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Silver HFT Program

Commodities / Gold and Silver 2013 Jul 05, 2013 - 03:30 PM GMT

By: Dr_Jeff_Lewis

Commodities

High Frequency Trading or HFT is a form of rapid algorithmic trading performed by computers and executed directly into financial markets, typically without human intervention.

Recent estimates have indicated that upwards of 70 percent of futures and equities trading volume is now being executed by algorithmic trading programs that are often run by large fund managers and financial institutions.


The Big Money is Behind HFT

HFT programs now have enough money behind them to destroy real wealth or productive capital in a microsecond if they simultaneously deal in large enough volume to cause a flash crash in a market they are permitted to operate in.

Unfortunately, the trigger for such a crash could be as simple as a bad headline, as the markets saw earlier this year when an erroneous Reuters headline appeared.

Furthermore, the elimination of the middle man or market maker who was willing to take either side of a trade by quoting both a bid and an offer price has contributed to the disconnect between price and fundamentals observed in the silver market, which has truly become a Matrix of price manipulation.

Precious Metals Paper Market Triggers
Some of the most predictable precious metal market movements may have been the result of HFT programs operating in these markets.

For example, if you would have simply sold at the New York open and bought back at the Globex open over the last few years, you would be up by more than 1,000 percent over the course of that time frame.

The emerging price pattern goes something like this:

  1. The precious metals market often rallies soon after the 9pm New York overnight open.
  2. The typical downside pressure trigger point is the New York open.

This situation is allowed to happen because it is profitable for those who control the markets.
The Real Winners in a Sea Of Volatility
Of course, as most of you already know, market manipulation can be effective at maintaining the disconnected state between price and reality as long as it is profitable for those who control or enable it.

What the silver market is now seeing in terms of price is based solely on a skewed trading structure in what remains the most important price determining exchange. The latest selloff is a major shift perceived by most alternative minded observers as a planned preparation for future higher prices. Remember, big shorts make a killing on buying back their short positions at a profit when prices fall.

The monetary masters in positions of authority over the markets do not care about inflation. In fact, they benefit from inflation because not only do they get first dibs on the cheap credit and control sentiment about its distribution, but they also get to grow their balance sheets larger and larger.

Basically, they play and profit from both from the buy side and sell side. This makes them the perfect partners of government, which also benefits from the cheap money — since it can borrow at low interest rates — and the protection of its legal tender.

Furthermore, the huge concentration of funds being controlled by HFT algorithms means these programs can be deployed more efficiently. There is also less need for conspiracy or collusion between humans, since it is all just programmed into the code for a machine to execute automatically.

For more articles like this, and/or for a breath of fresh silver market reality amidst the stench of denial and technically meaningless short term price obsessed madness, check out http://www.silver-coin-investor.com

By Dr. Jeff Lewis

    Dr. Jeffrey Lewis, in addition to running a busy medical practice, is the editor of Silver-Coin-Investor.com

    Copyright © 2013 Dr. Jeff Lewis- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Dr. Jeff Lewis Archive

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