“one or two market participants wanted the price lower…”
With every price smash, no matter the time of day or night, the desperation of the cartel is laid bare for all to see.
Gold futures worth almost $2 billion, some 15,000 contracts, were dumped on the market in less than two minutes yesterday.
The sharp decline was not warranted and suggests one or two market participants wanted the price lower.
Such sell offs have been seen frequently in recent months and tend to be short lived. Smart money will again accumulate gold on the dip.
We went over a few scenarios of the mechanics of market manipulation in our BOHICA post yesterday.
As stackers keep on stackin’, and as the manipulation gets called out every time, together, these two things make the manipulation less and less effective every time.
Sure enough, slowly but surely, this dip is being bought by smart money who recognize the manipulation for what it is. An in silver, sub-$17 silver is a gift:
To recap what we said yesterday about the mechanics of the smash:
Nobody in their right mind would come in and all of the sudden have to sell 12,128 contracts damned the price. That’s over $1.5 billion in gold sold in one single minute.
Sure, this is not to say every contract sold that minute was from one person. What it means is that a huge order comes in. It hits everybody’s bid and then some. This causes traders who are long (betting the price will rise) to sell out of their positions because they are losing money.
For example: Person buys gold this morning at $1293. They set up a “stop loss” at $1280. This means they are willing to lose $13 on the trade and sell automatically to get out of it so they don’t lose any more.
A HUGE order comes in at 11:37a.m. EST (which is just what happened).
The order blows though $1280 to the downside so the trader is sold out of his position.
Now multiply this by 100s and 100s of traders that are in the market setting stop losses to not lose that much money.
When the banks flood the sell orders, the longs losing money are forced to sell out of their positions. Others legitimately trying to sell must sell at a lower price because there is a massive order dropping that price. The banks, on the other hand, just sold all that gold. They didn’t have any gold. They “sold it short”, meaning they sold it first and have to buy it back later.
If they buy it back later at a lower price, they make money. They sold it for $1293 and bought it from our trader above at $1280. The bank made $13. Our trader lost $13, and since the trader does not have unlimited money, but because the banks can sell unlimited paper gold to push down the price, the bank wins.