Tag Archives: OTC derivatives

The System Is Starting Its Final Collapse

The director of the CME Metals Group announced her resignation to effective December 11. No further explanation was provided – Reuters link.  I’m not one to infer some type of conspiracy theory in connection with this, but it seems rather abrupt.   It’s akin to Bernanke leaving the Fed much sooner than anyone expected.  The rats are leaving the ship before it sinks.

The collapse began in earnest in 2008.  This is why gold soared to all-time highs in dollar terms until late 2011.  The effort to push down the price of gold is overt evidence that the systemic collapse, even with the heavy application of money printing, has been ongoing since 2008.  The recurring violent hits to the price of gold using fraudulent paper gold is overt evidence that the authorities are becoming more desperate in their attempt to hide any possible market signals that the systemic collapse is accelerating.  This is how gold behaved from March 2008 – October 2008.  Look what happened then.

Something catastrophic is occurring behind “the curtain.”   I would love to have a peak at what is melting down.  We can generally speculate that, with the oil, copper and iron ore price collapse, and with emerging market currencies collapsing,  there’s been a series of derivatives  explosions that have been contained but that are straining the Central Banks’ abilities to keep the system from coming completely unglued.  This is also why the price of gold is being contained with brute force.

We have never seen markets behave the way they’re behaving right now,  with absolute unpredictability.  The overt intervention is a big part of the what we’re seeing on the surface with gold, currencies, credit markets and the primary stock indices.  But all indications suggest a high likelihood of several train wrecks occurring at once behind the scenes.  The intervention, of course, is keeping the surface indicators from crashing.  But the intervention has also destroyed the signal transmission and rational capital allocation mechanisms of the market.  Adam Smith’s “invisible hand” has been amputated, if you will.

This is why stocks like AMZN, FB, GOOG and NFLX trade at insane p/e ratios.  It’s debatable whether or not AMZN has bona fide economic net income in the first place.  I have not looked in depth at the accounting of FB, GOOG and NFLX to assess whether or not their “net income” is a function of GAAP manipulation or if they actually produce real cash flow in excess of all expenses, on and off the income statement.  But all of them unequivocally trade at sublimely irrational market caps and they are the primary devices being used to keep the S&P 500/Dow indices propped up.

Another indication of the chaos erupting behind the “curtain” is the melt-down going on the junk bond market.  Alhambra Partners wrote a piece in which it asserted that the stunning spike higher in triple-CCC rated junk bonds is indicative of something blowing up in the junk bond market – LINK.    But it’s not speculation, it’s a fact.  And it’s not “something,” it’s the entire distressed credit asset class.

The asset class itself, like every other financial asset, is horrendously mis-priced thanks to the massive Central Bank intervention.  But unavoidable leaks are springing and they are going to turn into torrential floods.

The reason triple-CCC yields are blowing out is that some entity or entities have been forced to sell.  Here’s how it works – I know this based on first-hand experience trading this stuff:   As you know by now, the bond market has become extremely illiquid.  This means that there’s a lack of capital available to accommodate sellers who look to sell at price levels remotely close to where bonds are being quoted.

Everyone (big pension funds, hedge funds, mutual funds, etc) keeps the price marks on the bonds in their portfolio unchanged and holds their breath that a seller never appears who has to sell for whatever reason and forces a re-pricing of the bond issue, which in turn forces a re-pricing of the market.  I’ve lived this nightmare as a sell-side junk bond trader running capital positions in triple-C paper.

The fact that triple-C bond yields have blown out so quickly means that sellers have appeared and the yields on these bonds are going to blow out until they become high enough for a bona fide distressed buyer to decide it’s worth the risk to buy some of the paper. We’re not talking 10-20 points below where everyone is marked.  Many of these bonds will plummet from the 80’s and 90’s to the 20’s and 30’s before enough capital begins to flow into the market to provide a bid big enough to take on the selling.  That’s usually the first step down before it gets even worse.

