Ongoing Flash Crash Speculation

By: Lynn Fisher. In August of 2013, Nasdaq-listed securities fell offline for just over three hours. On October 15, 2014 the 10 year Treasury Note experienced an extreme flash crash. Then on July 9, 2015 there was the Nasdaq’s “Flash Freeze”. And in the final week of June, gold dumped 1.8 million ounces at 4 a.m., driving the metal below its 200-day moving average. Flash crashes continue, year after year, and there is ongoing flash crash speculation.

Now add the recent silver flash crash of almost 11% in the overnight market on July 6th US that moved silver from $16.06 USD down to a bottom of $14.34 USD within a 1 minute interval, a market move that has all of the world speculating on the actual cause. It is purported to be one of many things, a broker liquidating a massive client position, a genuine algorithm glitch, the Bank of Japan liquidating six thousand contracts, or an overt manipulation to take gold lower via silver (if so, it worked.) However, the bulk of speculation via the mainstream media pointed to electronic, or algorithmic trading as the cause of the “Flash Crash”. Hmmm.

Ironically, the CME has chosen to stay completely silent on the issue, other than stating that their “Velocity Logic” safeguard that paused the market for 10 seconds “worked as designed, allowing liquidity to come back in to the market.” Nothing like manipulation, as the September and December silver futures were adjusted, in addition to a multitude of mini-futures. As if flash crashes are completely normal events and to be expected in market performance – they are not.

In our humble opinion, the overt manipulation is clear. Add up the key factors to determine means and motive. Note that the trades were executed after the US market closed and upon the Tokyo open. This was done specifically so that the orders did not have to be filled with physical COMEX silver. No physical metal inventory moved, it was a complicit paper move, executed with extreme precision. That was the means, now what about the motive? The government is desperate to drive investors out of physical gold and silver and in to fiat currency, plain and simple. By instilling fear via perceived volatility, they hope to decrease investment in the real money of precious metals and increase the purchase of national currencies.

Keep in mind, if you are of the manipulation mindset, be encouraged that the bullion banks would not be cycling out of massive numbers of short positions if they thought the price was going to go down significantly. One can then rest on the rationale that prices are about to go up.

Here is what we DO know for sure. Market manipulations always fail… eventually. The paper markets continue to separate from the physical metals. The backwardation that exists in the metals market has only been furthered by these flash crashes. And remember that patience is a virtue that is rewarded in the physical metals market.

I’ll take this opportunity to add silver (still the buy based on the current gold:silver ratio) to my holdings.

Finally, stop reading the ongoing flash crash speculation and gain further education on the physical precious metals market manipulation from our friend and colleague Chris Powell via the GATA.org site.