Fat Finger or Something Else?

Headlines like these make you wonder – “Gold Plunges After 1.8 Million Ounces Were Traded in One Minute,” (https://www.bloomberg.com/news/articles/2017-06-26/gold-plunges-as-1-8-million-ounces-traded-in-a-new-york-minute)  particularly when nobody seems to know what caused it.  “Fat Finger” or something more nefarious?  Naturally it could have been an error, but could it be something/someone BIGGER than a “Fat Finger” trying to spook the market?

Nothing new there.  There have been many other occasions.

Does someone recall the July 20, 2015 headline “Gold prices plunge to five-year low” “…By 9.15 am ET, the metal was down about 2% at $1,110, having dived below $1,100 — a level not seen since 2010…  Gold bugs have been scared off recently by expectations that the Federal Reserve will hike interest rates for the first time in nearly a decade…” (http://money.cnn.com/2015/07/20/investing/gold-price-slump/index.html)

Or the October 4, 2015 headline “Gold Plunges Most Since 2013” – “…Gold prices notched their biggest decline in nearly three years, as a stronger dollar and signals that the Federal Reserve might be closer to raising interest rates this year drove investors out of the precious metal.  

Gold for October delivery closed down 3.3% at $1,266.30 a troy ounce, the metal’s biggest loss since Dec. 19, 2013…” (http://www.foxbusiness.com/markets/2016/10/04/gold-plunges-most-since-2013.html)

Well as Stefan Wieler of Goldmoney said on January 26, 2016 “This is not 2008 – at least not for gold” “…With markets in a sharp correction to start 2016, market commentators nevertheless still hold a downside bias for gold. The rationale for this downside has shifted however, from a fear of FED normalization to a fear that deflation and associated asset-capitulation would take gold lower in a “dollar short squeeze”, reminiscent of gold’s sell off in 2008. With a well-grounded framework for analyzing the gold price, we fear neither rationale; we still view a significant fall from today’s level an unlikely outcome, or temporary at best. In fact, as many other asset classes are mired in wide valuation outlooks at either extreme (a binary outcome: normalization or capitulation), the three core drivers of the gold price remain firmly in gold’s favor…?” (https://www.goldmoney.com/research/goldmoney-insights/this-is-not-2008-at-least-not-for-gold)

To keep it in perspective, where we were then and are now:

Gold Prices – 10 Year Daily Chart – June 26, 2017
Courtesy of www.macrotrend.net

Food for Thought or Not (or Ramblings from an Innocent Bystander)