On the sixth of this month, there was another market “flash crash”, this time in gold, recalling the May 6, 2010 “Flash crash” on the NYSE and NASDAQ. On May 6th, 2010, Proctor and Gamble stock began to plummet, driven downward in a reckless spiral by computer-driven trades in a matter of mere minutes, to prices approaching a penny… The result was near panic, if one listens to various versions on You Tube:
After an investigation the SEC traces the panic sell-off to computer driven trades that was, so the “official version” goes, by trades apparently emanating from an investment firm in Kansas City. The panic evident in the announcers voice, while not evident in the various studies of the Flash Crash, are nonetheless the undertone.
Now, it seems that a similar incident has happened in the High Frequency Trading of gold, according to Zero Hedge’s “Tyler Durden”:
Now note something highly significant in this graph-laden study; note the statements in “Durden’s” article:
“Rumors of a ‘fat finger’ abound from the gold futures pits but the precious metals complex just collapsed instantaneously… and the market was halted for the now traditional 10 seconds as circuit breakers were triggered, only this time instead of Stop Logic the event was “Velocity Logic” or lack thereof. Of course, the timing is perfect as it occurs right before the first POMO of the new year.”(Italicized and bold-italicized emphasis added)
Now, before we get to the implications of the emphasized portions of the previous statement, a word about “Fat Finger” scenarios and POMOs. First, POMOs. POMO stands for Permanent Open Market Operations (See Permanent Open Market Operations – POMO) is the process by which the Federal Reserve System “buys or sells securities outright in order to permanently add or drain the reserves available to the U.S. banking system.” So the sudden computer driven “Gold Flash Crash” is more than a bit suspicious from that standpoint. The “Fat finger” is simply trading parlance for a trader whose fat clumsy fingers hit the wrong keys entering trades on their computers.
Clearly, the “fat finger” scenario does not work here, because as Durden indicates, the “precious metals complex just collapsed instantaneously,” and with the complete lack of trades, or “velocity” as the traders say (note now the analogous use of a physics term), there was no movement in the system, and with no movement, no energy.
This, as “Durden” notes, triggered an automatic trading algorithm – sort of – a “velocity logic” triggered after the the collapse of velocity automatically.
A moment’s reflection here will indicate huge implications, not the least of which was why similar automatic “shut offs” were not triggered during the May 6, 2010 Flash Crash. As I’ve mentioned in private correspondence to various individuals about the May 6, 2010 Flash Crash, it is not reasonable to assume that such safeguards were not built in to the system…
(Here comes the High Octane Speculation part):
…and that implies that someone reached into the system and initiated the Flash Crash. And we see evidence of this again with this recent gold “flash crash”, which has a much more dramatic graphic appearance, as if someone reached in and either cancelled or somehow removed all gold trades instantaneously and simultaneously from outside, or caused a systematic failure all at once. This implies vast computing power, knowledge of the trading system and algorithms.
In short, folks, someone is toying with the computerized trading world, sending messages, and the message is loud and clear: we can crash, and erase, the whole thing, any time we choose.
That has to have them burning the midnight LEDs at various intelligence agencies and banks… unless, of course, they’re the ones behind it, and I doubt that, since they’re the ones benefiting from that financial system. Nor does it make much sense for a foreign power to do so either. Sending messages that they are capable of crashing the economy that, like it or not, continues to be the locomotive of the rest, is more than a little suicidal. Of course, I wouldn’t put it past certain banksters or corporate fascists or their institutions to flirt with wholesale fraud and theft that such a capability would give them. Stupid parasites that many of them are, it would not be beyond them to kill the host that provides their own wealthy and comfortably corrupt existence. Still, most of them have minds, even if addled. So I think that scenario, too, is a bit weak…
…see you on the flip side.