We have been seeing increased volatility in Precious metals lately. Whilst these moves have been seen many times before the frequency seems to have increased and in AUD the magnitude seems to be to a greater range than typical. Usually we don't see 2 standard deviation moves occur so close. Anyway... all this is happening whilst there is increasing turmoil. Short term chart looks like a cliff. EDIT:
One take on it: "All it takes is one signal, When vol spikes you have a system that is built to be unstable in a crisis."
Nice post SP. Still I don't believe for a second in "free markets", banks have been caught rigging pretty much every other market on the planet. Algo's are the new culprits but over time we have seen increased trading not decreasing generally. Also they tend to smash markets when they are the least liquid so that they set a new trading range. Commercials and hedge funds are small fish compared to the size and strength of central banks. Big banks control the market. What I can't understand is the whipsaw. My best guess is that they wish to frighten buyers in waiting for lower prices and flush weak hands. What better way to freak people out of position then to whipsaw violently, you get to flush out more hands.
Watched this go down this afternoon, the spot in USD terms really took a hammering, it's down 40c and I think some large buy orders kicked in at $14.65 or so as the bottom did not last long at all. The Aussie has also dived, which has taken the edge off the price drop here (forcing the price upwards) but it' still dropped nicely in AUD terms. We are coming to the end of the month, be interesting what moves happen in the next 24 hours as they are likely to continue for the rest of the week.
What if everyone is frightened and confused and getting jittery, chasing the last scraps of a doomed market? Algos will then magnify those jitters into extreme volatility. There's been an arms race with algo technologies chasing diminishing returns, getting faster and faster and faster. And all that debt and cheap money that has been flooding world economies over the the last several years at levels far beyond anything in modern history.... One mistimed spark and it will be an inferno.
I agree mostly. NYMEX is largely where the action takes place, it is very irregular for this to be occurring at this time of day. Friday moves NYMEX usually gives us a direction and indication for price moves however it's becoming increasingly volatile and far less ordered. Still bear market is in place. So it's too early to tell as there's been no major paper price support established yet.
Problem is the money still exists, none of it evaporates. But the underlying asset used to generate the fiat initially by whichever borrow comes into question, the winner still holds the cash though.
You probably wont understand whipsaws until you stop trying to use sinister theories as an explanation. They are part of normal trading dynamics, and have been around for decades, as have all the other market characteristics that now get blamed on algos or hedge funds. If there is now increased trading due to increased participation and more fast "algos", then logic says that should stabilise price, not make it more volatile, as they are all competing for the same spread, and competing against each other. If you suspect they are all collaborating to swing price, then you are dreaming. It is a race for the spread by bots... not a gentlemanly game of "your turn to go first".
Yeah you'd think it'd stablise markets but there's no real evidence for that argument. So no dreams for you on that score. Also as far as collaboration goes... you must be joking and living in a delusion. Of course I am saying the probability of collaborate is a near certainty or are precious metals the only free market? Haha, I love how you defend it, truly I do. Happy to take this one the distance too... take a shot at it by all means.
Flash crash. It all works well until it doesn't. Maybe algos and HFT get a bad rap, but even the most sober accounts of the 2010 flash crash point to the fact that they play a contributory role:
Nah, don't need to take a shot, I gave my reasons and logic. Your response says it all: "...no real evidence for that argument" "...you must be joking and living in a delusion." Translation: "I don't really know, but I believe.... with near cetaintly" Same old vague lines the permabulls use.
Exactly my point. HFT's did not cause it. "A large enough sell order can lead to a liquidity-based crash accompanied by high trading volume and large price volatility... - exactly. This has always been the case, even before HFT's. It is Market Dynamics 101.
Smart move. But pointing to colorful quotes in a rather poor attempt to discredit is funny. Markets are more likely rigged just like every other market they've been found guilty in and allowed to continue. Arranging the deck chair and taking turns is part of the same game. It's an open secret when the rabbit wants something to be know in the market. But if you want to continue to play the apologist, by all means just don't expect not to have opposition.
True... once price started running. But any participant "contributes" once price breaks and is running. As far as normal volatility in normal trading ranges are concerned, they have a stabilising effect.
As I said, it all works well until it doesn't. When everything is normal, everything is fine. Then, when things are perturbed, the amplification effect kicks in.
Yeah... OK? But, while ever you use non-committal assumptions, hypothetical clichs, and baseless beliefs, you are discrediting yourself, and there is nothing rational to discuss. Guess we will leave it there?