This dynamic is going to spread to other asset classes within the credit market, like subprime mortgage pass-thru trusts, collateralized debt obligations, etc.  This how it began to unfold in 2008.  This is why Wall Street banks are now net short corporate bonds. The problem is that this time around the amount of debt of all varieties is a few multiples greater than it was in 2008.  And connected to all of this is a preponderance of OTC derivatives.  Derivatives that I believe are already melting down behind “the curtain.”

At some point the “collapse dyamic” is going to hit the entire stock market.  It already has in several sub-sectors and individual stocks below the surface.  We see this in the “cliff-dives” that occur when companies report “unexpectedly” disappointing earnings results.   Stocks which were held up with the broad indices thanks to the Fed’s monetary lasiviousness get quickly repriced to downside.

This morning a poll is out from Quinnipiac University which reports that 83% of Americans polled live in fear of another “terrorist attack.”  I find this highly troubling because of the amount of power it gives the Government to control the population.   I expect to see a stunning degree of abuse of this power, as if the Patriot Act, Homeland Security Act, Detainee Bill and surveillance laws are not horrifying enough.

In late 2003, a colleague and friend of mine and I surmised that we would eventually see things occur in this country that would “blow  our minds.”  This is in the context of Enron, 9/11 and the highly illegal invasion of Iraq having already occurred.  Ponder that for a moment.

The  hallmark of an empire in collapse is the imposition of Governmental totalitarianism and reckless attempted military imperialism.  Currently the U.S. military is the most dangerous terrorist in the world.  Contrary to the view reflected in the Quinnipiac poll, my biggest fear is that the U.S. Government is soon going to turn its reign of terror on its own citizens.  History tells us this is what occurs when a powerful economic/political system is in the final stages of collapse.

Extreme Gold/Silver Manipulation And Potential Financial Collapse

Doc from Silver Doctors invited me back on to his weekly market wrap to discuss the extreme manipulation in the precious metals market.  In addition to the massive imbalance between paper gold/silver and the above ground available for supply for delivery should a lot more  paper longs demand delivery, the potential exists for the mother of all short squeezes in gold  and silver.

We also discuss India’s current  demand, which is misunderstood and subjected to highly misleading media reporting by the likes of Reuters, Bloomberg and the World Gold Council.  I explain why this is the case and why India gold demand is significantly higher than is currently reported.

Other topics include the why Glencore could potential an OTC derivatives catastrophe and potential black swan events that could appear before the end of 2015:

Deutsche Bank’s Balance Sheet Is Toxic Waste

Deutsche Bank has $1.5 trillion of declared asset value on top of $67 billion of net worth.   But a large portion of its assets are loans and related financing vehicles and trading positions connected to Glencore, VW, the energy sector, emerging market companies, high yield and a highly unreliably valued net derivatives position.  It Deutsche Bank has “mismarked” the value of all these assets by just 5% its net worth is wiped out.

It’s more likely that the bulk of its assets are overvalued by at least 20-30%.   And that’s in the context of the current financial and economic environment – both of which seem to be quickly deteriorating.  In other words, DB is technically insolvent.   I performed a similar analysis on some big bank balance sheets in late 2007/early 2008 and my model predicted the collapse of Countrywide, Wash Mutual and Wachovia. All of the big Wall Street banks should have collapsed but we know how that ended.

The present situation doesn’t remind me of 2008 right before Lehman blew up.  It is more like 2008 x 10.  The hidden ticking time bombs in the global financial system are significantly greater than what was ticking 2008.  And the fraud and criminality used to cover it up, along with the propaganda devised to promote the idea that the economy is recovering, is many times more worse than it was in 2008.

Craig Hemke of TFMetalsReport.com me invited onto this podcast show to discuss Deutsche Bank’s latest “fluffed up” $7 billion “intangibles” write-down, which didn’t even scratch the tip of Deutsche Banks real “iceberg” of financial toxicity.

You can listen to this discussion at here:   Deutsche Bank And The Coming Global Financial Catastrophe

A friend of mine with connections at DB told me yesterday that his sources describe Deutsche Bank as a toxic junkyard of chaos and complete unaccountability.  In my opinion the German Government/EU will eventually either have to print money and monetize DB or its demise will trigger Lehman x 10.

