Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold and Silver 6 Degrees of Separation as HFT Goes Mainstream

Commodities / Gold and Silver 2014 Apr 03, 2014 - 03:11 PM GMT

By: Dr_Jeff_Lewis

Commodities

A recent 60 Minutes television show interview revealed the long established electronic trading mechanism used to front run and carry out price management and profit schemes across trading seconds. In the wake of the interview, one cannot help wonder how many degrees of separation exist between public awareness of this and its connection to futures and precious metals price manipulation. 

Furthermore, for all the pomp and circumstance surrounding this bombshell, one also wonders why a tightly controlled media would set this red herring free into a public holding a dwindling institutional confidence.


High frequency trading has been around for at least a decade, beginning in earnest in the aftermath of key regulatory changes. Such changes have mainly been in equities, and have recently spread to futures and forex. Insiders have been chronicling the farce for years. 

As part of Michael Lewis' tour promoting his book, "Flash Boys", he was given access to a much wider audience in his interview with 60 Minutes. While most of the damage has already been done, one might rationalize that we have potentially skipped a few chapters on the way toward collapse of confidence. But I would not hold my breath. 

The HFT story, combined with algorithm trading strategy, is known to most precious metals investors. It has been a key racket for at least a decade following regulation changes. 

HFT, which accounts for more than 70% of equity market volume, is legal and nearly as damaging. But it is certainly in line with changes such as Glass Steagall, which gave the green light for commercial banks to become full-fledged investment banks, while exchanges became for-profit entities. 

For all the news hitting the mainstream, the exchanges themselves are the real beneficiaries for precious metals. The self regulated CME is the main focus for price discovery and the COMEX.

The metals HFT trading is used by the large commercial banks to push the market in whatever price direction they deem "necessary" to affect a profit. They routinely spoof or create un-fillable orders to induce hedge fund or speculative algorithms to sell automatically. This enables the commercial banks to buy back positions, profiting and painting the tape so that the whole world of technical analysts and professional traders think the market is fundamentally this way or that. But in reality they are a complete farce. This, of course, trickles down to the mainstream investor and public sentiment where complacency rules for those with a voice.

Regulators talk and we will soon see a giant storm of action and debate regarding the fairness and/or evil of HFT. But this issue has occurred despite regulation - if anything, regulation serves to add more complexity as it is often written by future traders. Additionally, it will soon revolve into the very system that exploits the flaws.

It's perfectly legal in the same way intervention by the ESF has been a legal cover for gold (and silver) manipulation. Heaven forbid the day an official uses this to "calm" the markets.

In the end it is a road that ultimately leads to a failure or confidence among the confluence of various other tremors. This is true especially in the context of financial and currency wars waged behind the scenes as the developing world slowly chips away at Western monetary dominance.

HFT leads to further disconnect in fundamentals which leads to absence of the market maker or human broker, leading to greater trading volume followed by growth and consolidation of the players that profit most from that volume (CME). This leads to increased fragility when machines buy and sell suddenly and all at once, followed by crash, collapse and more stimulus and bailouts, along with more credit creation and more pressure on interest rates.

Then follows foreign tensions as dollar holders accelerate dis-hoarding of dollar denominated assets, then volatility and shattered underlying economy, leading to widespread mistrust, fear and civil unrest. Next is scarcity of metal, then policy implementation accelerates demand, shortages create a two-tiered market, then paper physical split which leads to large institutional investors taking massive position in retaliation for political sanction and, ultimately, hyperinflation. 

In the end, HFT is yet another consequence of a much larger and more fundamental issue.

It's well known throughout human history that once the control of money is usurped from the market by those in power, it is merely a matter of time before the final unwind begins in earnest. HFT is one more loophole, allowing a small subset of elites to gain the upper hand.

Private banks are allowed to create the public "money" supply out of nothing, as debt is the government enforced FRAUD which is the foundation of the entire market.

The fear is that the coverage of this story will be viewed as merely a recasting and not necessarily stir up issues. In much the same way, the most recent silver investigation (led by the CFTC) simply recasts the denial - and this time with silence.

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 © 2014 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

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in