UBS’ Art Cashin on the ‘Strange Happenings’ in the Paper Gold Market
By Frik Els
Shortly after the opening of trade on the Comex market in New York on Friday the gold price plunged more than $30 an ounce to an almost three-month low of $1,259.60 an ounce.
Chicago’s CME Group, which operates Comex, said at around 8:42am Eastern time a 10-second stoppage occurred after a volatility safety mechanism was triggered, apparently after a 2m ounce order was executed.
The exchange said the market functioned as intended and that all trades will stand.
Veteran trader and Wall Street legend, Art Cashin, who is also director of floor operations at UBS spoke to King World News about the “strange happenings in gold”:
Well, it (gold) is under some pressure. And while I am far from being a conspiracy theorist, I could see where some of the people involved in that asset class would be concerned because we’ve had several incidences of very large sales.
And they all seem to come at approximately the same time in the relatively early morning in New York, usually before the stock market has opened. The question there is, why would you suddenly dump a large amount of gold? Why wouldn’t you try to piecemeal it out over the (course of the) day?
When it happens 5 times over a period of months, it does raise questions
So, if that happens once it could be an accident of technology, or it could be a simple error. But when it happens 5 times over a period of months, it does raise questions. Is it being done purposefully? Is somebody trying to send a message? Is somebody trying to influence the market?
We don’t have enough details, but as I say, as a guy who doesn’t ordinarily believe in conspiracy theories, I think there should be some further investigation as to who is selling, and why always at that time?”
Friday’s violent swing pales in comparison to gold’s $200 an ounce drop over the space of two trading sessions in April.
According to some traders that decline was triggered by a short seller pushing through two trades – one of 3.4m ounces and then a 10m ounce sell order – within a 30 minute period whichpanicked the market and set up a sustained period of selling of the metal.
The paper market for gold has grown exponentially in recent year with daily trading volumes now reaching $240 billion a day, much more than the S&P 500 and Dow Jones stock markets combined.
Midas Letter is provided as a source of information only, and is in no way to be construed as investment advice. James West, the author and publisher of the Midas Letter, is not authorized to provide investor advice, and provides this information only to readers who are interested in knowing what he is investing in and how he reaches such decisions.
Investing in emerging public companies involves a high degree of risk and investors in such companies could lose all their money. Always consult a duly accredited investment professional in your jurisdiction prior to making any investment decision.
Midas Letter occasionally accepts fees for advertising and sponsorship from public companies featured on this site. James West and/or Midas Letter may also receive compensation from companies affiliated with companies featured on this site. James West and/or Midas Letter also invests in companies on this site and so readers should view all information on this site as biased.