Computer Trading Algorithms Run Wild

16 February 2017 — Thursday


After a short up-tick, gold was sold off three bucks or so once trading began in New York at 6:00 p.m. EST on Tuesday evening.  From there it chopped mostly sideways with a slight positive bias as London trading moved along.  It began to trend lower starting around 12:30 p.m. GMT in London — and then at precisely 8:30 a.m. in New York, the computer algos got spun — and the gold price cratered by 8 bucks or so within seconds, probably on the consumer price news.  By the 10 a.m. EST London p.m. gold fix, the price had rallied back to almost unchanged, before getting sold off a few dollars into the London close.  It rallied sharply from there — and that ended around 1 p.m. in New York, although the exact time is hard to place because of Kitco data feed problem.  It traded sideways from there until about 3:15 p.m. in the thinly-traded after-hours market — and then proceeded to tack on a few more dollars in the close.

The low and high ticks were recorded as $1,217.50 and $1,234.90 in the April contract.

Gold finished the Wednesday session in New York at $1,233.20 spot, up $5.40 from Tuesday’s close.  Net volume, as usual, was over the moon once again at around 214,000 contracts.

Here’s the 5-minute gold tick chart courtesy of Brad Robertson.  There were traces of volume in morning trading in the Far East on their Wednesday, plus a bit in the London session as well.  But the real volume began around 6:00 a.m. Denver time, which was 1 p.m. in London…followed immediately by two monster volume spikes on the engineered price decline at 8:30 a.m. in New York.  Volume continued to be fairly decent after that — but by the COMEX close…11:30 a.m. MST on the chart below, volume fell off to mostly background.

The vertical gray line is 10:00 p.m. Denver time, midnight in New York — and 1:00 p.m. China Standard Time [CST] the following afternoon in Shanghai—and don’t forget to add two hours for EST.  The ‘click to enlarge‘ feature is a must.

It was almost the same price pattern for silver on Wednesday, so I’m not going to bother repeating myself by discussing it.

The low and high ticks in this precious metal were reported by the CME Group as $17.755 and $17.99 in the March contract.

Silver finished the day at $17.95 spot — and up 2.5 cents, which was 3 cents above its 200-day moving average — and still below $18 spot.  Net volume was not overly heavy at just under 43,000 contracts, but roll-over/switch volume out of March was very chunky.

Here’s the 5-minute chart from Brad as well.  And my comments on it would be almost the same as they were for gold’s 5-minute chart.

Like for gold, the vertical gray line is 10:00 p.m. Denver time, midnight in New York — and 1:00 p.m. China Standard Time [CST] the following afternoon in Shanghai—and don’t forget to add two hours for EST.  The ‘click to enlarge‘ feature is a must here as well.

Ditto for platinum, as it was led on the same price path as silver and gold yesterday — and also had that decent rally in the after-hours market as well.  It finished the Wednesday session at $1,009 spot, up 10 bucks on the day.

It was “all for one, and one for all”…as the powers-that-be led palladium along the same route as well, complete with the rally after the COMEX close.  Palladium closed at $787 spot, up 8 dollars from Tuesday.

The dollar index closed very late on Tuesday afternoon in New York at 101.23 — and rallied by about 15 basis points within two hours of the start of trading at 6:00 p.m. EST on Tuesday evening.  By shortly after 12 o’clock noon in Shanghai on their Wednesday, the index had given up all those gains, plus a bit more.  But starting around 2:35 p.m. CST over there, it began to chop higher, topping out around  the 101.50 mark about 10:30 a.m. in London, which was the time of the morning gold fix.  It didn’t do much from there until precisely 8:30 a.m. EST in New York.  It then blasted to its 101.76 high within seconds, as the precious metals go their lights punched out at the same instant.  The index headed sharply lower from there, but got saved at the 101.01 mark by the usual  ‘gentle hands’.  It rallied weakly from there — and rolled over at 2:35 p.m.  It traded mostly lower for the rest of the day, as the dollar index closed at 101.09 — and down 14 basis points from Tuesday.

I’ll have more to say about that 8:30 a.m. dollar spike in The Wrap.

And here’s the 5-month U.S. dollar index — and it’s now sitting at its 50-day moving average, whatever that means in the age of computer trading gone rogue.

The gold shares opened down almost 2 percent when trading began in New York at 9:30 a.m. EST on Wednesday morning.  They made it back to unchanged by around 11:35 a.m. — and then chopped sideways either side of the mark for the rest of the day.  They eked out a slightly positive close, as the HUI finished higher by 0.12 percent.  Call it unchanged.

