-- Posted Monday, 30 April 2012 | | Disqus
Dear Friend of GATA and Gold:
The Wall Street Journal, which back in December published an essay by a recently resigned member of the Federal Reserve Board complaining that "policy makers" were "suppressing market prices that they don't like" and then, despite GATA's many importunings, refused to ask him to specify which prices and to explain whether he knew about this price suppression because of his service at the Fed --
http://www.gata.org/node/10839
-- today committed an equal act of journalistic obtuseness. It's appended.
The Journal noted this morning's strange and seemingly uneconomic smash down in the gold price and strained mightily to attribute it to a mistaken "fat finger" trade -- even though the "mistake" would have involved more than a billion dollars' worth of gold and this sort of thing lately has been happening practically every other day.
A far more obvious and plausible explanation is that the trade wasn't uneconomic at all -- that it was part of a central bank-sponsored defense of a short position in gold or a defense of a competing currency or both, part of the longstanding Western central bank scheme to rig the currency markets and particularly the gold market:
http://www.gata.org/taxonomy/term/21
But at least these odd movements in the gold market have become so blatant as to command even the Journal's attention, to the extent that the newspaper is compelled to contrive excuses and distractions. That's progress.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
* * *
Gold Shakes Off $1.24 Billion 'Fat Finger'
By Tatyana Shumsky
The Wall Street Journal
Monday, April 30, 2012
http://blogs.wsj.com/marketbeat/2012/04/30/gold-shakes-off-1-24-billion-...
Gold futures ended nearly unchanged Monday, after a large early-morning sell order roiled traders and slashed prices by almost $15.
The CME Group Inc.'s Comex division recorded an unusually large transaction of 7,500 gold futures during one minute of trading at 8:31 a.m. EDT. The sale took out blocks of bids as large as 84 contracts in one fell swoop and cut prices down to $1,648.80 a troy ounce. The overall transaction was worth more than $1.24 billion.
Gold traders buzzed with speculation that the transaction was an input error -- a so-called "fat finger" trade.
"Or a Gold Finger as it might be known in the bullion market," traders at Citi joked in a note to clients.
One indicator that the transaction was a mistake was its size. At 750,000 troy ounces, such large trades are rarely conducted amid very thin trading volumes. Monday trading was expected to be quiet as market participants in China and Japan are out on holiday and many European traders are preparing for a holidays there.
"No one who has the account size and the money to trade thousands of gold contracts would do it in one transaction -- that's just stupid," said one trader. The collateral required to purchase 7,500 contracts is about $75.9 million in cash that the trader would have deposited with his broker.
Moreover, the likely mistake is symptomatic of the shift to electronic trading. Computer trading systems are vulnerable to input errors, as they do not question the order before executing the transaction. By contrast, when most order flow would pass through the Comex floor where human traders processed the deals, potential errors stood higher chances of being intercepted, traders said.
"You would definitely verify [a trade this big] before you executed it," said one Comex floor broker.
Still, not everyone agreed Monday's slip in gold was caused by a keystroke error. Chuck Retzky, director of futures sales for Mizuho Securities USA, said that silver prices suffered a similar leg down at the same time as gold, tumbling 35 cents to $30.805 a troy ounce, but other markets like Treasurys, currencies, and stocks were unperturbed.
"To do it both in gold and silver tells me that it wasn't a trade done in error," Retzky said. He added that the sale could have been caused by a trader looking to cut back holdings on the last trading day of April, as fund managers often time purchases and sales for particular reporting periods.
Meanwhile, gold prices spent much of Monday shaking off the early-morning losses and finished the day nearly unchanged at $1,664.20 a troy ounce.
* * *
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* * *
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-- Posted Monday, 30 April 2012 | Digg This Article
| Source: GoldSeek.com
