Vancouver
Thank you. Your insight into how everything is connected has saved me a fortune. I cannot tell you how many people showed up tonight simply to hear you. As the moderator said, you have the best track record of anyone. Your insight into the world is amazing. I understand what you said tonight as so many were talking about your speech walking out. It will be the markets that force political change. You have thousands of followers here in Vancouver. You should know that.
Thanks for everything you are doing.
R…S,,,
ANSWER: Thank you. It is nice to see the understanding of the world economy is growing. I believe to create political change that will preserve our liberty, it requires the public to grasp the world is all connected. If we can accomplish that, we have a chance at leaving our children and their’s a better life rather than a dismal one. I have been speaking in Vancouver for 30 years. It has always been one of my favorite spots in North America.
Flash Crash – It is What it is!
QUESTION: Good evening Mr. Armstrong,
When it comes to the precious metals I have found you to act as a much needed fulcrum between the “gold bugs” and the main straem media – thank you!
In your most recent bid you say, “All Crash events take place because of the LACK of BIDS. It does not matter what time of day, they just do.”
Your statement is of course correct but does it tell the whole story?
These paper silver sales are specifically targeting thin markets, where there is less participation and hence bids.
The “gold bugs” state that if hundreds of contracts are being sold all at once in thin markets then there can be no other objective then to drive the price lower. When I sell something, I try to get the best price possible.
Am I and or the “gold bugs” missing something?
Your thoughts would be greatly appreciated.
ANSWER: The validity of any Flash Crash is determined by the aftermath. You simply cannot manipulate any market defined as changing the trend. So any attempt to impact prices is a short-term manipulation is short-lived. Take the May 6, 2010 Flash Crash in the US share market also known as The Crash of 2:45. The US stock market crash came on Thursday May 6, 2010 in which the Dow Jones Industrial Average plunged about 1000 points (about 9%). Regardless if it was an error or a deliberate attempt to push the market down, it takes place because there is a lack of bid. However, if the move is false, the the market will rapidly recover those losses within minutes or a couple of days. In that case, it was the second largest point swing in history, 1,010.14 points, and the biggest one-day point decline, 998.5 points, on an intraday basis in Dow Jones Industrial Average history. It is the LACK OF BIDS in the market that allows that downdraft to take place. Everyone made excuses from sticky fingers to it wasn’t real. The market failed to generate any sustainable rally. It rebounded rapidly closing at 10520.32 that day, but the next day it closed lower 10380.43. The market then rallied ONLY for 3 days (3 day reaction rule) reaching the highest closing at 10896.91 failing to even close above the high of the day of the crash 10925.86. The 3 day reaction rule worked and the market fell to new lows bottoming at .9596.04 on July 1, 2010.
The market is NEVER wrong. It does not matter if it was thin or robust trading. All the excuses in the world are still excuses. It is what it is. The Dow elected a Daily Bearish 04/27 1 day after the high. The trend was headed lower.
During a Flash Crash, (1) there is a lack of bids underlying the market, and (2) typically what happens is market-makers withdraw out of UNCERTAINTY. The very day of the low in the 1987 Crash, I looked at the screen and saw a 240 call option was $300 in the S&P when it fell to 180. I picked up the phone and tried to buy. The market-makers withdrew. ONLY my experienced saved me. I would have said buy at the market. I hesitated and put in a limit order. The next trade was 3000. With no market makers I would have been filled on that limit offer.
It is what it is. Excuses are simply the way to say you were not wrong, it was fake. But the truth is always revealed by the price. It is what it is.
USA Why The Fed Risks are Nonsense
All we have heard is about the hyperinflation all based on the idea that the Fed has increased the money supply. I have warned that the dollar has become the new world currency. The German elections in September are not looking good. Let’s just step back a second and look at the issue without bias. The real risk of the Fed is perhaps a half-trillion loss that is less than 3% of GDP. We have the Bank of England buying nearly 100% at times of government new debt compared to 60% at the Fed. The Fed has simply a theoretical inflation risk. However, what is the risk at the ECB and Bundesbank? The risk there is the collapse of the Eurozone that ends in the split of the union. The whole issue of the ECB saying that depositors will have to bailout the banks is because they cannot reach agreement of who will pay for what. Germany is not about to pay for a bailout of Spanish banks. So the only solution is that the depositors of the troubled bank will have to suffer the loss. That is the “fair” way of doing this with of course those with more than a €100,000 euro will pay most of the cost.
In this case the Bundesbank, that sits on €700 billion of peripheral euro (debt) assets of member states. If these assets were shaved by 30%, the currency devaluation for such assets would be about 5% of the German GDP. Clearly, the risks of a catastrophic collapse exists in Europe on a major scale. No such risk exists at the Fed.
The Swiss government holds assets of €350 billion in foreign currency reserves. A 20% franc revaluation to EUR/CHF parity would give them a loss of €70 billion that would amount to 15% of Swiss GDP. The risk for the Swiss is trying to prevent the Swiss from rising against the Euro and that risk in the result of the peg. The Swiss are intentionally buying Euro to keep their currency down. The peg is a loss that could be devastating. They are trying to diversify in turn selling the Euro for other currencies including A$ and C$ along with the US$ of course..
The dollar is the only game in town. If the German elections turn bad, look out come September.