The silver equities opened down as well, falling to their respective lows around 10:50 a.m. in New York.  They rallied valiantly from there, with their high ticks coming about 12:30 p.m.  They sold off a bit from there until 1 p.m. EST — and then traded sideways for the rest of the Wednesday session.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down 2.50 percent.  I wasn’t impressed.  Click to enlarge if necessary.

The CME Daily Delivery Report showed that 1 gold and 24 silver contracts were posted for delivery within the COMEX-approved depositories on Friday.  The lone gold contract was picked up by HSBC USA.  Once again it was International F.C. Stone as the sole short/issuer in silver.  Canada’s Scotiabank picked up 20 of those contracts.  Citigroup and ADM picked up 2 contracts apiece for their respective client accounts.  I shan’t bother linking this activity.

The CME Preliminary Report for the Wednesday trading session showed that gold open interest in February dropped by 110 contracts, leaving 930 still around.  Tuesday’s Daily Delivery Report showed that for the second day in a row only 1 gold contract was posted for delivery today, so that means that 110-1=109 gold contract holders dropped out of the February delivery month.  Silver o.i. in February fell by 2 contracts, leaving 148 still open.  Tuesday’s Daily Delivery Report showed that 19 silver contracts were actually posted for delivery today, so that means that 19-2=17 more silver contracts were added to the February delivery month.

So far in February, there have been 5,125 gold contracts delivered, plus 410 silver contracts.

There was another deposit in GLD yesterday.  This time an authorized participant added 85,720 troy ounces.  And as of 7:41 p.m. EST yesterday evening, there were no reported changes in SLV.

With February half over, there has been 1,429,696 troy ounces added to GLD  — and during that same time period, not only have there been no deposits in SLV, there has been a total of 1,084,216 troy ounce withdrawn from it.

There was a tiny sales report from the U.S. Mint yesterday.  They sold 25,000 silver eagles — and that was it.  Ted described U.S. Mint sales in his Saturday weekly review as “putrid” — and that pretty much sums it up.  Except for the odd sales surge, retail bullion sales have been like that for years.

There was no in/out gold movement at the COMEX-approved gold depositories on the U.S. east coast on Tuesday.

In silver, there was 569,182 troy ounces received — and that entire amount disappeared into JP Morgan’s vault.  There was a smallish 32,204 troy ounces shipped out, with 27,069 troy ounces of that shipped out of CNT — and the balance came from Brink’s, Inc.  The link to that activity is here.

It was fairly quiet over at the COMEX-approved gold kilobar depositories in Hong Kong on their Tuesday.  They only received 493 — and shipped out an even smaller 246.  All of this activity was at Brink’s, Inc. as per usual — and I shan’t bother linking it this time.

I don’t have all that much in the way of stories today, so your editing task won’t be too onerous.


Consumer Prices Surge at Fastest Pace in 5 Years as Real Wages Tumble

Stagflationary trouble looms.

As prognosticators ooh and aah over the soaring consumer price index (up 2.5{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} YoY – the most since March 2012), driven by a 14.2{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} YoY spike in gasoline prices, it appears they missed the fact that real average weekly earnings  plunged by 0.6{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} YoY – the biggest wage collapse since November 2011.

After Germany and China’s inflation-a-palooza, U.S. consumer prices are soaring too.

This Zero Hedge article appeared on their Internet site at 8:43 a.m. on Wednesday morning EST — and another link to it is here.

Warren Buffett just dropped Walmart and signaled the death of retail as we know it

Warren Buffett’s Berkshire Hathaway just sold off $900 million of Walmart stock, choosing to invest billions in airline stocks instead.

The sale, which leaves Buffett with nearly no shares in Walmart, comes as America’s largest traditional retailer has been rushing to catch up to Amazon and other online competitors. Amazon’s market value is now $356 billion, compared with Walmart’s $298 billion. Buffett last year acknowledged that traditional brick-and-mortar retailers were struggling in the face of competition from the e-commerce giant.

It is a big, big force and it has already disrupted plenty of people and it will disrupt more,” Buffett said at his annual shareholders’ meeting in 2016, according to Bloomberg. Buffett’s been paring his stake in Walmart since then. He first bought shares in the retailer back in 2005.
He also noted that Amazon’s competitors, “including us in a few areas, have not figured the way to either participate in it, or to counter it.”

