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MACHINES drive ‘Prices’…not PEOPLE!

April 12, 2013

Gold and Silver Prices crashed today to new lows for the year. Why? Does anyone discern the real underlying reasons? The big change that has occurred within all our global markets these past 15 years is the ‘transition’ from  human driven markets (via ‘open outcry’) to  MACHINE driven markets (via HFT computers and Algorithmic transactions). Practically all our global markets are now electronic and driven by ‘machines’ and ‘algorithms’.  Programmed math via sophisticated algorithms allows trading to occur with NO human oversight. This transition to ‘machines’ and ‘algorithms’ is why traders and TRADING DESKS can manipulate ‘prices’ within our markets (and then view their behavior as legal and proper). The Gold and Silver markets are obvious candidates for this type of manipulation in real-time.

Goldman Sachs and their Trading Desk advisers announced (yesterday) that the price of gold was too high…in their opinion. They then advised other traders to SHORT the gold ‘price’ (this was announced on CNBC to all listeners). Shorting the gold price is easy for these Trading Desks as they can initiate a Short transaction (in their mind) even though the transaction is likely to be a NAKED SHORT (where ‘phantom’ shares enter the markets). The loop-holes in the SEC regulations appear to allow IOU’s during the transaction to substitute for real delivery of shares. This means that ‘phantom’ shares can enter the market to DRIVE DOWN the ‘price’ of gold and/or silver. All this (on the surface) appears to be ‘legal’ from the point-of-view of a trader. So why not take advantage of this loop-hole for huge profits?

There is no need to BLAME traders for all this manipulation that is occurring today. Traders are merely following the ‘rules’ that they perceive as ‘legal’ within our politically driven SYSTEM. The real culprit in all this manipulation is our current SYSTEM. We no longer have real Capitalism in America or the World. What has emerged in recent years is a MACHINE driven system which has ‘corrupted’ all the markets and most ‘prices’. Prices no longer reflect pure changes in SUPPLY and DEMAND. For example:  right now there is a huge shortage of silver coins in many markets…yet this supply shortage seems to DRIVE the ‘price’ down. Does this make any sense under normal principles of Capitalism? Demand for silver is growing as supply decreases…yet ‘prices’ are driven DOWN. Why?

The culprit is our Machine Driven Markets where ‘prices’ can be manipulated via programmed Algorithms. Algorithms are now involved in some 70% trading volumes. All this has occurred in the past few years and most pundits seem UNAWARE of this phenomena! Those who want to understand this new trading phenomena need to go to Google Search or to You Tube and plug-in Algorithmic Trading Strategies. This will lead you to video’s and published articles which can educate you on this new phenomena. Where is all this Machine Driven Trading leading us? Can Capitalism survive with this type of SYSTEM?

Personally, I do not think that our markets are stable or sound. Our entire global SYSTEM (still called Capitalism by many) has been corrupted by these new technologies and trading strategies which have emerged in recent years. What is emerging now is a major CRASH of the markets sometime down the road. The DOW Index continues to increase…even though our ECONOMY is deteriorating rapidly. Does this make any sense? Our Fed continues to pump up our markets with their ‘phantom’ money units called QE. Money is now created ‘OUT OF NOTHING’ by our Centralized Authorities…with no awareness (it seems) of these new BUBBLES that are emerging. Is any of this SOUND economic behavior? In my MIND, all these policy actions are leading to a HUGE CRASH down the road.

At some point soon the public and the trading community will wake-up to all this real-time manipulation and market rigging. When this happens CONFIDENCE will drop and the markets will CRASH. Watch the markets and see if you can DISCERN the fantasies with these markets. Gold and Silver prices are giving us a WARNING that future events will be unsettling. Historical money has been Gold and Silver and these commodities are now warning us that the markets are very unstable and that conditions must change soon. Watch and learn. I am:

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