Fill or Kill: The Mechanics of Precious Metals Price Manipulation

fill and killMuch confusion persists regarding the method, or mechanics, of how the big banks are able to push the price of precious metals around at will for so long.
The confusion comes from declarations that on price drops, the bullion banks are selling. This then triggers the frequent and violent down-drafts we have witnessed over the last 2 years and counting. However, the trading data indicates the contrary. Commitment of Traders (COT) data shows that the big banks always buy on these dips and they always sell on rallies. Always. (This is clear evidence of manipulation in and of itself.)
So how do they get the price moving in one direction or another, usually to the downside?
The mechanism is made clear by the forensic analysts at NANEX, which provides documented real time price action down to the microsecond:
Stacking the Bid with Fill or Kill.

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GATA and Ted Butler have long established and outlined the reasons why this occurs (legally). They have also established the foundation that forms the basis of how the manipulation unfolds. Despite very clear and concise commentary, the message sometimes becomes diluted in its distribution. This situation makes for easy picking from the hard-core opposition who mainly reside, ironically, as part of the professional mining and trading community.

The confusion comes from declarations that on price drops, the bullion banks are selling. This then triggers the frequent and violent down-drafts we have witnessed over the last 2 years and counting. However, the trading data indicates the contrary. Commitment of Traders (COT) data shows that the big banks always buy on these dips and they always sell on rallies. Always. (This is clear evidence of manipulation in and of itself.)

So how do they get the price moving in one direction or another, usually to the downside?

The mechanism is made clear by the forensic analysts at NANEX, which provides documented real time price action down to the microsecond.

Stacking the Bid with Fill or Kill

Via high frequency trading, the big banks are able to stack the bid with spoof orders because of their size and privilege. They are able to place the trades in large size because of their already super-concentrated short (and long in the case of gold) corners. This issue, along with no governor on position limits, also constitutes manipulation on its own.

This technique has been around the HFT world for years and is otherwise known as “fill or kill”‚ trades. The volume for these contracts is impossible to fill, so the transaction never closes. However, the bid lasts long enough to trigger speculative funds (hedge funds) to respond (via their own algorithms) into automatic selling and down goes the price.

In the aftermath, the big banks are ready and willing to buy. And they clean up, as it is revealed when the COT data is released a week later. The reverse happens on the way up.

Who has the ability to out a trade on like that?

These sudden moves appear around market opens and coincide with the overlap between the London fixes and the COMEX open. These millisecond trades that have ‘broken’ the CME platform more than a few times over the last 6 months are fill and kill trades.

These are naturally active sessions of which, on at least four occasions over the last 6 months, the CME has needed to stop trading because of the sudden surge in liquidity.

The resulting price action forms the foundation of the technical analysis. It also forms the popular commentary as to why the price moved this way or that, which of course really has not much to do with those exogenous events.

Opponents, mainly those in the professional trading community, will often misrepresent or attack the wrong argument. It is natural that most of us desire to imagine we are part of an ethical system and not operating in a rigged
casino.

That the miners remain largely mute on the issue may be simply due to their dependence on the very banks that control the price.

The Broader Effect

Are the big banks intervening in all markets?

Many will often point out in opposition to sweeping statements about manipulation by the FED or the government. They will dispute that surely they cannot be involved in corn, wheat, and other commodities.

Maybe so, probably not.

The very same analysis of trading structure analysis can be applied to other commodity markets.

The fact that other commodity markets are also down doesn’t necessarily mean that JPM is acting in all markets. But surely these ‘other’ commodities take their signal from the indications put out by PM performance. Like it or not, precious metals may be peripheral, but remain as peripheral assets. However, they are a permanent guide to inflation expectations.

What the FED Wants

The Gold Antitrust Action Committee (GATA) has quietly built a huge archive of evidence fully revealing the role of government in the covert manipulation of the gold market. But the Fed doesn’t have to be involved on a day to day basis. They are by proxy given their status as regulator. Additionally, to a large degree they are members of the Federal Reserve because of the banks which own these outsize positions.