Since the end of 2014, Walmart shares have fallen 21{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} compared with a 119{f02ffe5e8b39fd7974c2720d01ccf381ddc9ebb4164215842085b3c57e4f642e} jump in Amazon.

This news story showed up on the Internet site yesterday sometime — and another link to it is here.

As Goldman Embraces Automation, Even the Masters of the Universe Are Threatened

At its height back in 2000, the U.S. cash equities trading desk at Goldman Sachs’s New York headquarters employed 600 traders, buying and selling stock on the orders of the investment bank’s large clients. Today there are just two equity traders left.

Automated trading programs have taken over the rest of the work, supported by 200 computer engineers. Marty Chavez, the company’s deputy chief financial officer and former chief information officer, explained all this to attendees at a symposium on computing’s impact on economic activity held by Harvard’s Institute for Applied Computational Science last month.

The experience of its New York traders is just one early example of a transformation of Goldman Sachs, and increasingly other Wall Street firms, that began with the rise in computerized trading, but has accelerated over the past five years, moving into more fields of finance that humans once dominated. Chavez, who will become chief financial officer in April, says areas of trading like currencies and even parts of business lines like investment banking are moving in the same automated direction that equities have already traveled.

Complex trading algorithms, some with machine-learning capabilities, first replaced trades where the price of what’s being sold was easy to determine on the market, including the stocks traded by Goldman’s old 600.

Now areas of trading like currencies and futures, which are not traded on a stock exchange like the New York Stock Exchange but rather have prices that fluctuate, are coming in for more automation as well. To execute these trades, algorithms are being designed to emulate as closely as possible what a human trader would do, explains Coalition’s Shahani.

This amazing, but very brief article, which certainly falls into the must read category, was posted on the Internet site a week ago Tuesday — and was a link included in Ted Butler’s midweek review yesterday.  Another link to it is here.

The Selling Ends: Foreign Central Banks Buy the Most Treasuries in Over Two Years

Over half a year after we first reported last August that foreign official institutions – central banks, sovereign wealth funds and reserve managers – are liquidating U.S. Treasuries in record amounts, a process that only accelerated into last month when official entities sold a record $405 billion in U.S. paper in the LTM period, Bloomberg decided to catch up to the topic with “America’s Biggest Creditors Dump Treasuries in Warning to Trump.”

Well, not so fast, because as we also warned last month, based on more concurrent data from the Fed, showing Treasuries held in custody, the selloff most likely peaked in November, as December was a month in which foreigners were actively buying, not selling Treasuries.

Moments ago, data released by Treasury International Capital confirmed this, when it showed that in December after 12 consecutive months of selling by foreign official institutions amounting to $405 billion, in December the selling finally reversed, and foreign central banks added $18.6 billion in Treasuries, the single biggest monthly purchase of U.S. paper since June of 2014.

This 5-chart Zero Hedge article was posted on their website at 4:56 p.m. EST on Wednesday afternoon — and I thank Richard Saler for pointing it out.  Another link to this story is here.

Trump: Intelligence community giving out classified information to press “like candy

U.S. President Donald Trump has criticized the U.S. intelligence community for allegedly leaking classified information to the media, responding to the latest report on alleged communications between his campaign aides and Russian intelligence agents.

Trump tweeted that information is “being illegally given to the failing @nytimes & @washingtonpost by the intelligence community,” wondering whether the NSA and FBI could be behind the leaks.

In a later post, he said it was “very un-American” that classified information “is illegally given out by ‘intelligence’ like candy.

The remarks came after The New York Times and CNN ran a story based on anonymous sources, which claimed that several associates of Trump had regular contact with Russian intelligence and other officials during his election campaign.

The president dismissed the reports as “nonsense,” attributing them to an attempt to cover up the failure of his rival Hillary Clinton in the election.

This news story put in an appearance on the Internet site at 12:17 p.m. Moscow time on their Wednesday afternoon, which was 4:17 a.m. in Washington — EDT plus 8 hours.  It was subsequently updated about five hours later.  I thank Roy Stephens for sending it along — and another link to it is here.

The Political Assassination of Michael Flynn

If we are to believe the Trump White House, National Security Adviser Michael Flynn just resigned because he lied about his conversations with Russia’s ambassador to the vice president. As White House senior counselor Kellyanne Conway told NBC‘s “Today Show” on Tuesday: “Misleading the vice president really was the key here.

