Seeking Alpha

Traders befuddled by short, sharp movements in gold prices

  • Gold traders have been puzzling over a series of massive transactions over the past three weeks that have caused the price of bullion to move sharply within a matter of minutes.
  • The latest incident came in the wee hours of yesterday morning in New York, when a wave of orders to purchase $2.3B worth of gold caused the metal to spike 3% in just 10 minutes.
  • Theories about what's causing the phenomenon include the effects of 24-hour electronic trading, short covering, selling by a distressed fund and deliberate market manipulation.
  • Gold is now -0.4% to 1317.20.
  • ETFs: GLD, IAU, SGOL, PHYS, AGOL, DGL, UBG, DGP, UGL, DZZ, GLL, DGZ, UGLD, DGLD, GLDI, GDX, GDXJ, GLDX, PSAU, NUGT, DUST, GGGG, RING
Comments (8)
  • JKHICKORY
    , contributor
    Comments (11) | Send Message
     
    "deliberate market manipulation" Not allowed, this is a fair game.
    18 Oct 2013, 04:33 AM Reply Like
  • coolsoupy
    , contributor
    Comments (217) | Send Message
     
    Yeah Right !!! Wanna buy a bridge?
    18 Oct 2013, 07:01 AM Reply Like
  • Han Jun Low
    , contributor
    Comments (131) | Send Message
     
    deliberate market manipulation..... As far as I can tell gold has not moved in a logical manner, often crashing when news from the US indicates it should rise etc. Large holders of the metal would NOT trade at such a high volume within minutes unless 1) they WANTED to lose money or 2) they wanted to break through stop-losses and confuse retail traders, driving them out because they can no longer understand the rules of the gold game.
    18 Oct 2013, 05:04 AM Reply Like
  • Robert Duval
    , contributor
    Comments (2935) | Send Message
     
    Total manipulation. Only when it goes up of course.
    18 Oct 2013, 07:48 AM Reply Like
  • C-Alarm
    , contributor
    Comments (5) | Send Message
     
    The first rule for the little guy is to forget about understanding why gold isn't behaving "as it should".
    Then next, use whatever manipulation or fund manager re-allocations or whatever is going on that strongly affects price as an opportunity to benefit from strong counter moves.

     

    Then finally, abandoning all the "reasoning" and complaints, watch how the Gold miners as a group [GDX] are behaving.

     

    If GDX moves above its 15 day MA and closes above that MA at least 0ne day before GLD breaks out above its high of the last 6 days, regard the move in gold and GLD as an authentic sign of a significant rally in the offing. But if GLD breaks its 6 day high without GDX already showing strength, anticipating that move in GLD, sell the break to the upside.

     

    The gold miners as a group should anticipate any move to the upside in Gold. They should not react to gold as they did on Oct 7 2013 and again on Oct 17. They should lead the way. On the last two sudden rallies in October of this year including Oct 17th rally, GDX rallied in response to Gold breaking up. This indicates any new strength in GLD and/or GDX should be seen as a bearish sign and an opportunity to go short. Allow for a 1% follow through in GLD as a stop, but sell the rally which is almost certainly a short covering move triggered by big money and/or oversold conditions.

     

    GDX has said be short and sell rallies ever since the last top in Oct of 2012. Nothing in that pattern has changed. The trend remains down.

     

    The only thing to watch out for is extreme oversold conditions in GDX such as in May and June 2013 and Oct 15-16th 2013. These can lead to a fairly sustained counter move if GLD itself was also washed out as it was in June 2013. The June 2013 low saw both GLD and GDX extremely oversold. So that triggered a sustained move up. But even that could not do more than remove the oversold condition. So it led to another sustained sell off into the Oct 2013 lows.
    Why is gold behaving badly given the present macro conditions? Is the market manipulated? Is gold going to 1000 or 2000? Shouldn't it be at 2000 now? Is it headed to 5000+? Is it a safe-haven or not? Are we into a deflationary or inflationary environment? Is gold a hedge against inflation or not? What about the Indian wedding season? And Chinese demand? And the seasonal cycles? Interesting debates for sure. But the "right" stance is to put aside the debates and especially the anger over manipulation and follow the trend. Be on the right side. Watch the miners.
    Getting short GDX and some GLD on Oct 18th. Stopping 1% above the high of Oct 17-18.
    18 Oct 2013, 09:21 AM Reply Like
  • mike_simms
    , contributor
    Comments (101) | Send Message
     
    Could be trying to reign is short traders. However I know gold traded in the 30-40 range in the early 1970s when I was young. And I remember the Carter years when people were selling their gold jewelry to make ends meet.
    18 Oct 2013, 10:02 AM Reply Like
  • User 9967631
    , contributor
    Comments (10) | Send Message
     
    The agreement which ended the shutdown caused gold to spike, is that a fair takeaway? The gold spike would have occurred in the early morning after the agreement...
    18 Oct 2013, 11:03 AM Reply Like
  • Brian Bobbitt
    , contributor
    Comments (1890) | Send Message
     
    You all MUST not get too excited about the daily moves in PM's. The markets behind the scenes are enormous [compared to the available stocks] therefore big unexplained moves have always happened. Countries, banks, hedge funds and so on have needs beyond our normal thinking and trading.
    The important thing to remember with trading PM's is 'the short term is for fools.', Just go with the macro flow, watch the trends and go with them. moves like the rise on the 17th should not get your blood up. Your blood should have been up for it before the move.
    Try to determine the trend and go with that. It is the ONLY way you will win with PM's.
    I have been fooling with it for over 30 years and that's what I have learned.
    Traded options for years, made and lost. Bought physical, made and lost, bought stocks, made and lost, and on and on. Overall, I am in dramatic profits and have the 1040's to prove it. I am still 'in the black' and hope to remain so.
    BTW, FYI I am adding to my silver physical stash with every opportunity. I even know a place to buy rounds with only a .65 cent per ounce premium. That is pretty good.

     

    Capt. Brian
    The Lost Navigator
    18 Oct 2013, 01:55 PM Reply Like
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