Gold Flash Crash ‘Winds the Spring’

Discussion in 'Bullion Investing' started by Ainslie Bullion, Jul 20, 2015.

  1. For those watchers of the gold and silver prices edited yesterday was an extraordinary day. In a matter of minutes we saw gold drop near vertically by 4.2% or around $50 to just $1,086/oz. That is its lowest point in over 5 years and it took the other PM’s with it. So what happened? It looks as though $2.7b or around 5 tonne of gold was dumped onto the market on COMEX in one hit. That is a fifth of a normal day’s trade in minutes. It wreaked very much of a similar event in February 2014, one in which just a month ago the orchestrator was prosecuted for "unusually large and atypical trading activity by several of the Firm's customers and caused the mass entry of order messages by Zenfire, which resulted in a disruptive and rapid price movement in the February 2014 Gold Futures market and prompted a Velocity Logic event." Now past events don’t necessarily prove similar repeats but one only has to ask one’s self… ‘If I wanted to exit a 5t gold contract in the most profitable way, would I dump it on an obscure time in the market with thin liquidity almost guaranteeing a precipitous price drop as I triggered stop loss orders and panic on the way down… or… would I sell gradually into a more liquid time in the market...?’ The answer may be in whether you were a big player and may profit on the short side…

    We edited a nice succinct, Aussie, balanced article by Greg Canavan from The Daily Reckoning. In that article, topically given yesterday’s flash crash, he quotes Martin Armstrong as follows:

    “At the top, the majority is long and they become the fuel to make any market crash and burn. [shares or property anyone?]

    At the bottom, the opposite unfolds for everyone will be short. They will pile on looking for $600 gold and will count their profits upon entering the trade. They become the fuel to send the market higher for it always begins with a short-cover rally; people continually try to sell each rally, looking for that new low, just as the people at the top remain convinced that a decline would follow with new highs.
     
    Last edited by a moderator: Jul 21, 2015
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  3. mikem2000

    mikem2000 Lost Cause

    Or, for this particular seller, maybe 5 tonne IS tricking it into the market at a slow rate. Maybe his total position to unload is 50 tonne or 100 tonne, you just never know about these things.
     
  4. rzage

    rzage What Goes Around Comes Around .

    Why would they sell slowly if they figure gold will drop to $800-$900 . I'm waiting for that price to buy , if it doesn't happen , I've lived this long without a finished gold type set ..... ;)
     
  5. mikem2000

    mikem2000 Lost Cause

    I think you will be having a finished type set before you know it :)
     
    rzage likes this.
  6. PeacePeople

    PeacePeople Wall St and stocks, where it's at

    Really? I suggest you read your reply again and ask what part of that scenario would a sane person partake in? If they're going to unload, why in thinly traded time and that kind of volume? Even if that is a trickle to them, what if any part of that makes any sense. Come on man, even you know that's nonsense.
     
  7. rzage

    rzage What Goes Around Comes Around .

    I think so too Mike , along with $10 silver .
     
  8. Stephan77

    Stephan77 Well-Known Member

    I'm loading up on pyrite futures.
     
  9. mikem2000

    mikem2000 Lost Cause

    Actually Peace, you are right, that reply wasn't meant as "this is what happened" but more of "there are other possiblties" I personally don't believe that is what happened either, but I am certainly not buying what the OP was selling. I was trying to show, there is really no way to know with the info we had on hand. If I had to take my mest guess, it was probabbly some sort of forced selling like a margin call or something like that, but again, that is only a guess.

    The info I would take home with however, is there IS downward pressure on Gold now.
     
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