The big banks (aka, the bullion banks) are simply allowed to do it. And they prosper as a result.

Nothing much has changed in the strategy by which concentrated power wields control over markets. The technology simply adds speed and blocks detection. The question, of course, is when will this end – if ever? The answer is impossible to say, though the inevitability that it will end at some point is guaranteed – just as the sun will come up tomorrow.

But the effect of the price distortions on the physical markets underlying (the interest rate of money, the wider financial system fragility and the economies they threaten) is the crimes of the century.

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Comments

  1. Love to hear anyone refute this evidence.  No doubt in my mind they can’t, and won’t.

    • You want to bet @BayofPigs. LMAO

    • We can all agree that the evidence that proves manipulation is founded and real. That a cap on Precious Metals is mandated by this and other governments or their Fiat system and thus their financial control over all of us, dies. We also must accept that it will continue untill it is forced to cease. If this dosent make a sound case for the return of dueling… i know not what will. To not be able to rid ourselves permanently of the likes of those that reap from their system at the expense of the many, is more than intolerable. Well, anyway, keep stacking, somethings gotta give. 

    •  SILVERTONGUEDEVIL
      “it will continue until it is forced to cease” 
       
      Couldn’t have said it any better! It will indeed be forced to cease in good time, and when it does, we will wish we bought more at this price……to say the least! I am definitely loving these prices!

    • Precisely Bay of pigs, all the bloviating in the world about lack of demand, inflation this, doo doo that falls apart when we see their fingerprints and footsteps all over the place in a manipulation sense.

  2. It’s called a “Fill or Kill” order not “Fill and Kill”.  Author is a bit confused.  High Frequency Traders can move the market price by placing a very large bid with fill or kill instructions.  The order is too large to be filled at stated price, but other algo programs see the bid and are triggered.  Rinse and repeat, all in the matter of nanoseconds and a HFT trader i.e. the Plunge Protection Team can drive the price of a mining stock down without using any cash.

    • @UglyDog – yes, that is correct. I did not edit prior to SD posting, I’ll update it.
      -Doc

    • @UglyDog: Thank you for writing part of what I was going to write.  Spot-on.  There’s another aspect the author gets wrong.  The really huge price declines like the April 12-15, 2013 drive-by shooting can not be accomplished by fill-or-kill orders alone.  Also, other algo and human traders are not necessarily going to be influenced by a fill-or-kill order when the order is too far below the current bid as to be considered what was once called “stink bids.” 

  3. From Trader Dan, Jan. 2
    “By the way, in honor of the FLASH CRASH crowds, gold experienced some more of these REVERSE FLASH CRASHES, first in overnight trade in Asia and then again later in the European session. Don’t expect any comments on this however from them–after all it is not good for sensationalizing their conspiracy views.”
    “One could make the case, purely out of sarcasm that nefarious forces are at work manipulating the gold price HIGHER so as to squezze the shorts out and paint the chart pricture in their favor. But we would not do that now would we? Note- to those who are humorless- this is meant as a tougue in cheek statement.”
    http://www.traderdannorcini.blogspot.com/2014/01/index-funds-buy-precious-metals.html

    • Yeah I also tend to side with with a momentum monkey’s view over a thought-out PhD’s summary, zeromam. lmfao

    • I take the PhDs’ opinions with a grain of salt - just as I take the opinions of others with a grain of salt – and come to my own conclusions.

    • “and come to my own conclusions.”  And they are………..?

    • Trader Dan, not a stacker. Therefore, he ignores manipulation, and only follows TA. I find that laughable on its face. And I see he is now banning people for disagreeing with his “analysis”. That is a sure sign of someone who can dish it out and can’t take it.
       
      Another guy I can cross off my reading list and ignore.

    • Trader Dan really has lost the plot. The evidence for manipulation is clear for anyone with an open mind to see. Why don’t you also quote Jeffery Christian while you’re at it?

