Mar

12

 Just wondering if a west coast fund's 2010 continued bond buying on the way up to the high, and their complete position liquidation in second half– might be seen as an ultimate insider trade…

See, I remember my dilemma on Oct. 13th 1989, the day later dubbed Friday the 13th in U.S. stock history.

Gold futures were closing at a relatively early 2.30pm; and somewhere in the last half-hour the newswires reported a snag in the UAL deal. In my view, S&P took out important support intraday and looked ominous from there. I began pyramiding my Gold longs, that barely started climbing late in the day from $366 to over $367 toward the 2.29pm closing minute. I was uber-confident Long "over the weekend" - but my accumulated position exceeded the overnight margin deposit requirement by an extra 1000 lots!

Thank Goodness, I employed the tallest broker at the Comex, who commanded authority in the pit -and I conveyed a very unusual order to him: show 1000 @ 367.5, but only agree to sell ALL or NOTHING. He tried to get attention of every big dealer in the usual closing minute mayhem - but got nothing, and the bell rang… In the next hour, the S&P crash got into second and third gear and spiraled into total limit-down halt… So it's Friday night, and a personal friend dealer calling: I have Goldman/Aron on the phone, they say they couldn't trade with you on the close -but asking if you could make them an EFP market for some size, they will not hold you… Well making market implied at least 40 lots. I utter 369.4/369.8; they buy 40, and I say enough…thanks. Of course, Sydney opened Sunday night with a 371 bid…

But the reason for my story is this– if I had a big brother that Friday whisper "keep buying as you please, knock yourself out… when you decide to get rid of them - we'll take the whole thing from you at the market" - would I ever halt buying and start offering?

So, conveniently, the fund kept pyramiding all the way to Aug/Sep top– and then the Bernanke was a declared taker of all of their size for the rest of the year; I doubt they ever had to hit market bids… Did I get anything wrong there?


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