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Quiet Guy

Big Sellers Move The Market

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http://www.telegraph.co.uk/finance/commodities/11752016/Speculators-smash-gold-as-dollar-squeeze-tightens.html

Powerful speculators have launched an unprecedented attack on the world gold market, driving prices to a five-year low as commodities wilt and the US Federal Reserve prepares to tighten monetary policy.

Spot prices slumped by more than 4pc to $1,086 an ounce in overnight trading after anonymous funds sold 57 tonnes of gold in Shanghai and New York, choosing the moment of minimum market liquidity in what appears to have been a synchronized strike intended to smash confidence.

No fun at all for some. I suspect this won't be the last such incident.

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Ross Norman, a veteran gold analyst at brokers Sharps Pixley, said sellers dumped 7,600 contracts covering 24 tonnes on the Globex exchange in New York in a two-minute span after it opened late on Sunday night.

A further 33 tonnes were sold at almost exactly the same time in Shanghai. The combined hit of 57 tonnes in such a short period is an extraordinary event in the world’s relatively small gold market.

But somebody just bought 57 tonnes of GOLD!

It looks like somebody needed some cash in a hurry, probably to cover their a$$.

Edited by XswampyX

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I don't really know anything about gold markets, but I guess what is happening is that the investment banks create paper gold out of nothing (basically an iou based on the future price of gold), then they sell it, and invest the money in something that increases in value faster than gold, then pocket the difference. If the price of gold increases faster than their investments, all they have to do is to create even more paper gold (from nothing) and dump it on the gold markets to reduce the price, which is what happened here.

I guess eventually the paper gold investors will realise that they can't win, and the price of paper gold will fall to zero, and the investment banks keep all the money.

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