‘Paper’ Gold Trading – an oxymoron!
The Denver Gold Forum, September 23, 2015, had a panel discussion on the so-called ‘Paper’ gold trading strategies at the COMEX and other Futures Markets (like those in Shanghai, London, and New York). The panel discussing this so-called Paper gold market consisted of Doug Groh of Tocqueville Gold, Bill Purpura, Paul Sacks, Kevin Grady, and Doug Pollitt. This discussion revealed some details which many of us may not understand fully (as traders). See website: http://www.denvergoldforum.org/wp-content/uploads/sites/2/2015/08/DGF15_printer-friendly-program_092015-8am-expanded.pdf.
Why does gold (and silver) get slammed on the COMEX regularily? Who is behind this? Why is ‘paper’ gold an oxymoron?
The first point that I would like to make is that the ‘name’ for this Paper gold trading market is a confused ‘oxymoron’ and this ‘name’ (Paper market) does not reflect the current realities of trading today. As these experts pointed out, the concept of ‘Paper’ trading originally derived from the Open Out-cry markets of the past (2006 and prior). Today, our trading markets have been converted to electronic markets (as of 2007) and there is NO actual ‘Paper’ being used for all our trading strategies. Today, our trading is digital (within cyberspace) and computers, algorithms, and human clicking of a computer mouse creates a trade. This change is monumental for issues like ‘price discovery’. But who is aware of this?
Those who continue to call these trading activities by the name of ‘Paper’ trade are really creating an oxymoron with their words. Today’s digital trading does not require any ‘Paper’ and our so-called ‘Paper’ gold market is really a ‘Digital’ gold market (within cyberspace, using virtual symbols to represent gold). This means that trading on the COMEX or similar electronic markets in Shanghai, London, or New York now consists of virtual symbols within our computer screens. The Open Out-cry paper system is over and the silent computer driven markets are now standard for all traders. But the confused ‘oxymoron’ continues in the minds of our commentators! Listen to the Hard Money commentators on this issue!
Let’s review what is really happening in our silver/gold/oil/energy markets. We now have a computer driven trading market. All is electronic and within cyberspace. The growing concept for trading in these silent cyber markets are Algorithms. These coded instruction algorithms can execute trades in milliseconds and this means that High Frequency Trading is in vogue. I can now ‘enter’ and ‘exit’ trades without actually being present to do my trading. An Algorithm can do the trading for me and do it much better and much faster. I have been watching the results of an Algorithmic Trading system called CoolTrade recently. See this link: https://www.cool-trade.com/index.asp.
CoolTrade and similar algo driven trading strategies are what makes up our trading markets today (mostly). What does this mean for ‘price discovery’? This means that I can ‘enter’ and ‘exit’ a short position (say on the COMEX) to drive down the ‘spot price’ of silver and gold in milliseconds. I do not need to take delivery or settle a trade. I merely sell ‘short’ on the Futures electronic market, drive down the price, and then exit the trade. According to the above panel of experts, only some 1 to 2% or trades on the COMEX actually desire delivery of the metals. These traders merely trade synthetic gold contracts (actually digital/virtual symbols) and settle in the cyber currency of the Exchange being used (Shanghai, London, or New York).
On July 10, 2015, one trader sold short some 700,000 ounces of synthetic (digital) gold on the Shanghai Exchange and immediately drove DOWN the gold price by $50. Think of this! 700,000 ounces of digital gold (called a synthetic gold futures contract) was sold merely to drive DOWN the price of gold. Who, in their right trading mind, would do this sort of trade (and Why)? To produce this 700,000 ounces could take months or years, yet a rogue trader over in China (or London or New York) sold gold (not actually owned or possessed) to the tune of 700,000 ounces within milliseconds. This is the type of imaginary/synthetic markets we now use for our trading! Trading of virtual/digital units which do not technically EXIST!
What a Ponzi/Sham on anyone who does their own thinking and trading. A Central Bank trading desk could be behind this type of Ponzi/Sham trade. There have been many trades of this type in the past four years and our silver/gold prices have been slammed via this strategy many times. Why would any logical trader desire to sell (synthetic/digital) gold/silver on our electronic futures markets merely to effect ‘prices’ (called price discovery)? When a pattern of this type has been repeated over and over for years, I think we need to ask the question…who has a self-interest in slamming and controlling the ‘prices’ of our precious metals (now continually and relentlessly for some 4.5 years)?
To me, this is obvious and I am not shy in saying WHO? There are also many others who are not shy on saying WHO? Myself, Paul Craig Roberts, Cris Powell, Bill Murphy, Turd Ferguson, Dave Kranzler, Jim Willie, Rick Wiles, and a host of other commentators have concluded that our Central Bank trading desks are likely behind this illogical trading SLAM in the prices of our precious metals. This is a strategy which is illegal (except for our corrupt finance elite within our Treasury, Central Banks, and the Exchange Stabilization Fund venues). These corrupt officials will resort to ‘price’ suppression merely to deceive the public and regular traders…so as to promote their funny money cyber currencies.
This strategy is becoming so obvious that even a few bankers and hedge fund managers are suggesting that price manipulation is REAL. We can witness this price manipulation daily if one has a ‘tick’ chart on actual real-time trading. The price of silver (for example) should be triple or more if actual Supply and Demand were setting the prices. The same goes for gold. Are the prices of oil, corn, and select foreign currencies also manipulated by our Central Bank trading desks? Personally, I think so! Algo’s and silent trading strategies can now manipulate or rig any market. Who has the ‘digits’ (called money) for this type of rigging? Think! I think you know! Enjoy and buy some silver/gold coins to honor our Founding Fathers on that which is Constitutional money! I am: https://kingdomecon.wordpress.com.
P.S. Read Dave’s report of July 7, 2015 for another point-of-view:
By Dave Kranzler
When a thoroughly corrupt Government wants to try and hide something from the public, they exert an all-out effort to mis-direct and cover-up. The financial markets are no different. It’s been obvious to anyone with one good eye and one brain cell that the puppet-masters behind the Wall Street/DC “curtain” have been propping up the Dow/S&P 500 and exerting forcefull downward pressure on the price of gold and silver. Why gold and silver? Because gold and silver, for 5,000 years, have been the world’s “alarm system” alerting everyone when something is terribly wrong.
I remember vividly 2008. Many of you were not involved in the precious metals markets. Inexplicably, the manipulators smashed gold and silver down from their bull market highs in March 2008 very quickly. Silver was smashed down to $8 after hitting $21 in March. I remember staring at the futures screen wondering what would stop JPM from taking silver down to zero?
Shortly thereafter AIG and Goldman de facto collapsed and the rest is history, including the fact that former Goldman CEO, Hank Paulson, was “coincidentally” sitting in as Secretary of the Treasury and “coincidentally” came up with a plan for the Taxpayers to bail out Goldman Sachs. Paulson, after all, was still sitting on about a quarter of a billion dollars worth of warrants on Goldman stock. This, after he was allowed to sell his GS stock worth $100’s of millions on a tax-free basis. Just a little “benefit” the elitists bestow upon themselves when their brethren appoint them to a Government post.