That sounds about as credible as when the president told CIA employees that the media had invented the story about his enmity toward the spy agency, not even two weeks after he had taken to Twitter to compare the CIA to Nazis. It’s about as credible as President Donald Trump’s insistence that it didn’t rain during his inauguration. Or that millions of people had voted illegally in the election he just won.

The point here is that for a White House that has such a casual and opportunistic relationship with the truth, it’s strange that Flynn’s “lie” to Pence would get him fired. It doesn’t add up.

This right-on-the-money opinion piece by Bloomberg columnist Eli Lake was posted on their website on Tuesday at 10:09 a.m. EST — and certainly falls into the must read category.  I thank Roy Stephens for digging it up for us — and another link to it is here.

Trump Left Saudi Arabia Off His Immigration Ban: Here’s the Reason Why

On August 15, 1971, President Nixon killed the last remnants of the gold standard.

It was one of the most significant events in U.S. history—on par with the 1929 stock market crash, JFK’s assassination, or the 9/11 attacks. Yet most people know nothing about it.

Here’s what happened…

After World War 2, the U.S. had the largest gold reserves in the world, by far. Along with winning the war, this let the U.S. reconstruct the global monetary system around the dollar.

The new system, created at the Bretton Woods Conference in 1944, tied the currencies of virtually every country in the world to the U.S. dollar through a fixed exchange rate. It also tied the US dollar to gold at a fixed rate of $35 an ounce.

The Bretton Woods system made the U.S. dollar the world’s premier reserve currency. It effectively forced other countries to store dollars for international trade, or to exchange with the U.S. government for gold.

This story has been told many times — and here’s the latest iteration.  It showed up on the Internet site yesterday — and another link to it is here.

NATO accuses Russia of fake news, while hysterically warning of WWIII

News media organizations in NATO member countries have no qualms about repeating unfounded, reckless claims of an imminent invasion of Europe by the Russian military, even threatening to ignite World War Three.

Yet when it comes to Russian media presenting valid alternative perspectives on a range of international issues, the Western alliance chokes up with accusations of Russian “fake news.”

NATO says it sees a sharp rise in fake Russian news since the seizure of Crimea,” reported Reuters recently, ignorant of the fact that its own headline was itself purveying fake news.

Such ignorance is rampant among Western media and symptomatic of massive group-think demonizing Russia.

For a start, Russia did not seize Crimea, as is routinely stated in Western media as if fact. The people of the Crimean Peninsula voted in a legally constituted referendum in March 2014 to join Russia’s jurisdiction. But Reuters in the above headline uses the words “seizure of Crimea” without any qualification as if the historic referendum to join Russia was airbrushed out of history.

This is just one example of the daily distortion about Russian relations that is perpetrated in the Western media. If any side is guilty of peddling fake news, it is the Western news media of the NATO military alliance. And on an industrial scale.

This longish, but very worthwhile opinion piece by Finian Cunningham, was posted on the Internet site at 4:16 p.m. Moscow time on their Tuesday afternoon — and updated about fifteen minutes later.  It’s the third offering of the day from Roy Stephens — and another link to it is here.

Kremlin-Baiting Trump: Allegations So Far — John Batchelor Interviews Stephen F. Cohen

Here’s the weekly audio interview with Stephen.  It was posted on the Internet site on Tuesday.  And although I don’t have the usual executive summary from Larry Galearis as of yet, I thought I’d post it in today’s column because events are so fast-moving now.  But it will be in my Saturday column as well, if you don’t have 40 minutes to listen to it just now.  I thank Ken Hurt for sending this our way.

Iran’s carpet exports to U.S. go from zero to millions

About $69 million worth of Iranian carpets were exported to the United States during the first 10 months of the current Iranian calendar year, ended on January 19, while the figure was zero in the entire preceding year, ISNA quoted Hamid Kargar, the head of Iran’s National Carpet Center, on Wednesday.

As Kargar elaborated, addressing the opening ceremony of a carpet exhibition in the northeastern province of Golestan, following the implementation of the nuclear deal in January 2016, Iran restarted exporting its carpets to the U.S. after about five years.

During the said time, Iran could manage to export $275 million of carpets to 80 countries across the globe, registering 19 percent increase in comparison with the same time span in the previous year, he said.

The exported carpets weighted 4,400 tonnes, showing 10 percent rise, the official added.

