Hedge Fund That Blew Up The Gold Market

[midwesterner (banned)]

Hedge Fund That Blew Up The Gold Market

Small Gold Trader Makes Big Splash

A huge trade by a tiny hedge fund has sent shudders through the gold market.

Thanks to the nature of futures trading, Daniel Shak's $10 million hedge fund held gold contracts valued at more than $850 million, more than 10% of the main U.S. futures market, and the equivalent of South Africa's annual gold production.

But as gold prices started falling this year, the trade, which was a combination of being long and short gold contracts—bets that prices will both rise and fall—started going bad. Monday, he liquidated his position, and is returning money to clients.

online.wsj.com/article/SB10001424052748703399204576108463818702014.html

Over the past several weeks there had been rumors that the reason for the precipitous drop in gold was primarily driven by a hedge fund liquidating its futures positions. This has now been confirmed: "Yeah, that was just me liquidating my spread position," Mr. Daniel Shak, [of SHK Asset Management] 51 years old, said in an interview. "I had a significant, fully margined position. The dollar amount of the gold liquidation was very small, it was just a lot of contracts." Of course in the extremely jittery gold market, the kind of persistent marginal gross selling of contracts was all that was needed to spook weak hands into a consistent of the precious metal, which as we pointed out was beyond overdone. Judging by this morning's jump in the PM complex, SHK's liquidation is now not only over but about to promptly reverse as daytrading momos realize they were duped by one single guy. Look for gold to resume its upward advance as investors realize that the gold was nothing more than an ongoing futures position liquidation.

We wonder how authors Carloyn Cui and Greg Zuckerman would feel if they knew just how big JPM's positions are. On the other hand, there is nothing to worry about: after all the corrupt muppets at the CFTC have just made sure that Jamie Dimon's criminal syndicate will be allowed to toy with the gold market at will in perpetuity.

Bottom line, M2 just surged by the highest amount ever, Bernake will never stop monetizing, and fiat is contiuing the race to the bottom. Most importantly for those with a trigger finger response time, the liquidation is now over. Keep a close eye out on the price of gold.

Note below what happens when a key selling catalyst is removed... or at least made apparent.

www.zerohedge.com/article/meet-man-behind-liquidating-hedge-fund-blew-gold-market