Today one of the savviest and most well-connected hedge fund managers in the world spoke with King World News about the war in gold and potential chaos in the derivatives markets. Outspoken Hong Kong hedge fund manager William Kaye also warned that a repeat of a 2008-type of event would plunge the entire global financial system into a complete panic that would dwarf what the world witnessed in 2008. Kaye, who 25 years ago worked for Goldman Sachs in mergers and acquisitions, had this to say in his fascinating and powerful interview.
Kaye: “I’m focused right now on the fact that the gold price has been relatively strong. Generally we see very thin trading in August. In fact, most of the trading that is recorded in the markets is algorithm trading. In other words, it’s Goldman Sachs algorithm trading with JP Morgan, and then they switch roles the next day.
This is well known in the industry, but it’s not well known to investors. So most of the liquidity that appears to be present in these markets is in fact nonexistent. It’s phantom liquidity provided by these high frequency trading algorithms....