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Thread: "Stop Logic" Gold Slam Was So Furious It Shut Down CME Trading Again

  1. #1

    "Stop Logic" Gold Slam Was So Furious It Shut Down CME Trading Again

    It was precisely a month ago when, in "Vicious Gold Slamdown Breaks Gold Market For 20 Seconds" we wrote:


    There was a time when, if selling a sizable amount of a security, one tried to get the best execution price and not alert the buyers comprising the bid stack that there is (substantial) volume for sale. Of course, there was and always has been a time when one tried to manipulate prices by slamming the bid until it was fully taken out, usually just before close of trading, an illegal practice known as "banging the close." It appears that when it comes to gold, the former is long gone history, and the latter is perfectly legal. As the two charts below from Nanex demonstrate, overnight just before 3 am Eastern, a block of just 2000 GC gold futures contracts slammed the price of gold, on no news as usual, sending it lower by $10/oz. However, that is not new: such slamdowns happen every day in the gold market, and the CFTC constantly turns a blind eye. What was different about last night's slam however, is that this time whoever was doing the forced, manipulation selling, just happened to also break the market. Indeed: following the hit, the entire gold market was NASDARKed for 20 seconds after a circuit breaker halted trading!

    Moments ago it just happened again. As part of the already noted massive gold slamdown just before 9 am Eastern, when "someone" sold an epic 2 million ounces of gold in one trade, the CME just went dark for 10 seconds, blaming it on an appropriately named "stop logic" event.
    What is Stop Logic? Basically, it is a the mother of all stop hunts, which takes out the entire bid stack and continues until such time as there is absolutely no liquidity left in the entire market! From the CME:


    Stop Logic detects potential market movements caused by the triggering and trading of Stop orders where the resulting price move would extend beyond an exchange specified threshold.

    The triggering of Stop orders can potentially exaggerate price movements in temporarily illiquid markets. When triggered Stop orders attempt to move the market to an executing price beyond a pre-established value, a Stop Logic event occurs. Stop Logic detects these situations and responds by placing the identified market in a Reserved state for a predetermined period of time, usually 5 to 10 seconds, depending on the instrument. During the Reserve period, new orders are accepted and an Indicative Opening Price (IOP) is published, but trades do not occur until the Reserve period expires, thereby providing an opportunity for participants to respond to the demand for liquidity. At the end of the Reserve period, the instrument will re-open and matching will resume.

    When a futures contract designated as a lead month contract experiences a STOP Logic event, associated options markets are paused and Mass Quotes canceled.

    Stop Logic will not prevent markets from ultimately moving in the direction of the order flow, but allows time for liquidity to enter the market so that new orders can be matched against the triggered stop order(s).
    Of course, the liquidity we re-enter at a time when the prevailing price has been reset substantially lower on what is basically a "banging the open" type of event, or in this case market open, when one or more traders attempt to generate the well-known "momentum ignition" event so known to HFT algo manipulators everywhere.
    The chart below from Nanex show precisely when and how the trading was stopped for 10 seconds in the aftermath of the furious sell trade.
    "Stop Logic" Gold Slam Was So Furious It Shut Down CME Trading Again | Zero Hedge

    I could be wrong, but it looks like scaring tactics to me, someone wants the gold down...
    Those who can make you believe absurdities can make you commit atrocities.

    Voltaire


  2. #2
    Gold is overpriced due to the scare tactics and misinformation spread by the gold hucksters. According to analysts in that industry, its real value is somewhere between $900 and $1000 per ounce. That is about as low as it is likely to fall if the gold market collapses again.
    "Democracy is two wolves and a lamb voting on what to have for lunch. Liberty is a well-armed lamb contesting the vote." -- Benjamin Franklin


  3. #3
    Quote Originally Posted by TopDogger View Post
    Gold is overpriced due to the scare tactics and misinformation spread by the gold hucksters. According to analysts in that industry, its real value is somewhere between $900 and $1000 per ounce. That is about as low as it is likely to fall if the gold market collapses again.
    Regarding this doc, the gold has a correlation with these factors:

    -Oil

    -Unemployment

    -TBILL

    -Inflation

    -GDP

    -USD Index



    http://qwafafew.org/images/uploads/I...20QWAFAFEW.pdf
    Those who can make you believe absurdities can make you commit atrocities.

    Voltaire


  4. #4
    The price of gold is mostly driven by simple supply and demand like all commodities. It doesn't really strongly correlate with any other factors except the dollar's exchange rate and an artificial demand created by the people who want to sell you gold. The people selling gold are every bit as deceptive as the Wall Street crowd and the bankers. Beware of what they say.

    Right now the price is being driven down by less demand.

    Gold Underperforms Due to India Tax Policy

    One of the largest gold sellers here in Phoenix is calling everyone and trying to convince them that the government is getting ready to confiscate everyone's retirement accounts. We should therefore roll them into physical gold and silver. I reminded the guy who called me that if I had taken his advice in January and rolled everything into silver my retirement funds would be worth about 40% less today.

    Gold and silver are commodities whose value has crashed many times over the years. It is not a safe haven and it is only worth whatever someone is willing to give you for it.
    Last edited by TopDogger; 11 October, 2013 at 20:36 PM.
    "Democracy is two wolves and a lamb voting on what to have for lunch. Liberty is a well-armed lamb contesting the vote." -- Benjamin Franklin


  5. #5
    You know I think the market understood first the inflation dropped so there is no need to put their money in gold and second that's more interesting, the Trans-Altantic treaty that will certainly sooner or later merge the Federal bank and Union Central bank and create another money. So why need a reserve of gold when a powerful block economic is created with a new money?
    Those who can make you believe absurdities can make you commit atrocities.

