GOLD is the money of the KINGS, SILVER is the money of the GENTLEMEN, BARTER is the money of the PEASANTS, but DEBT is the money of the SLAVES!!!

Friday, December 5, 2014

Kevin Kerr: High-Frequency Trading = More Efficient Way to Manipulate Markets

Kevin has successfully traded commodities since 1989.

During this 40+ minute interview Jason asks Kevin about the oil market. Kevin thinks there may be further downside for oil in the short term but that there will be supply problems the lower oil prices go as extremely unprofitable shale oil production in the US shuts down and/or companies go bankrupt.

Jason and Kevin talk about the oil market extensively and Kevin thinks long term the oil price must go higher to keep meeting growing worldwide demand.

Next, Jason asks Kevin about living in Estonia with his family and the amount of entrepreneurship and free market capitalism there compared to the US. Kevin thinks there's less regulatory hurdles in Estonia to starting and growing a business than in many industries in the US.

He thinks Putin is capable of invading other countries in Eastern Europe and the Baltics though and he doesn't trust Obama's word about NATO defending Estonia.

After that, Jason and Kevin talk about how nothing is really working on the long side in commodities markets and about precious metals, high frequency trading (HFT) and how its changed trading markets and why the commodities markets have so much paper futures contracts that are not backed by any real commodities.

Kevin is fed up with the current status quo. He thinks HFT allows rich hedge fund managers and investment banks to easily manipulate trading prices and he says there's no need for so many paper futures contracts for gold and silver when there's almost no real metal backing the contracts.

Speculation on commodities markets in the past allowed commoditiy producers to lock in a profit and hedge their production so they didn't go bankrupt but the way paper futures markets work in commodities there's so many paper contracts out there that the amount of speculation has increased by an order of magnitude and created enormous price volatility that was never there in the past.

Jason and Kevin wrap up the discussion by talk about gold and silver and if they think it's bottomed and what may make it bottom. Kevin thinks demand from countries wanting their gold back may make the market bottom in the near future while Jason expects supply problems and shortages from miners to rapidly develop soon with miners going bankrupt in 12 months or less if prices go lower.

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