Art Cashin on the ‘strange happenings’ in the paper gold market

Thinks there should be some further investigation

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?

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 which panicked 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.

'Liquidation binge' briefly halts gold trading Friday

FLASHBACK: One short seller’s ‘shock & awe’ crushed gold with a 400 tonne trade