After the flash crash in gold: Andy Xie
The recent gyrations in precious metals, commodities, and both the dollar and yen stem from correlated deployment of vast liquidity resulting from quantitative easing around the world.
Some of the correlations are just due to the same people stir-frying the same stuff, not economic reasons.
As the quantitative easing around the world continues, such flash crashes will recur. It is possible that mass panics, resulting from such flash crashes, could change the trajectory of some economies.
The most important case is that, if the Japanese government bonds and/or yen holders panic over the Bank of Japan’s (BOJ) QE policy, the resulting chaos could trigger a financial crisis in Japan, and the resulting yen crash would push East Asia and the world into a crisis.