    • BOP  - absoultely correct- trader dan is just that, a trader. Though dan has on occasion posted his sentiments that zman always takes out of context, dan’s concern has little to do with manipulation and all to do with making a profit off market swings, and why zman quotes a traders views on a stacker site leaves that speculation option wide open….. Didn’t know dan was now banning people for disagreeing with him. you sure on that? just another zman troll btw, pm prices are manipulated both ways. scammers can make a profit pushing market swings either side of point zero, dude! either you are to stupid to understand market movements or of course the obvious here, baiting the unsuspecting……

    • I think what Trader Dan is trying to illustrate is that the bullion banks can and do move a PM market up or down, is that price manipulation?  Maybe, anyone (hedge funds) that trades in a market can move the price for a brief period of time.
      The more important question, is what the BB’s do price suppression?  No.
      How in the world could the BB’s suppress the tiny physical silver market?   They can’t, the available amount of new investable silver is only $ 8 billion for the whole global economy, no one can control this part of the physical market.
      At the end of the day, who cares what the BB’s do in the paper trading (up or down) market?   Are there any shortages of gold at $1200 oz?  No. Are there any shortages at $18-20 oz silver?  No.  
      Price suppression of any commodity results in shortages in short order, gold and silver are no different. 

    • zman – your humor is endless, I luv it – there is acknowledged market manipulation in the libor fixed rates, a corrupt forex trading system, insider trading going on daily, the stock market ppt holding up a sick man, the sec & cftc turning a blind eye to everything, hft-algo free pass trading-a corrupt and degenerate congress that gets about an 8% approval rating, a potus that does not need clarification and a list here that goes on forever and you want us to believe there is an honest to goodness straight shooting fair and square pm market? LOL! Thanks for providing my daily dose of laughter here with your posts!  LMFAO

    • @BigTom, yes, I saw him ban a guy on a thread the other day. The guy was making points on manipulation and Dan didn’t like it, so he turfed him.
       
      zmans old, tired, worn out cliches, nonsense and propaganda are well know here. I think it is impossible for someone to consistently read AG, Doc, Eric, Ed, Pat Fields, RGR, and countless others that have demolished those arguments hundreds of times here, and yet still disagree 100% with all of those posts all of the time (see directly above for a great example of that). Anyone saying there are free markets in gold and silver and denying broad and concerted manipulation should be dismissed entirely, imo. The evidence is overwhelming to anyone with a shred of honesty, integrity and an open mind.

    • @BigTom
      How in the world does anyone compare LIBOR manipulation relative to the physical metals market?  You must be kidding, two different issues. Yes, they can manipulate interest rates, but nothing can control a physical market.
      Why don’t you ask the traders that are LONG gold and silver to take delivery of their long positions?   They don’t, whos fault is that?   That is not manipulation.  If you want to make a case that they manipulate who can take physical delivery, make that case.
      How do you think PM prices can go higher in the future?     Magic?   If you don’t believe in supply and demand, what will move the prices higher? 
      We are talking about a global physical market, there is nothing that can manipulate a physical market, if investors want physical possession, there is NOTHING that can stop it, thus the price will move higher.
       

    • BoP – interesting what you say about trader dan. I am not a trader but always liked dan, use to catch him on goldeagel.com a decade ago whenever he posted. but the other day his value in my eyes dropped a # of points. ‘Mark’ that comments there on the same verbage style as zman here but, so much more obnoxious than zman, took time out from ‘bitch slapping’ dans readers on being stupid pm believers with it’s the ‘equities now stuipd’ shots, but he took a few minutes out to post a some TA trading points, and dan actually thanked him. really surprised me. Thanking a guy that constantly ‘bitch slaps your readers! Seems to me a way to loose your readership! There are some really intelligent posts on there from a traders point of view that never get a thanx from dan and he takes time out to thank that turd!  Anyway, zman gets old, no logic at all, but he is civil in his discourse, even if he cannot understand, or is paid not to understand the facts……wish I could say ‘go chiefs(actually Alex) but the day/game is over…..! 

