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Dow Crashes, Gold Spikes

"Apres moi le deluge. After me, the deluge." – Jeanne Poisson, Marquise de Pompadour, falsely attributed to King Louis XV

Today the Dow Jones Industrial Average crashed by nearly 1,000 points over several minutes before recovering.  About 800 points of the drop occurred in about 5 minutes.  Meanwhile, gold spiked over $1,200, closing at a near all-time high in United States dollars after setting all-time highs in Euros, Swiss franks, and British pounds.  And just last week, the Wall Street Journal published an article about how market traders are now using video game processors to beat out their competition in a game of milliseconds.

The below is a June 2009 interview with Joe Saluzzi of Themis Trading.  Pay close attention to the entire video

"The volume you see during the day right now.. is FICTITIOUS... It's NOT REAL..  It's done by what they call high-frequency traders.  These are machines.  The biggest machine out there wins the game nowadays.  And these people deal in subseconds.  50 milliseconds is a huge amount of time.  Any over that and you are a dinosaur...  What they do all day long is basically buy and sell and they try and collect liquidity rebates from the exchanges who are basically in partnership with them.  They trade for no apparent fundamental reason...  

"The trick to the market here is that the high-frequency guy does not add liquidity, he adds VOLUME.  And there is a big difference between liquidity and volume. [If] volume is 12 billion shares, who cares?  If a news event occurs, and there is no more liquidity anymore, the trapdoor opens and no one is there to buy... I have a feeling one day the door is going to close.  Everyone is going to be running for the exits.  There is going to be a major move in the markets and everyone is going to wonder "What happened?"  What did that crazy guy on Bloomberg Television say that day about high frequency traders?  There is a problem structurally in the equity markets that nobody wants to talk about. There is intervention, there's manipulation going on."  

I certainly do not yet know exactly what happened in market today.  The CNN link above mention issues with Proctor and Gamble stock, but the fact remains the stock market is not a great bellwether for the economy anyways.  With  rampant unemployment caused by the government, and events in Greece and elsewhere unfolding quickly, we certainly are living in unsustainable and wildly unpredictable times.  Many have been lulled into a false sense of stability - 2010 is an election year, after all.  Many have been surprised by the levels of chaos in Greece, but the current events were not hard to foresee - though the exact timing is impossible to predict - like this article on the Greek rioting and US banking system I wrote.... in 2008.   

As I wrote in "One Step Closer to the End of the Golden Brick Road," investigating for yourself the massive size of the gold market and its alleged manipulation is time well-spent.  There IS a reason why the American people have been lied to.

Inscription:  History repeats itself. The robber barons of the middle ages, and the robber barons of today.
The people bowing before the combination of bankers and politicians, bearing the sword of legislation.

(Source, copyright expired)

Some things never change.  For those of you intent on voting for "the lesser evils" in the Republocrat parties, remember the definition of insanity: doing the same thing and expecting a different result.  In a time where just one year ago most of America was excited about "change," perhaps now is not quite the change that was expected.



Disclosure: No positions