tag:blogger.com,1999:blog-4927433125525937227.post6447429510644483147..comments2023-10-15T07:07:16.862-07:00Comments on Gold ETF Investor: Very odd price crashes for gold stocks on Friday on London Stock ExchangeUnknownnoreply@blogger.comBlogger4125tag:blogger.com,1999:blog-4927433125525937227.post-78371807482871179892012-06-04T02:48:42.657-07:002012-06-04T02:48:42.657-07:00I'm not sure my sense of reality was strong ye...I'm not sure my sense of reality was strong yesterday! Jubilee, rain and watching Prometheus (not a good film) may have inspired some paranoid conspiracy thinking....Blood and Propertyhttps://www.blogger.com/profile/11938733379301047398noreply@blogger.comtag:blogger.com,1999:blog-4927433125525937227.post-37684525273599889442012-06-03T15:08:52.746-07:002012-06-03T15:08:52.746-07:00I agree that there's probably nothing in this....I agree that there's probably nothing in this. It just seems that if someone wanted to manipulate prices to achieve some effect in another market - ie an OTC product or a fund that is priced off the London Stock Exchange - then couldn't this 'quirk' be an opportunity to do so? And if people bother manipulating global commodities markets (I think Bart Chilton said that this was probably going on with the likely aim of affecting products in other markets) then why not on a less grand scale? Although these deals happen often does that mean they are normal and are done with no motive beyond those of unsophisticated people like me? <br /><br />I'm not saying this has happened and yes, in this case the deals look pretty large (to me), one of about £500,000, one of £150,000 and one of £60,000. But the price moves have happened to all the precious metals miners I looked at and I see that this can happen at any time of the day (one 'negotiated' trade at 15.42 for RRS had the same effect but, like you said, it was a moment that passed).<br /><br />In ETFs those moments also happen in the middle of trading and they don't always pass so fast - (http://goldetfinvestor.blogspot.co.uk/2012/03/18-error-in-etf-securities-physical.html looking at PHGP there were two trades at a much lower price and they weren't huge deals.)<br /><br />These price movements are (and probably should be) dismissed but if it suited someone to do it on purpose who would bother finding out? No doubt I should be focusing on other things! And considering I own more gold stocks than I ever intended to (via BlackRock which you probably don't approve of ) I should be happy.Blood and Propertyhttps://www.blogger.com/profile/11938733379301047398noreply@blogger.comtag:blogger.com,1999:blog-4927433125525937227.post-78862228878125460492012-06-03T11:40:42.914-07:002012-06-03T11:40:42.914-07:00And if that explanation doesn't make you feel ...And if that explanation doesn't make you feel more relaxed, then take a closer look at Randgold. This is a great example, as it is floated on both the LSE (as RRS) and the NASDAQ (as GOLD). Check out the Google Finance pages for both.<br /><br />London closed <i>after</i> the NASDAQ opened. Did the dramatic plunge in RRS after hours in London have the slightest effect on GOLD on the NASDAQ? Quite the contrary... Randgold went on to rise 10%.<br /><br />Randgold's a great stock to trade because of this. The closing price of GOLD in the US on Friday(on the NASDAQ) is +10%. But RRS had not risen by 10% in the UK (on the LSE) on the same day. Imagine there were no bank holiday on Monday: one of two things would have to happen. (1) RRS will rise to close the gap with GOLD (otherwise there'll be an arbitrage opportunity), in which case you should buy at the open, as RRS has to 'catch up' with GOLD. Or (2) RRS will stay static or fall, in which case you'll know you need to sell GOLD at the open. Simples.<br /><br />RRS has the other advantage of not having any stamp duty, as it's registered in Jersey. So it needs to rise 0.5% 'less' than almost anything else you buy on the LSE.<br /><br />Plus, in my strictly personal opinion, Randgold could be one of the hottest longs around this year. But that's a story for another day.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4927433125525937227.post-47135228552193430542012-06-03T11:14:01.787-07:002012-06-03T11:14:01.787-07:00It's just after-market trading isn't it? I...It's just after-market trading isn't it? In other words, largish trades being placed when there are almost no buyers or sellers (as the main market is closed). The effect is to give bizarre closing prices, sometimes many percent to the up- or down-side.<br /><br />This happens all the time, with all sorts of equities, commodities, and currencies. It's true that such trades <i>can</i> give you a vague idea of what might happen at the next open, but generally they don't.<br /><br />Most brokerage accounts won't let the small (<i>i.e.</i> 'retail') trader play in the pre- or after-markets. Which is probably just as well. One observer (I forget who, I'm afraid) noted that to do so would be like 'driving blindfolded'. Those big funds and institutions that do play this game are doing so out of necessity: they <i>really</i> need to dump or acquire the investment in order to hedge other trades, get fresh liquidity, or to meet margin calls in other markets.<br /><br />Of course, such moves can't happen in the open markets because trading is thick (rather than thin), and any mad bid prices will be quickly snapped up by HFTs.<br /><br />One notable exception: I've found the US pre-market in GDX to be a very reliable indicator of how things are going to go during the trading day. I presume this is because the smart money is taking advantage of their near sole rights to trade in thin markets to front-foot others after the overnight news has already decided whether that day will be 'risk on' or 'risk off'.Anonymousnoreply@blogger.com