  4. hey doc,
    Wasn’t this article posted the other day (31st) then taken off?

  5. Since there is no chance anyone will ban HFT, then we’re right where we’ve always been.
    The scam continues until they fail to deliver, and (this is key) someone raises hell, in public about it.
    December 31st there was a disappearance of about 1000 gold longs that should have generated notices, but they just vanished.
    (paid off)

    • “The scam continues until they fail to deliver, and (this is key) someone raises hell, in public about it.”
       
       
      Since it must be incredibly obvious to all of the traders out there that the gold and silver markets are being manipulated, why would they “raise hell in public” about it then?  Why not now?  They know the score.  If they were going to raise hell, wouldn’t they already be doing that?  Something tells me that they will tuck tail, sheepishly agree to cash settlements, which is what almost all of them are there for anyway, and life would go on.
       

  6. Don’t know why it is needed to bring up old subjects, that go nowhere.

  7. Here’ s the “boss’” take on JPM (read that greedy cocksuckers).
    If this doesn’t make you run out and buy some silver (if you can find it) than I don’t know what will?
    http://goldsilverworlds.com/investing/2013-the-year-of-jpmorgan/

  8. @Marchas45:  I KNEW you would be reading this….what else can you do when its -50 below zero and 5 feet of snow at your door, right????
    God, its days like this I know why I live in Florida….hang in there you Big Stacker, you!!!!

  9. Lol it’s supposed to be sunny tomorrow and around 4% so things are looking good all around. Maybe I’ll see some of SilverHawk’s Orange Balls. Lol Keep Stacking

  10. The metals manipulation crimes will continue until We The People stop participating in the crime.  I know it is difficult to stop using fiat currency due to Legal Tender laws, but this is the only way out. We all must stop using fiat currency. Do not work for it. Do not depend on it at all. When enough people stop using it, it will become worthless. Then the Parasites that use fiat currency to steal the value of our labor can no longer.
    Yes, miners also must stop depending on banks for finance. The miners will stop depending on banks for finance when their fiat currency is valueless. We can make this happen by not using (giving value to) fiat currency.

    • I support the thought you have on this but, really, refusing to use fiat is just not possible.  Anyone doing that will be instantly out of a job and in this market, employers have many others to choose from who will accept and work for fiat, no problem.
       
      What IS possible, however, is to remove our assets from the banking system except for the bare minimum we need to have there to pay bills and no more than that.  Put all savings into PMs, land, and other real goods and store them outside the banking system.  This will accomplish all that we can accomplish and will also set us up nicely for any monetary or economic collapse that comes along.  Bank holiday?  Who cares, if 98% of our wealth is not anywhere near a bank?  :-)

  11. “Commitment of Traders (COT) data shows that the big banks always buy on these dips and they always sell on rallies. Always. (This is clear evidence of manipulation in and of itself.)”
     
    It is?  Isn’t this the same thing that any investor might do?  Buy low, sell high, and all that?  To me, manipulation means a lot more than timing our buys and sells.  It means that they use various techniques, some of dubious legality, that CAUSE the market to move in a direction that is favorable to them.
     
    “This technique has been around the HFT world for years and is otherwise known as “fill or kill”‚ trades. The volume for these contracts is impossible to fill, so the transaction never closes. However, the bid lasts long enough to trigger speculative funds (hedge funds) to respond (via their own algorithms) into automatic selling and down goes the price. In the aftermath, the big banks are ready and willing to buy. And they clean up, as it is revealed when the COT data is released a week later. The reverse happens on the way up.”
     
    Under these conditions, those doing the manipulating make a LOT of money while those not doing it lose a LOT of money.  One would think that unless these losing traders are really stupid, they would simply stop playing this rigged game.  Somehow, I have to think that they are not stupid because Wall Street is ALL about performance and those who do not perform get left by the side of the road pretty quickly in this dog-eat-dog business.  I would love to hear a rational explanation of why this continues.  Yes, those profiting from it will surely want it to continue but what about the rest of them who do not profit?
     

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