Facebook dominates the Internet, but will it dominate currencies going forward? From Forbes;
Facebook’s 27-year-old founder, Mark Zuckerberg, isn’t usually mentioned in the same breath as Ben Bernanke, the 58-year-old head of the Federal Reserve. But Facebook’s early adventures in the money-creating business are going well enough that the central-bank comparison gets tempting.
Everything started quietly, in 2009, with the experimental launch of Facebook Credits, billed as “the safe and easy way to buy things on Facebook.” Anyone who chipped in $5 from a Paypal account, Visa card or the like, could do the equivalent of changing money on an overseas trip. Voila! — $5 turned into 50 Facebook Credits.
Although we never published this article earlier this week, on being long Gold overnight, and shorting the metal intraday, we present it below. Manipulation or not, very interesting observations. Guest post by SK Options Trading.
In August 2010 we wrote an article entitled “Proposing An Overnight Gold Fund” in which we explored the potential for launching a fund that held long positions in gold overnight and was short gold during the day. We pointed out that “a hedge fund starting in 2001 with $100m, with the strategy of being long gold from the PM to AM fix, and short gold from the AM to PM fix…would be worth $2.16billion today, before any fees and expenses.” We have been monitoring this trading strategy since then and therefore would like to take this opportunity to update readers on its astonishing progress.
Firstly we will introduce the thinking that led us to investigate this trading strategy. There is much debate within the precious metals industry regarding the alleged suppression, or at least manipulation to an extent, by either central banks or the proprietary trading divisions of large banks, or a combination of the two.
In April 2010 the US Commodity Futures Trading Commission CFTC fined Hedge Fund Moore Capital for manipulation of the New York platinum and palladium futures market, as the firm was found to be “banging the close”, which involves entering orders in a manner designed to inflate the closing price, which other various derivatives contracts could be based on. So that is irrefutable evidence that the precious metals futures market is, at least to some extent, being manipulated. However a large concentration of this debate is based not on platinum and palladium, but on gold and silver, and particularly gold.
There are other theories that could explain this discrepancy that do not involve manipulation. For example one could take the view that Eastern market participants are perhaps more bullish on gold than their Western trading counterparts. Therefore gold is perhaps more likely to rise during Asian trading and fall when the west takes over.
The S&P 500 is off to a great start for 2012, up 4.52% in the first 12 days of trading versus a 1.93% gain over the same timeframe in 2011.
But what about volume? I’ve seen a number of comments about the light volume of our “January Effect” rally. So let’s do a comparison with last year. First, here is a snapshot of the index with the volume shown below along with its 50-day moving average.
According to the data I downloaded from my Stockcharts.com subscription, the cumulative volume of the first 12 days of this year is 232.4 Billion versus 296.4 Billion in the first 12 days of 2011. That is a 21.6% decline.