On May 6th, 2010 – three years ago, today – the Dow “flash crashed” by 1,000 points; much of it occurring in less than 30 minutes – before recovering to lose just 345 points…
While not close to the percentage losses of the 1987 crash; it, too was blamed on advanced COMPUTER programs that simultaneously “kicked in”; DESTROYING all semblance of market liquidity…
In 1987, such programs – euphemistically termed “portfolio insurance” – were not utilized to MANIPULATE markets; but instead, to PROTECT portfolios from falling prices. In other words, the major mutual funds held similarly derived “stop loss” contingencies; so when they were all “turned on” simultaneously, the market became a selling VACCUUM.
Conversely, 2010’s crash was precipitated by MANIPULATIVE HFT algorithms; simultaneously seeking the same trading “catalysts.” And like 1987, they all “kicked in” at the same time, yielding MASSIVE losses for the suckers involved…
Stock Market Crash 5/6/10 (Live Panic!) Incredible!!
I have written exhaustively of the dangers of HFT trading, which currently constitutes 75% of ALL NYSE activity – particularly as Goldman Sachs has a 20% market share. And remember, the (then) largest HFT trader – Knight Trading – nearly bankrupted itself with them last year…
…while numerous ETFs have DESTROYED investors in like manner…
…as recently as last week…
Artistic Algo paints Smiley Face while Crashing Stock from $10 to $0 in Milliseconds
As relates to PMs; I not only write daily of the destruction wrought by PAPER PM naked shorting, but of how you WILL lose money owning mining shares…
“D-DAY”
…and as of late, closed-end bullion funds…
“PM BULLION CLOSED-END FUNDS – HELPING OR HARMING?”
However, NOTHING depicts how BROKEN U.S. markets have become better than what occurred last week, when a “hacked Twitter account” of the Associated Press news service caused a three-minute market PANIC…
Hacked AP Twitter Account reports of Two Explosions at White House, Obama Injured
In which “more than 260,000 front-month e-Mini contracts traded between 1:09 and 1:12 PM EST, and more than 180,000 front-month 10-Year U.S. Treasury contracts”; creating the same selling VACUUM that as in October 1987 and May 2010…
From a Twitter Hack to the Complete Evaporation of all Market Liquidity in One Chart
Throw in the carnage wrought a week prior in the PAPER PM pits; when HFT computers were allowed to NAKED SHORT tens of billions of gold and silver “contracts”; and you can see why I have long SHOUTED that “PHYSICAL=LIFE, but PAPER = DEATH”…
Hopefully, last week’s “WHITE HOUSE TWITTER CRASH” will serve as the straw that broke the camel’s back for anyone naive enough to believe “markets” are anything but banker-operated slot machines hungry for your life’s savings. If not, I don’t know what else will.
PROTECT YOURSELF, and do it NOW!
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