Huge U.S. gold position liquidated by fund-WSJ

[JohnQPublic]

Exlanation for low prices this week? Those nasty margin calls.

Huge U.S. gold position liquidated by fund-WSJ (http://www.reuters.com/article/2011/01/28/precious-fund-idUSLDE70R0TH20110128)
LONDON | Fri Jan 28, 2011 5:44am EST

LONDON Jan 28 (Reuters) - Hedge fund SHK Asset Management liquidated a U.S. gold futures position this week valued at over $850 million, more than 10 percent of the main U.S. futures market, the Wall Street Journal reported on Friday.

As a result of the move, which was made on Monday, the number of gold contracts on CME Group Inc.'s Comex division plunged by more than 81,000, to about 500,000, in their biggest single fall ever, the WSJ reported. It said an average daily move is about 3,000 to 5,000 contracts.

Daniel Shak, who runs the $10 million fund, told the newspaper that the trade had been profitable for him for years, but it stopped working and the exchange kept raising his margin requirements, forcing him to put up more money.

Shak said that when the exchange raised it by 25 percent on Monday, he decided to cut his losses and end the trade, the newspaper said.

[JohnQPublic]

Sun Hung Kai Financial (http://www.shkf.com/en/assetMgt/assetMgt.html) (SHK)

[Glass]

25% is a big hike. Clearly didn't want the business any longer. I see a nice run up in metals in the morning which held to the end of trade. Good news.

[gunDriller]

Exlanation for low prices this week? Those nasty margin calls.

Huge U.S. gold position liquidated by fund-WSJ (http://www.reuters.com/article/2011/01/28/precious-fund-idUSLDE70R0TH20110128)
LONDON | Fri Jan 28, 2011 5:44am EST

LONDON Jan 28 (Reuters) - Hedge fund SHK Asset Management liquidated a U.S. gold futures position this week valued at over $850 million, more than 10 percent of the main U.S. futures market, the Wall Street Journal reported on Friday.

As a result of the move, which was made on Monday, the number of gold contracts on CME Group Inc.'s Comex division plunged by more than 81,000, to about 500,000, in their biggest single fall ever, the WSJ reported. It said an average daily move is about 3,000 to 5,000 contracts.

Daniel Shak, who runs the $10 million fund, told the newspaper that the trade had been profitable for him for years, but it stopped working and the exchange kept raising his margin requirements, forcing him to put up more money.

Shak said that when the exchange raised it by 25 percent on Monday, he decided to cut his losses and end the trade, the newspaper said.

yeah, this is what did it - plus it was options expiry week.

seems like Gold has made the round-trip from 1300 to 1400 a few times now ... and silver, from 26 to 30.

BUT - in the middle of it all - we had 2 outside day reversals. that's where the day starts down and ends up UP, which is usually considered bullish.

[PatColo]

the slide in metals the past couple weeks smells artificial esp considering that the USD index slid from ~81.5 to ~77.75 during the same period (http://www.crbtrader.com/data.asp?&page=chart&sym=DXH11&width=600&tblwidth=600), which would normally put a fire under the metals.

[gunDriller]

the slide in metals the past couple weeks smells artificial esp considering that the USD index slid from ~81.5 to ~77.75 during the same period (http://www.crbtrader.com/data.asp?&page=chart&sym=DXH11&width=600&tblwidth=600), which would normally put a fire under the metals.


true.

sometimes the official explanation is that people are exiting the safety trades (dollars and gold) ... that would explain the simultaneous decline in the $ and in PM's.

anyway, a welcome dip in the price.

wonder what happens Monday ?