    Voltaire


  6. #6
    Mysterious Gold Seller Is Back With Periodic High Volume Slams, Fails To Break Market

    Unlike on the two prior occasions when the "mysterious" (coughBIScough) gold seller sold so much gold he briefly broke the gold market not once but twice, this morning's concerted gold selling episodes, which briefly took gold to a three month low, were unable to obliterate the entire bid stack (at least for now) and crush enough liquidity to force the CME to announce another "stop logic" 10-20 second trading halt. However, there were some other peculiarities surrounding today's now recurring morning gold battering (which as we noted in a market where the CME no longer supervises any and all manipulation, were and are certain to continue). Specifically, what is curious is that starting at 3:48 am Eastern Time, Nanex found "six instances (there may be more) of 1 second periods in Gold futures with a high number of trades (700 or more)." As those who have been covering our coverage of HFT manipulation will note, these are precisely the kinds of momentum ignition, and not rational price discovery, events that seek to manipulate prevailing prices lower (or higher). The good news is that as everyone knows, aside from equity, electricity, FX, libor, aluminum, and credit derivative markets (in just the case of JPM) gold is never manipulated: Blythe Masters promised. So there's that.
    These are the specific volume spiking intervals that Nanex has noted in the latest overnight trading session of note.

    • 03:48:04
    • 04:46:46
    • 05:30:42
    • 07:43:22
    • 08:43:26
    • 09:43:29

    As Nanex further observes, "Note that the last 3 are almost exactly 1 hour and 3 seconds apart. That's not likely a coincidence."
    Mysterious Gold Seller Is Back With Periodic High Volume Slams, Fails To Break Market | Zero Hedge


    You may also be interested to read this:

    Blythe Masters On The Blogosphere, Silver Manipulation, Gold-Axed Clients And Doing The "Wrong" Thing

    http://www.zerohedge.com/news/blythe...ng-wrong-thing
    Those who can make you believe absurdities can make you commit atrocities.

    Voltaire


  7. #7
    Why is China buying so much Gold?
    This is a very interesting article, I recommend you to read it: Why Is China Buying So Much Gold? | Gold Retirement Plan

    Those who can make you believe absurdities can make you commit atrocities.

    Voltaire


  8. #8
    Quote Originally Posted by Franc Tireur View Post
    You know I think the market understood first the inflation dropped so there is no need to put their money in gold and second that's more interesting, the Trans-Altantic treaty that will certainly sooner or later merge the Federal bank and Union Central bank and create another money. So why need a reserve of gold when a powerful block economic is created with a new money?
    Gold is actually not a hedge against inflation as many of the gold hucksters claim and as many people believe. If you had purchased gold during the 1980 peak ($850) and held it until today, you would have lost money on your investment after adjusting for inflation.

    Gold is a volatile commodity whose price is driven by the whims of the market. The only safety net it provides is in the event of a total collapse of the dollar. Even if that happens, gold could still be confiscated by the government at a price fixed by the government, which is what FDR did
    "Democracy is two wolves and a lamb voting on what to have for lunch. Liberty is a well-armed lamb contesting the vote." -- Benjamin Franklin


  9. #9
    Quote Originally Posted by TopDogger View Post
    Gold is actually not a hedge against inflation as many of the gold hucksters claim and as many people believe. If you had purchased gold during the 1980 peak ($850) and held it until today, you would have lost money on your investment after adjusting for inflation.
    Since that the federal reserve bank or other central banks manipulate the market of commodities, and particularly the precious metals so people can still use their paper fiat money, you will never be able to know the truth.

    Gold is a volatile commodity whose price is driven by the whims of the market.
    I am not sure about that, if you take a closer look at what China, India, Russia, Iran, Basil are doing with their gold, believe me, there are no whims, they just bypass the reserve currencies of the world which are the Dollar and the Euro.


    The only safety net it provides is in the event of a total collapse of the dollar. Even if that happens, gold could still be confiscated by the government at a price fixed by the government, which is what FDR did


    Here is a very interesting article about the history of gold confiscation in the world.

    Confiscation of Gold – Possible or Not?

    Confiscation of Gold – Possible or Not? | Armstrong Economics
    Those who can make you believe absurdities can make you commit atrocities.

    Voltaire


  10. #10
    China's Gold Hoarding Continues: Over 2,200 Tons Imported In Two Years


    Paper gold in the developed world may trade based on the whims of marginal momentum chasers, and of course, the daytrading mood of the BIS gold and FX trading desk, but when it comes to physical gold and China's appetite for it, one word explains it best: unstoppable. After rising to a gross 131 tons imported from Hong Kong alone in August, which was the second highest ever monthly import tally, September saw a modest decline to "only" 116 tons: "only" because it is still 67% more than the amount imported a year earlier.
    The total gross imports since September 2011 is now a whopping 2232 tons. Why September? Because that is when we posted: "Wikileaks Discloses The Reason(s) Behind China's Shadow Gold Buying Spree." The chart below confirms precisely said reason.
    China's Gold Hoarding Continues: Over 2,200 Tons Imported In Two Years | Zero Hedge

    Really, China is a "funny" US trade partner, they are doing all they can to destroy the Dollar. Why the US government is doing nothing about it?

    Why the US government do not reform the trade agreement with China and put the pressure on them?
    Those who can make you believe absurdities can make you commit atrocities.

    Voltaire


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