Tudor Gold Corp V.TUD

RE:NY Comex

[stockzorg]

StockAudit wrote: causes price of GOLD to drop precipitously as soon as trading starts.

Nothing has changed....Total Manipulation!!!

Quite correct StockAudit.  This is one of the oldest games in trading, and here's how it works:

- Someone wants the price of gold to decrease so they don't lose money on their short positions.
- Before the COMEX opens, they sell gold futures.
- This causes the price of the gold futures to decline below the price of gold - a mismatch
- Computer algorithms worldwide pick up the mismatch.  They know eventually the prices of gold and gold futures must come back into balance.
- The algorithms initiate trades on the COMEX at the open - they sell gold (which is now more expensive than the futures) and buy the futures (which is now cheaper than the underlying gold).  This scam has worked reliably for so long, the algorithms operate entirely on their own.  No human intervention is required.
- The price of gold declines at the open on the COMEX (or other exchanges as well).

Now, there is an issue here.  The folks who initially sold the futures (on this particular day) lost money on that trade (to the benefit of everyone who shorted gold).  They must be compensated for that loss, but the compensation must be "out of band" and not directly related to gold or gold futures trading.

There are some theories as to who provides this compensation and how it occurs.  The one I consider most likely is that the U. S. Treasury and regulators allow traders to front-run their customers on all trades using high frequency trading systems, dark pools, etc.  The profits made come with strings attached.  One of those strings is to keep the price of gold (and some other things) controlled to certain specifications. In return, the regulators stay away from reviews of the HFT systems and and dark pools - not that they have the skills and tools to actually audit those systems anyway.

[Another theory is that traders collude to take turns in executing the futures trades and balance the losses among the participants in the scam. On the whole, the money made by manipulating the market is far greater than the losses taken on the futures trades, and those losses simply become one of the costs of doing business.  This theory has fairly wide acceptance, but is also by far the most risky since it involves more collusion directly related to the trades

Still another theory is that the money comes from the Fed, by paying the participants above market interest rates on overnight money every day of the year.  As with the first theory above the same strings are attached with respect to the use of these gifts for price manipulation.  In this theory, one aspect of the recent large increases in the amount of overnight money being placed with the Fed is that perhaps a great deal more money might be needed in recent times to keep prices manipulated.  As a result the Fed must find a way to increase the above market interest payments.  One way to accomplish this is for the participants to place more funds overnight with the Fed.  

The theories are in some ways conjecture since we have no visibility.  But I wouldn't mind hearing about other similar theories if you have them.  GLTA.