The U.S. imposed a ban on carpet imports from the Islamic Republic, among other products, in September 2010. It was Iran’s major market for Persian rugs and the sanctions caused total carpet exports to drop by 30 percent — the embargo meant no American could buy, sell or import Persian rugs, even if they were purchased outside of the Islamic republic.

But with many of the west’s sanctions lifted after Tehran reached a historic nuclear deal with western powers last year, the industry has been enjoying a boom and sales to America have increased.

The above six paragraphs are all there is to this short news item, filed from Tehran, that appeared on the Internet site yesterday.  It’s the final offering of the day from Roy Stephens — and another link to the hard copy is here.  The embedded photo is worth the trip, unless you don’t like carpets.

China’s holdings of Treasuries dropped in 2016 by most on record

China’s holdings of U.S. Treasuries declined by the most on record last year, as the world’s second-largest economy dipped into its foreign-exchange reserves to buttress the yuan. Japan, America’s largest foreign creditor, trimmed its holdings for a second straight year.

A monthly Treasury Department report released in Washington today showed China held $1.06 trillion in U.S. government bonds, notes, and bills in December, up $9.1 billion from November but down $188 billion from a year earlier. It was the first monthly increase since May.

The People’s Bank of China, owner of the world’s biggest foreign-exchange reserves, has burned through a quarter of its war chest since 2014 in an effort to underpin the yuan and deter capital from fleeing the country. Chinese sales have made borrowing more costly for the U.S. government: 10-year yields rose to 2.6 percent last year, from as low as 1.3 percent.

This Bloomberg story showed up on their Internet site at 2:02 p.m. Denver time yesterday afternoon — and was updated about an hour later.  I found it on the Internet site — and another link to it is here.

Top Gold ETF Gets Islamic Finance Certification to Tap New Markets

The world’s largest physically-backed gold fund said on Wednesday it has been certified as sharia compliant, the latest effort aimed at spurring demand for bullion from investors across majority-Muslim countries.

Gold had traditionally been classified as a currency in Islamic finance, confining its use to spot transactions, but new guidance issued in December is making room for a wider range of investment products.

The SPDR Gold Trust, an exchange-traded fund which holds 836.7 tonnes of bullion worth $33 billion, now falls in line with rules from the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI).

World Gold Trust Services, a subsidiary of the World Gold Council (WGC), said in a statement to Reuters that the ETF had received the certification from Malaysia-based Islamic advisory firm Amanie Advisors.

This gold-related Reuters article was posted on their website at 10:19 p.m. EST on Tuesday evening.  I found it in a GATA dispatch that Chris Powell headlined “Now devout Muslims can help bullion banks and central banks short gold” — and another link to it is here.

China gold demand much greater than major analysts tell us — Lawrie Williams

Once again we are indebted to Koos Jansen for crunching the numbers on China’s gold imports in 2016.  He has added together direct imports to mainland China from the following nations/areas which publish detailed export statistics – namely Hong Kong (771 tonnes), Switzerland (442 tonnes), Australia (53 tonnes up until September – October to December figures not yet available) and the U.K. (only 15 tonnes, although most U.K. gold exports to China now seem to be being routed via Switzerland where the refiners take good delivery gold bars from the U.K. and re-refine them to the sizes and purities demanded in the East).  Jansen sees little more going directly into mainland China from other sources and allowing for around 20 tonnes going in from Australia for the final quarter of the year comes up with a grand total of Chinese gold imports at approximately 1,300 tonnes.

In addition – the USA will have exported around 4.5 tonnes direct to the Chinese mainland, and Jansen also comments that South Africa doesn’t break down its gold export figures so he may well suspect that some is going in from there too – but the amounts will be relatively small so we can stick to 1,300 tonnes as a nice round figure.

Add to that China’s own gold output, estimated at 453 tonnes and there will also have been a scrap gold element to be taken into account.  This suggests that China ‘consumed’ around 2,000 tonnes of gold in 2016, which equates quite closely to the Shanghai Gold Exchange (SGE) gold withdrawals figure for the year of 1,970 tonnes.  This would seem to confirm Jansen’s oft-made assertion that SGE gold withdrawals are equivalent to total Chinese gold demand – a premise largely dismissed (perhaps without adequate reason) by the major gold consultancies which virtually all put Chinese demand at less than 1,000 tonnes.

This very worthwhile commentary by Lawrie put in an appearance on the Sharps Pixley website sometime on Wednesday — and another link to it is here.


