reverse flash crashes must stop!

Those of you who read this site regularly know that I am prone to use hyperbole/sarcasm to prove my point. Actually there was nothing sinister, nor evil about the price action. What happened was that the computers shifted from selling to buying within seconds because while the payrolls number put a firm bid under the US Dollar, events in Ukraine escalated with that attack by its military on the town of Slovyansk, which is being held by pro-Russian militants. These same militants apparently shot down at least one helicopter.

That this area flared up on a Friday, made the bears nervous about getting too aggressive, even the face of a surprisingly decent jobs number, because no one knows what might transpire over a weekend. They did not want to get caught too short just in case.

However, this underscores my contention made this week - gold would be much lower were it not for this Ukraine mess.


  1. Dan maybe when the market looked under the hood of the BLS numbers and saw more then 800k people left the work force dropping the labor participation rate to the lowest since 1979, that the household survey reflected the loss of 73k jobs, that the establishment survey created 234k jobs under the birth death model and that wages were stagnant, the market determined the BLS labor report was not all that impressive but simply the usual propaganda exploited by CNBC

    1. Mad Max;

      Thanks for the comments.

      If you are asking me if I believe any of these payrolls numbers, the answer if no. But the market does and that is the problem my friend.
      You know as well as I do that all most look at is the headline number.

      We both know that the labor participation rate has been lousy for some time now and yet gold has moved lower regardless. The market is looking at the number as confirmation that the Fed will remain on track for further curtailing QE as the year progresses.

      Keep an eye on US interest rates as well. that will have an impact on gold.

  2. Also in the important workers category, those under 55, some 259K jobs were lost....so much for the great recovery. The problem with the underlying employment numbers is that they will not push inflation and therefore the commodity sector will be flat unless however the FED is ultimately forced to print more

    1. I'd read somewhere that 10,000 boomers per day were turning 65. By extension, 10,000 a day must be turning 55. So the pool of workers under 55 must be shrinking by some number >0 and <10,000. Perhaps this demographic fact accounts for much of the 259K under 55 job loss as there aren't as many people under 55.

  3. Well Dan you have seen enough of my comments to know what I think. Chaos. We have leaders less intelligent than Maxwell Smart himself. It is coming and I believe that first the great deflation occurs, then civil unrest, and at long last crash and burn, political leaders will be exposed, so will the press. At long last we will get the massive mess created years and years in the making. Then healing. Sorry for my views for those of you who believe in unicorns and the power of the establishment to stop this. They cant. Only the true spirit of god will keep us away from complete chaos.

  4. in heaven one minute and hell the next; severe $ and pm volatility; sparks

  5. Dan, let it go. Can we just focus on market analysis? Recently, you've been wasting a lot of your energy ridiculing the "gold is maniuplated all the time" crowd.

    1. Anonymous,

      I believe the reason Dan cannot just "let it go" is he is inundated with hate mail from those you mention, of which we cannot see. It goes hand in hand with how he wants to help those people like me and several others that stupidly fell for things that made sense in this upside down world... I'm a lot more objective now, thanks to Dan's blog.

      He is truly a light with no axe to grind. People brought a fight to him and he is standing firm in his knowledge of the truth.

    2. Anonymous and Nate;
      Nate - thank you for writing that. It is exactly what happens. I try not to take some of this personally but I am only human and there are times when the sheer venom and spleen from some of these cultists is too much. It is astonishing at the reaction that can be elicited from some of them when one dares to touch their golden gold.

      Anonymous - I think that much of what comes out of that crowd deserves to be heaped with scorn. It is disgraceful.

    3. you have a lot of nerve Anonymous; if you do not like what you read at this site, pound salt and go elsewhere; belly up to the bar and get a real name also; sparks

    4. Anon;

      Tell you what - I will make sure that I check in with you next time before I post anything so that I can get a majority vote from the board of directors that you must be a part of that runs this site. I deeply apologize for not getting permission from you prior to posting or commenting. I do not know got into me that I could be so brazen.

      Enjoy the weekend. I will check back with you on Monday to see if it is okay for me to post.

    5. another shoe clerk bagholder at $1550 who forgot to cut loss; sparks

    6. Steve,

      Of course Dan is free to post what he wishes and I am aware that I am free to stop reading at any time. I'm just providing him with some constructive criticism. Oh, the nerve of me!

