07
Jul
2017

Silver Prices Bounce Higher After 7% Fall In Minute

– Silver prices ‘flash crash’ before rebound
– Silver hammered 7% lower in less than minute in Asian trading
– Silver fell from $16 to $14.82, before recovering to $15.89
– Silver plunge blamed on another ‘trading error’
– Gold similar ‘flash crash’ last week and similar recovery
– Hallmarks of market manipulation as $450 million worth of silver futures sold in minute
– Trading ‘errors’ always push gold and silver lower. Why never higher?
– ‘Flash crashes’ increasingly frequent in precious metals, yet rarely happen in stocks and bonds
– Rapid recovery from frequent raids bodes well for precious metals
– Silver coins and bars accumulated on dips by ‘stackers’

Silver prices got a bit of a jolt this morning  when spot silver had yet another so called ‘flash crash’ and fell by between 7% and 10% before recovering and bouncing sharply higher to not far below where the attack on the price began.

In a repeat of what happened to gold last week, a bout of massive selling hammered silver prices lower momentarily. Having hit an early session high of $16.18/oz, the spot silver price fell from $16 to as $14.82 in less than a minute. The price recovered as quickly as it crashed, rebounding to $15.89/oz.

Source: Thomson Reuters via Business Insider

This isn’t the first so called ‘flash crash’ silver has seen in the last month. It fell in tandem with gold’s 1% ‘crash’ on June 26th, by 1.3%. Prices did not rebound as quickly, silver has declined by nearly 3.7% between then and July 6th.

Yesterday silver appeared to be on the road to recovery having climbed 0.5%.

Many analysts are calling the flash crash a ‘trading error’ or fat finger.’ However, this is somewhat lazy and ignores a few pertinent facts and context.

The aggressive selling had all the hallmarks of market manipulation as $450 million worth of silver futures were sold in a minute. An entity appears to have wanted silver lower and the massive sell order achieved that goal.

This could be due to a hedge fund or institution having a short position. By manipulating prices lower they can liquidate their short positions at much lower prices, making sizable profits.

The profit motive is a powerful one for hedge funds, banks etc and it would be naive in the extreme to discount this possibility. Especially, as regulators and the CFTC have been seen to be very “light touch” in recent years.

We think it notable and worthy of further inquiry as to why ‘fat finger’ trades never appear to be in favour of gold and silver prices and never result in gold and silver prices surging in value.

It is also worth noting that such fat finger trades rarely result in massive selling of stocks or bonds that result in sharp declines in a minute or two.

Finally, banks have been found to have been manipulating silver markets in recent years and this was proven in the evidence seen in the silver manipulation lawsuit.

Deutsche Bank agreed to settle a class action lawsuit filed in July 2014 accusing a consortium of banks of manipulating gold and silver. Among the charges that Deutsche Bank effectively refused to contest were:

  • bid-rigging, and unjust enrichment.
  • price fixing and unlawful restraint
  • price manipulation claims

Deutsche Bank agreed to pay $38 million to settle the U.S. litigation over allegations it illegally conspired with other banks to fix silver prices at the expense of investors.

Might other institutions and banks not have been doing the same thing overnight in the silver market?

Silver Fixing By Banks Proven In Traders Chats

Since 2003, we have believed and written about how the silver and gold markets are manipulated. Even then there was circumstantial evidence to suggest this was the case.

Since then, there has emerged much evidence that bullion banks were coordinating the manipulation of gold and silver and suppressing prices as alleged by the Gold Anti Trust Action Commitee (GATA).

Physical silver buyers are again taking advantage of this latest artificial price decline and are continuing to accumulate silver coins and bars. Gold and particularly silver stackers accumulate physical silver on an ongoing basis and many use these price declines to acquire silver for the long term at short term discounted prices.

Related Updates

Gold market ‘flash crash’ explanations vary from ‘fat finger’ to ‘price manipulation‘ (January, 2014, Dow Jones Marketwatch)

Latest Gold ‘Flash Crash’ Leads To Questions Regarding Manipulation

Manipulative Gold ‘Fat Finger’ Or Algo Trade Worth 1.24 Billion USD

Goldman, Citi Turn Positive On Gold – Despite “Mysterious” Flash Crash

News and Commentary

Silver swoons and snaps back again in latest flash crash (TheAustralian.com)

Gold prices dip ahead of U.S. non-farm payrolls data (Reuters.com)

Asia hit by Wall St. stumble, debt yields spike after ECB minutes (Reuters.com)

Bond Rout Deepens as Asia Stocks Join Global Drop (Bloomberg.com)

Trader bets nearly $1.5 million on major gold rally in the second half (CNBC.com)

Silver Flash-Crashes As Japan Opens (ZeroHedge.com)

Silver just had a flash crash (BusinessInsider.com)

Gold may supplant “outdated global financial architecture” (Gold.org)

Real cryptocurrency money is here in Asia (StansBerryChurcHouse.com)

We’re all ten years older and deeper in debt (MoneyWeek.com)

Gold Prices (LBMA AM)

07 Jul: USD 1,220.40, GBP 944.47 & EUR 1,068.95 per ounce
06 Jul: USD 1,224.30, GBP 946.14 & EUR 1,077.51 per ounce
05 Jul: USD 1,221.90, GBP 945.87 & EUR 1,078.45 per ounce
04 Jul: USD 1,224.25, GBP 947.32 & EUR 1,078.81 per ounce
03 Jul: USD 1,235.20, GBP 952.09 & EUR 1,085.00 per ounce
30 Jun: USD 1,243.25, GBP 957.43 & EUR 1,090.83 per ounce
29 Jun: USD 1,246.60, GBP 959.88 & EUR 1,093.14 per ounce

Silver Prices (LBMA)

07 Jul: USD 15.84, GBP 12.29 & EUR 13.88 per ounce
06 Jul: USD 16.01, GBP 12.36 & EUR 14.09 per ounce
05 Jul: USD 15.95, GBP 12.36 & EUR 14.09 per ounce
04 Jul: USD 16.15, GBP 12.48 & EUR 14.23 per ounce
03 Jul: USD 16.48, GBP 12.72 & EUR 14.49 per ounce
30 Jun: USD 16.47, GBP 12.69 & EUR 14.44 per ounce
29 Jun: USD 16.83, GBP 12.98 & EUR 14.76 per ounce


Recent Market Updates

– Precious Metals Are “Best Defence” Against Bail-ins In Economic Crisis
– Buy Gold Near $1,200 “As Insurance” – UBS Wealth
– UK House Prices ‘On Brink’ Of Massive 40% Collapse
– Gold Up 8% In First Half 2017; Builds On 8.5% Gain In 2016
– Pensions Timebomb In America – “National Crisis” Cometh
– London Property Bubble Bursting? UK In Unchartered Territory On Brexit and Election Mess
– Shrinkflation – Real Inflation Much Higher Than Reported
– Goldman, Citi Turn Positive On Gold – Despite “Mysterious” Flash Crash
– Worst Crash In Our Lifetime Coming – Jim Rogers
– Go for Gold – Win a beautiful Gold Sovereign coin
– Only Gold Lasts Forever
– Your Future Wealth Depends on what You Decide to Keep and Invest in Now
– Inflation is no longer in stealth mode

 

Important Guides

For your perusal, below are our most popular guides in 2017:

Essential Guide To Storing Gold In Switzerland

Essential Guide To Storing Gold In Singapore

Essential Guide to Tax Free Gold Sovereigns (UK)

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Mark O'Byrne
Executive Director