HFT-Driven "Markets" Continue To Distort Prices

49
Wed, May 6, 2015 - 11:03am

As The POSX collapses another point today, it's easy to ask why gold isn't racing higher. The answer, of course, lies with the algos and their seemingly endless pairing of gold with the yen.

This is just a perfect example of how utterly FUBAR all of these "markets" are. Once again, conventional wisdom is tossed out the window due to the total market control of the HFT algo computers. Your example today continues to be the relationship between the dollar index (POSX) and gold.

Again, conventional wisdom holds that as the dollar rises, gold falls and vice versa. Do a Google search of this and you'll find thousands of articles detailing this inverse relationship. So why, then, has the POSX fallen from 100 to 94 (down over a point today!) and yet gold has barely budged?

Always remember that the POSX is about 60% euro. This is extremely important, especially today, as the fall in the dollar is primarily due to a rise in the euro. Just today, the POSX is down 1.22% but the EURUSD is up 1.54%.

But the infernal HFT algos aren't set to sell$/buy gold, instead, as we've documented countless times these past few months, they're set vs the yen! Therefore, a falling dollar only boosts gold IF the dollar is falling due to a rising yen. Having the dollar fall vs the euro accomplishes next to nothing. We saw this last week and we're seeing this again today.

Here's the Pig, falling fast and begging for support. It needs to find it, too, somewhere north of 93.25:

But while the POSX sinks like a stone, gold is barely budging. Today it's actually down at 89. WHY?? Again...it's all about that yen and the HFTs that key off of it. For while The Pig is crashing and the euro is soaring, the yen is hardly moving at all. And when the yen hardly moves, gold hardly moves. Here, see for yourself (yen in candles, gold in bars):

On the other hand, crude oil is rallying.

Why?? Has the US eased the pressure on Russia? Have MENA geo-political concerns flared up? Have oversupply issues been resolved? Has global demand suddenly surged? I don't know. Maybe the answer to all of those questions is a resounding yes. Or...maybe...as we've been stating here for months...crude oil is only moving due to changes in the euro. Once again, it's all about the damned HFTs that control everything through paper derivative trading. Euro down, crude down. Euro up, crude up. It's become no more complicated than that.

And so, repeating...Here's the Good News and Bad News out of this...

GOOD NEWS: All of the charlatan, permabear paperbugs out there that claim "gold is going to 0" or even lower don't stand a snowball's chance of being correct as long as the yen stays above 0.82 JPYUSD or, conversely, below 122 USDJPY. Only if the yen depreciates another 25% vs the dollar will the HFTs slam gold that low.

BAD NEWS: As long as the current system perpetuates, paper gold isn't going higher, either, until the yen rallies against the dollar. All of the talk about China and physical demand and London supply and SDRs and cost of production isn't going to matter much as long as the JPYUSD stays below 0.86. For now, the HFT algo paper trade dominates and trumps everything else.

EVENTUALLY, this will all implode in spectacular fashion, just as every other instance of uneconomic pricing has in the past. Until then, just recognize it for what it is and act/prepare accordingly.

TF

www.tfmetalsreport.com/freetrial

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  49 Comments

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Mickey
May 7, 2015 - 11:27am

Thursday Dow stopped just below 17750

17750 is mcHughs critical point

boomer sooner
May 6, 2015 - 8:43pm

@ matt & Craig

Craig- Thanks for the confirmation. Hope she blows!

matt-that didn't cross my mind about the metal blocking signal. I thought about tracking app on my phone and toss it in the middle of the pile before i head for the fraidy hole. Battery going dead would be the issue.

We got missed by a mi!e, literally. Neighbors tree ended up in our back yard from the winds being drawn into the storm. Closest one yet. Another one on the way, 30 minutes.

If you want to watch

https://kfor.com/on-air/ios-live-streaming/

matt_
May 6, 2015 - 5:24pm

Metals and GPS

I own a $2000 bicycle. I know it is dumb. Anyhow, a couple of years ago, I looked into buying a lojack type device for tracking my bicycle in case it was stolen. I thought a small device could be hidden inside the bicycle headset or handlebar tubing. From what I read on the internet at the time it wasn't feasible because the metal would block the signal.

boomer sooner
May 6, 2015 - 5:16pm

Boomer, you might find this interesting

boomer sooner
May 6, 2015 - 4:44pm

Crazy question

With the tornados bouncing around here today, got me thinking of a way to track my stack in case the above ground portion ended up in Missouri (Silver Sooner could pick it up for me). How small of a GPS device has anyone used? I have thought about lojack or something similar. Crazy I know, but in 1999 a cattle rancher near us lost his house. Two weeks later some people came looking for him and had his Talley book for his herd, ended up in their front yard. They lived 150 miles away. I don't think my tubes or ammo boxes would float that far, but a few blocks would suck with all that debris. Might just be time for another burial party.

boomer sooner
May 6, 2015 - 4:21pm

Copper

Rut ro, shaggy-- Hit a brick wall today at $2.95. Back at the end of last year, the LCS owner and I were talking about copper v. silver and if I should sell my copper. His take was sell and buy silver, I didn't. My thought was copper was wayyy too low and should move better. So far paying off. I'm sitting on three barrels of copper. Probably 1000#, brass 500#+, and 200#+ of raw lead. Thinking about building a furnace and melting down into bricks, but the energy to do so is almost cost prohibitive. Bullet molds might be a better idea.

May 6, 2015 - 4:20pm

Thanks Matt, as long as the

Thanks Matt,

as long as the FEDs PPT continues to reverse these S&P pullbacks to the lower channel line, why not go long S&P? Looks like we are at a critical point today.

Hmmm...

CPE
May 6, 2015 - 4:14pm

Re: the latest move to eliminate cash

perhaps that's why this is trending on twitter:

BullionStar @KoosJansen

In The Netherlands someone said Fuck The King, and now the king is pissed - as if he's not equal to us. Trending: #FuckTheKing #FuckDeKoning

2:17 PM - 6 May 2015

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May 6, 2015 - 4:12pm
SilverX3
May 6, 2015 - 4:09pm

I don't know nothing about

I don't know nothing about that Joe Lavorgna guy. But doesn't his face look like a punchbag you wanna test your fist with? Another shill who misinforms and doesn't allow the other "realist" to speak the truth.

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