    7. Anonymous;

      The next time gold experiences a sharp move lower, do us all a favor and visit all of the pro-gold sites and take a count of how many of them will attribute the "smash" lower to a "Flash Crash" orchestrated by the powers that be, those nefarious evil-doers, to discredit gold. They will regale you with proof positive, indisputable evidence, that gold is being manipulated lower when it should be trading higher.

      This nonsense is what perpetuates their reign over their victims. I mock it because it deserves to be mocked for its simplistic and stupid view of how our modern commodity futures markets function.

      Note how they will not bring out all of their epithets towards those who "reverse smash" ( my words ) gold higher without taking any consideration of what they are doing on the charts. I can just as easily make the case that there is a group working to manipulate the price of gold higher and cite instances such as today to "irrefutably prove" my point.

      Those who are serious about such things would of course, and should of course, dismiss it. Why? Because this has become the new normal in our futures markets. It happens regularly all the time across nearly all of them, not just gold or silver as those peddling this nonsense would lead their cultists to believe.

      I am trying to wake people up and I will do that as often as I feel the need to do it. Apparently some are learning which brings me a great deal of personal satisfaction.

      Like I said in the article, - one can be a proponent of holding physical gold, not mining shares, not futures and not eTFs' and still not have to subscribe to the constant stream of misinformation and outright nonsense that fills the world of many gold bugs.

    8. Dan,

      I'm aware of both sides of the argument. I appreciate that you are trying to help people make more informed decisions, but I was just sensing some frequent ego/bitterness creeping into your posts. That might not be the best approach. But maybe I was just reading too much into your written words.

    9. What's the point of criticising others continuously.. It's alright to make a point but sometimes enough is.enough.... Different opinions is what makes a market

  6. Gold and silver extremely resilient in dodging bullets so far this year. The emotional roller coaster looks likely to continue all the way broadly down, for many months and perhaps years to come, to the dismay of both sides.

  7. Looks like the weak hands, trend followers are getting suckered into selling every time the price of GOLD drops below its 30 day mov avg. !! Someone is buying and)( commodity ) the price action may be signalling that inflation may be bottoming and higher inflationnaround the corner if GOLD can rise aboe $1425. Yellen got big jugs and the markets love the milk of the printing press.

  8. Wow Wolf, disturbing picture for me to even envision. Please pick a better visualization as my stomach cannot take such visions. The Fed is powerless except in devaluation which only leads to more chaos. There is only one progress and productivity cannot go any higher. The crash is inevitable. Hold on to your hats. Learn to swim in paper.

  9. Pretty amazing video starting to come out of Ukraine.
    Medieval mayhem underway.

    It seems likely that some type of over-the-top response by either side will eventually provide the excuse either side wants. I hate talking like this...but it seems some type of perceived or real massacre is in the cards.

    How long can the sizable amount of hostility and forces at the ready over there remain patient and exercise restraint before they go primitive in a big way?

    Looks like we're going to find out. Like Dan has repeatedly stated...without the Ukraine threat keeping gold aloft it more then likely would be in the mid to lower $1200's

    TGIF...and everyone have a great weekend!

  10. Ukraine in my opinion is big deal. It is a very good sized country on the border of Europe about to fall into chaos. How this does not have implications that include this rigged world economy is lost on most in the US. It is playing out we will see who is right.

  11. If that happens Concord, and everyone wants their Gold back (Germany)..then look out above. Not sure it will? Would make the holders of paper claims on gold look like fools. I would like the fools portion, but the real hurt destruction that would begin on young men and war in the streets, smell of wheat in the fields would be pitiful. Sad that it has to come to this. Our backing of the IMF and the $17 Billion I am sure is playing into the fight made rather than the De-Escalation mode.

  12. What I am wondering is is, because a minor skirmish in Ukraine - just a few people died - is perhaps related to concern about geo-political risk, affecting currency markets including precious metals ...

    Dan, or any other participant, have you ever seen a situation like this reverse itself - on the same day ?

    i.e., Gold prices jump because of strife in Country X.

    UN leader or US President or some Politico make some vaguely pacifist statement, geo-political risk becomes less relevant - and gold prices fall.

    OK, so normally we see this cycle play out over a week or a month or a few days.

    Has it ever played out over a few hours ? That is my question. Dates would be great.

    It's very interesting how world affairs affect currency markets.

  13. If only if only, but for Ukraine.....metals would be lower. How did it happen with such a great jobs report? Come on guys deal with the market as it is not as you would like it to be. Metals are up and no one believed the bullshit report. Dont fret though, next week metals will be down again after all..its tradition.


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