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

lelford
May 6, 2015 - 12:09pm

So if the Algos are in control

If the algos are in control, can they not be re-programmed to another pairing to replace gold/yen with say, gold/franc or gold whatever. All it would take is an algo programming change and we're back into Ground Hog Day all over again. I keep waiting for that one day where there is just one slip of the finger that crashes forever these dastardly machines and the monkeys (that is being unkind to monkeys!) that operate them.

canary
May 6, 2015 - 12:19pm

I disrespect...

USD down, EUR,oil up, negative economic news...and gold/silver are down. It's just one day of countless examples.

I disrespect anybody's financial opinion who doesn't recognize market manipulation. And not just gold and silver.......The good news: coffee is down for today.

P.s....the whole "algo thing" is a programmed manipulation to me as well.

matt_
May 6, 2015 - 12:37pm

G. Edward Griffin and Peter Schiff interviews

I just listened to these recent interviews of Peter Schiff and G. Edward Griffin, the author of the Creature from Jekyll Island:

https://radio.goldseek.com/shows/2015/05.01.2015/GSR-05.01.15-cc.mp3

Griffin gives a very frank and succinct discussion of the state of our society, government, and banking system. He outlines why our trust in government and banks is misplaced, and offers some hope that things can be turned around. It probably isn't new news to most subscribers here. However, if anyone is just starting to try and figure out what is really going on, it is a good place to start. I've read the Creature from Jekyll Island and most of Peter Schiff's books as well, and I learned a lot from them.

Angry Chef
May 6, 2015 - 12:43pm

G. Edward Interview

Matt,

I've read " The Creature From Jekyll Island " but the best book on the subject IMHO is Eustace Mullins work, " The Secrets Of The Federal Reserve " You can purchase it on his site. He passed away I think around 2010 but his son is keeping the work alive. You can also watch his youtube videos while they're still available.

https://www.eustacemullins.us/

Sit back and listen to the master.

Eustace Mullins - Secrets of The Federal Reserve (FULL)
braincramps
May 6, 2015 - 12:50pm

Virus or EMP pulse

A virus or EMP pulse would be the easy way for the government to walk away from their financial mess since it would take down the financial/banking systems. They would then blame it on... pick an evil country (Russia/China/N. Korea, etc). This solves the ETCC problem, the hypothecation problem, the derivatives problem... and so on.

I have this large fear that this is the probable outcome. The reason I fear it is, because we are a JIT (just in time) society and there is usually not more than 3 days of food in a typical city. Having electronic systems go down would be devastating to the population, unless you're a fan of the Georgia Guide Stones.

If you want to understand how taking out our computer systems or electrical grid could look, please read the book "One Second After". It is based on the Dept of Defenses's published war gaming of an EMP pulse.

Don't mean to add to the fear porn, but when it leads to so many solutions for the governments of the world...

Ned Braden braincramps
May 6, 2015 - 1:58pm

Catherine Austin Fitts...yesterday

Catherine Austin Fitts-Major Turning Point Comes This Fall
CPE
May 6, 2015 - 2:12pm

This is interesting

https://www.mining.com/web/announcing-a-new-global-operating-system-for-gold/

An exerpt:

BitGold is not a bank and does not take risks with a customer’s deposits, not a cryptocurrency like bitcoin, and there are no IOUs and no securitized assets like gold ETFs. As a Trusted, Limited Third Party, the platform is a software service that allows for the quick settlement of independent-physical gold trades so that a users’ gold is easily acquired and accessible across various payment networks. The platform is powered by BitGold’s patent-pending locational-gold exchange and vault management system linking vault custodians and bullion banks with real-time settlement. The BitGold technology allows users to choose where in the world they want their gold physically stored and connects the securely-vaulted gold to international payment rails such as SWIFT, Visa, MasterCard, Interac, SEPA, UnionPay, Discover, American Express and others.

....

While, I've only read the one article and not researched this fully. For small balances and transactional uses like paying bills this seems to be more secure than an FDIC "insured" derivative bomb, also known as a bank, handling the small balances and transactional funds...

silver66
May 6, 2015 - 2:14pm

Bitgold---CPE

A friend sent me bitgold valued at 10 cents last week. He wanted to test out the system

I signed up and will be sending back some bitgold to him.

Take a look who is backing it....very interesting

helps solve a problem in the freegold concept. Save in gold but spend in currency, this time digital currency

https://www.bitgold.com/

Silver66

Blythesshrink
May 6, 2015 - 2:15pm

http://www.reuters.com/articl

https://www.reuters.com/article/2015/05/06/us-gold-china-fix-idUSKBN0NR0...

​More evidence that China intends to take control of gold pricing later this year.

May 6, 2015 - 2:20pm

Not quite a "swarm" yet

However, lots of little shakers going on in both Northern and Southern California since last week.

https://bigstory.ap.org/article/969d462609f444da8061ae0dccda75d1/small-q...

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