The Bots are Back!
Posted by Investment Rarities on June 25th 2011 in CFTC, China, Federal Reserve, General Economy, Gold, JPMorgan, Monetary Policy, Quants, Short Sellers, Silver, Ted Butler, U.S. Congress, Wall Street | Be the first to comment!
Following Ted Butler’s recent excoriation of ‘trading bots’ for their role in May’s silver sell-off, Avery Goodman describes how, from Thursday until Friday morning, there was “a sudden flood of what appeared to be ‘trading bots’ vigorously creating paper positions in the precious metals futures market.… so many new fantasy short positions were opened that it overwhelmed the demand. These new short positions are backed by nothing but electrons, but are treated as a genuine supply of gold, silver or platinum and the price of all the metals went down as a result of the flooding.”
Goodman explains how a confluence of events is driving the activity, including a potential shortage of physical silver, over-leveraged speculators and the end of QE2, and concludes that while “The day to day action is going to be very dependent upon capricious decisions made by hedge funds and big banks. Good opportunities to establish positions in silver and platinum and to some extent, in gold, are now arising, as the prices decline.”
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