Here are the only other two photos from my Sunday trip to the woods that I kept.  The first is a white breasted nuthatch — and the other is a chickadee fresh from picking up part of a sunflower seed from the same railing where I took the pictures of the nuthatch.  These are two of the usual denizens of the winter woods in this part of North America.  Click to enlarge.


Well, the consumer price news hit the tape at precisely 8:30 a.m. EST yesterday morning.  I was having trouble sleeping — and just happened to be looking at my computer screen at that particular instant — and was amazed by what transpired.  I would suspect that it was nothing more than computer-generated HFT action in the COMEX futures market and in the U.S. dollar index…as the latter headed north, with the former heading south…all a the same instant.

It was all over in seconds — and all four precious metals recovered to close higher on the day, but not by much.

Today’s third story in the Critical Reads section about automated trading programs that Ted contributed, was most likely responsible for what happened — and if you didn’t read that brief article, now is the time to make amends.

Here, as always, are the 6-month charts for all four precious metals, plus copper.  And, for the fourth day in a row, I must point out silver’s failure to break above it’s 200-day moving average by any meaningful amount.  Whether it can, or will be allowed to in the days ahead, remains to be seen.  The click to enlarge feature helps a bit with the four charts.

And as I type this paragraph, the London open is less than ten minutes away — and I see that after selling off a hair at the open of trading in New York at 6 p.m. yesterday evening, the gold price rallied a few bucks as the dollar index headed lower.  But the moment the index stopped falling, gold was sold down for a small loss by 3 p.m. China Standard Time on their Thursday afternoon — but it’s up 40 cents at the moment.  It was a similar price path in silver, except it’s down a penny currently.  Platinum traded the same as gold — and is back at unchanged.  Palladium traded the same as silver — and is down a buck as the Zurich open looms.

Net HFT gold volume is just over 37,000 contracts — and that number in silver is pretty decent already at just over 11,000 contracts.  Roll-over/switch volume out of March is rather modest at the moment.

The dollar index began to head lower the moment that trading began at 6:00 p.m. EST in New York yesterday evening — and hit its current 100.89 low around 10 a.m. China Standard Time on their Thursday morning.  It didn’t do much after that until around 1:30 p.m. CST — and has been struggling higher since then — and is still down 10 basis points at a hair under the 101.00 mark as London opens.

Going back to that article about Goldman Sachs and computer-generated trading.  Here’s what Ted Butler had to say about it in his mid-week column yesterday…

Certainly, artificial pricing is not unique to silver or gold and has become the norm in most markets. I would define artificial pricing as resulting from machine based trading and not related to long term investment. I believe this machine based trading has overtaken all the markets.

 The highlights include how 600 professional stock traders in 2000 have come to be replaced by just two traders (aided by computers) today. Most shocking was the revelation that computer engineers now make up a third of Goldman Sachs’ total workforce. The whole thing is nothing short of mind boggling to me. But as shocking as it seems, it also helps explain things. The process is not unique to Goldman Sachs or the stock market — and the same type of transition has occurred throughout the market world over the past two decades. And we can see it with our own eyes in daily price change in just about every market, certainly including gold and silver.

By definition, all this computer based trading involves speed and beyond split second timing that no human can compete with. The price of silver and gold and many other commodities are being set in the ultra-short term, by the fastest machines created, with no actual supply or demand or long term investment input. We all accept it, as we are given little choice (except to buy, sell or hold on our own timetable); but that doesn’t mean we can’t recognize the process for what it is – namely, artificial. All the computer machines are focused on the shortest time frames possible and, by definition, not the long term. This is what creates the current artificial price level in silver.Silver analyst Ted Butler: 15 February 2017

And as I post today’s column on the website at 4:02 a.m. EST, I note that the gold price began to rally almost the moment that trading began in London — and it’s up $4.40 the ounce currently.  From down a penny, silver is now up 4 cents.  Platinum is up 4 dollars — and palladium by 3.

Net HFT gold volume is just under 48,000 contracts — and that number in silver is at 12,700 contracts, which isn’t a big increase from an hour ago.  Roll-over/switch volume still isn’t out of the ordinary, although I certainly expect that to change as the Thursday session unfolds, particularly once New York opens.

The dollar index made it up to the 101.04 mark around 3:25 p.m. China Standard Time, which was thirty-five minutes before the London open — and headed lower from there.  It’s off its current 100.76 low tick by a handful of basis points — and now down 29 basis points.

I’m wide open for anything today — and whatever happens, I’ll have commentary on it tomorrow.

See you then.


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