The CME Group, which operates the U.S. COMEX gold futures market, said Wednesday's plunge in gold was not the consequence of a "fat finger" or a human error. The trading wasn't even fast enough to trigger a pause on Globex, said CME.

One thing that we can say for certain was that there was massive, concentrated selling as the New York stock markets opened with some 35,000 lots sold which is equivalent to 3.5 million ounces and saw the price fall from $1,735/oz to $1,711/oz between 0825 and 0830 EST.

One sell order alone was believed to be 24 tonnes or 770,000 troy ounces. Incredibly there was 35% daily volume in just 60 seconds.

The selling, like all peculiar, counter intuitive, sharp sell offs in recent months, was COMEX driven with COMEX contracts slammed leading to further stop loss selling.

The selling may have been by speculative players on the COMEX. It may have been algo or computer trading driven or tech selling - although this is less likely.

It would be naive to completely discount the possibility that a bullion bank, short the gold and silver markets, may have been trying to protect their large concentrated short positions. The CFTC data shows some bullion banks continue to have massive concentrated short positions - which are still being investigated.

Informed commentators questioned the nature of the selling as a large institutional COMEX trading entity would normally gradually sell a position of this size in order to maximise profit.

David Fuller's view These sudden and often large moves are a factor that we have to contend with. One might philosophically say: 'And thus it always was', except for the fact that such sudden and occasionally extreme moves have become more common with the growth of high-frequency trading (HFT) in recent years.

I do not know if HFT caused gold to drop over $20 in about a minute. However, since it is now the dominant player in many actively traded markets, it is certainly a suspect. More importantly, let's hope COMEX officials find out why it happened. Exchanges have too often tolerated sudden, aberrant moves because they love the volume. This is short sighted because it frightens away too many other participants.

Follow the development and increasing dominance of HFT to its logical conclusion. Does COMEX or any other exchange really want their trading to be dominated by the financial version of Star Wars? And if HFT did not cause the sudden downdraft, it would be nice to clear that industry of suspicion.

There have always been plenty of aggressive cowboys in the market, who may want to test or interrupt trends. That may not be nice, but it is not illegal. Most traders and investors look after themselves and would not think twice about shaking someone else out of the market. That is part of the game, especially among traders.

Meanwhile, there are some steps that you can use to protect you positions. 1) Trade well within your available capital. 2) Watch the Stochastics levels - you can view these in the Library by first bringing up the chart of interest, and then clicking on the 'Charting' link in the charcoal bar overhead, and finding Stochastics in the 'Analysis' section. Heavy selling is more likely than not to occur against the background of short-term 'overbought' readings. 3) If trading well within your capital, consider using tight stops when you wish to make risk loss your priority; for instance, when a market has accelerated above its MA. Remember that the successful use of stops is often the most difficult aspect of trading.

Of course, those who are holding unleveraged positions in physical gold need not be concerned by HFT or any other factor which contributes to sudden volatility.