Market Watch

Gold Players on the Move

Well folks, looks like the major commodity players are on the move today. It’s one thing to show someone your hand and then quite another to slam it face up on the table and dare you to draw. It could not be more evident than some of the transactions which defined today’s major moves. Lets start overseas shall we….

Per CNBC:

“China launched a currency swap deal with the euro zone on Thursday, in the country’s latest push to transform the yuan into a major world currency. The foreign exchange (FX) swap — an agreement to exchange one currency for another at a set rate at a certain time in the future — will have a maximum size of 350 billion yuan ($57.2 billion) and 45 billion euros ($60.9 billion) and will be valid for three years. From the perspective of the euro system, the swap arrangement is intended to serve as a backstop liquidity facility and to reassure euro area banks of the continuous provision of Chinese yuan,” said the European Central Bank in a news release.”

“It’s a significant sign that the renminbi (yuan) is becoming more important, moving towards more credibility. Its significance has been bolstered from its recognition of its international use. We will see more of this,” Juckes told CNBC.

The People’s Bank of China’s efforts to internationalize the yuan appear to be working. Last month, the Chinese yuan was ranked one of the world’s top ten most frequently traded currencies for the first time ever, in a Bank of International Settlements survey. The currency ranked ninth in the top-ten list, eight places higher than when the survey was last conducted three years ago.”

Once the European Union becomes dependent on the Chinese to stay solvent the Chinese will have all the leverage they need to move forward into a role as a major player. The accumulation of Gold of the past few years should time nicely toward a backstop currency. However, China isn’t the only one on the move. Bloomberg Reports HERE

“OAO Moscow Exchange will introduce trading of gold and silver as early as this month as part of plans to make metals more accessible to smaller banks by reducing transaction costs.

The exchange will quote gold and silver in Russian rubles per gram, with minimum trades starting at 10 grams of gold and 100 grams of silver, the bourse’s Deputy Chief Executive Officer Andrey Shemetov said in an e-mailed response to questions yesterday. Platinum and palladium contracts will start trading in the first half of 2014, he said. Russia is the world’s largest developing-nation producer of gold after China.

The exchange will quote prices and enable traders to settle contracts via delivery to and from unallocated metals accounts at its National Clearing Center. Banks can deposit or withdraw precious metals in the form of physical bullion bars, and delivery and collection will occur at a nominated Moscow vault, the bourse said. The contracts are also likely to appeal to brokers, producers, jewelers and private investors in the long run, it said.”

So, what are we doing about that here in the U.S. ? If you said nothing you would be wrong. Lets take a look at the exchanges today per CNBC/Hedge…

“Gold lost $25 in two minutes on Friday morning, as the gold market experience a massive surge in volume that triggered a halt in the middle of the plunge. The move took gold down to a three-month low, and was felt across the commodity markets. And incredibly, a single sell order could be the culprit.

“It appears to have been an order to sell 5,000 gold futures contracts at market,” Eric Hunsader of Nanex told CNBC.com, when asked to explain the swift move at 8:42 a.m. EDT. “About 2,700 went off and tripped the stop logic, halting gold futures for 10 seconds while liquidity replenished. When enough liquidity returned (after 10 seconds), the balance of about 2,300 completed.”

The order was so big, then, that gold was automatically halted in the middle of the order being filled. The CME Group confirmed the halt. “We had what we call a stop logic event, which is a momentary pause in trading.”

Hedge Explains: “Moments ago it just happened again. As part of the already noted massive gold slamdown just before 9 am Eastern, when “someone” sold an epic 2 million ounces of gold in one trade, the CME just went dark for 10 seconds, blaming it on an appropriately named “stop logic” event. When triggered Stop orders attempt to move the market to an executing price beyond a pre-established value, a Stop Logic event occurs. Stop Logic detects these situations and responds by placing the identified market in a Reserved state for a predetermined period of time, usually 5 to 10 seconds, depending on the instrument.

Of course, the liquidity we re-enter at a time when the prevailing price has been reset substantially lower on what is basically a “banging the open” type of event, or in this case market open, when one or more traders attempt to generate the well-known “momentum ignition” event so known to HFT algo manipulators everywhere.

*Smack*  Well, we can see the cards. Do we have the courage to Draw?