At 8:42am EDT this morning an entity entered an order to sell 5,000 December gold futures contracts at market. This order represents roughly $640 million in notional gold value and triggered a temporary 10 second trading halt and a 5-minute period in which over $2 billion worth of gold futures contracts changed hands:
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Perhaps the most interesting aspect of this latest large stop tripping market sell order in gold futures was the time of day in which the raid was executed. There was no market moving economic releases or events taking place at 8:42am EDT this morning - it just so happened that the market was vulnerable with a literal 'gold mine' of sell stop-loss orders on the south side of the key $1275 level.
It would be preposterous to think that any entity attempting to obtain best price execution would attempt to sell such a massive amount of gold in just a few seconds. Which leaves only one reasonable explanation: The 5,000 lot sell order was designed to wreak havoc and confusion (trigger stop-loss sell orders and breach a key technical support level) by an entity that was already short the market. Who might this entity be?......"Goldman Sachs Says Gold is a Slam Dunk Sell"
Our suspicions were further confirmed by two separate conversations with Commodity Trading Advisors (CTAs) who both use trend following strategies to trade commodity futures - both trader's systems issued a short signal in gold on today's close below $1275. Behemoth firms such as Goldman Sachs have enough information about market participant positioning to be able to identify price zones which will trigger maximum market impact - this morning's 5,000 contract sell order in December gold futures is a textbook example of "maximum market impact" and predatory trading activity.
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321Gold.com Editor Bob Moriarty fired us the following comment via email, which we're sharing here with his permission:
A lot of times you don’t do things because of your entry point, you do it because of your planned exit. But it’s a zero sum game with the number of shorts being perfectly matched with the number of longs. When someone sells 5,000 contracts, we know, because we understand the commodity markets, that they now have to buy 5,000 contracts. It’s perfectly logical, perfectly legal for anyone with the scratch, and hardly part of a conspiracy.
No one in history has ever made a single cent off a belief in a conspiracy. It may be true but it certainly is meaningless. All sound consists of signal and noise. This is noise.