Glencore Could Trigger A Global Derivatives Nuclear Meltdown

The middle class in America is like the housewife who knows her husband is cheating on her but she chooses to ignore it and pretend it will stop.   – Anonymous FOD – Friend of Dave’s

The system has been totally hijacked.  Make NO mistake about it, gold was hit hard when the paper trading in London cranked up after the SGE had turned off its lights for the day. The reason:  Glencore.

Anyone remember Enron?  Probably not.  Most people have already forgotten, mostly, that their taxpayer dollars were used by ex-Goldman CEO Henry Paulson to bail out Goldman Sachs in 2008 when he was Treasury Secretary.  His primary motive was to preserve the value of the $250 million in warrants he still owned after he got to unload $500 million in stock – tax-free.  Recently Zerohedge found a snapshot of Paulson laughing about the entire matter.

Glencore is going to make Enron look like a polite tea and cake break.  Gold was smashed when paper London opened because the Fed, BoE and ECB can not under any circumstances let the price of gold spike up – like it should be doing – and thereby alert the world that there’s a big problem in the world of derivatives related to Glencore, among other “things” (Emerging Market FX contract, energy, Biotech ETFs, etc).

The issue with Glencore, since we all saw it coming which means the Central Banks saw it coming, is the degree to which the CB’s have been able to “brace” for its impact.  The problem, however, is that just like Enron and the big banks before it, there is  100% probability that Glencore upper management has:  a)  lied about the market value of its assets, both on and off balance sheet;  b)  has lied about the true amount and nature of its derivatives exposure;  c) has been lied to by rank and file who are in charge of accounting and reporting the data to upper management (trust, me I know this goes on because I saw it first-hand at Bankers Trust;  and foremost, e)  has NO idea the true nature of its total exposure to the full lunar eclipse world of OTC derivatives.

Given that  Glencore management has fed the Central Banks a big bag of lies about the size of the risk exposure at the Company, it’s not probable that the Central Banks are properly prepared to put out the fuse on the nuclear derivatives bomb that has been lit.  This is why the stock market is shitting the bed today and this why the price of gold was bombed like an ISIS camp by a joint effort of London and NYC bombers.

Just ask Jamie Dimon about this regard in reference to the London Whale blow up.  Dimon admitted that he had no idea how large JPM’s exposure was at the time.  The London Whale is a sea-algae molecule in size compared to Glencore and the entire body of OTC derivatives connected to anything Glencore has touched.

Can you smell middle class flesh burning yet?  It’s starting to burn my nostrils…

Something Snapped Again Behind “The Curtain”

While the movement in AAPL stock may have affected the first 30 minutes of trading in the NYSE, about 30 minutes ago the SPX fell of a cliff while AAPL remained largely unchanged. While financial tv clowns might attribute the sell-off to the Atlanta Fed’s Lockhart issuing a statement that September is the right time to raise rates, that was not the catalyst – click to enlarge:

Snapped

The Fed mannequins are now seen as “the boy who cried wolf.”  Only this cry has been going on for over two years now.  The market is immune to the good cop/bad cop routine.

Furthermore, you’ll note that the SPX also gapped down around 10:30 EST, again on no apparent news triggers.  This was well before Lockhart had to chance to memorize and rehearse his rate-hike comment.

Not only did stocks gap down twice today without any help lower from AAPL, but the price of oil has crashed through $50 in the last week and a half and appears to be headed to $40, if not lower.

Perhaps the recent plunge in AAPL stock is a reminder to momentum chasers that markets always have a way of moving in two directions and not just “up.”  Certainly the economic news continues to get worse and two homebuilders “missed” their highly managed revenue and income bogeys this morning.

No doubt the Fed will catch the knife again today – just like it did yesterday.  But the warning signal has been sent and there’s nothing Janet and Stanley can do about that.

Reality has funny way of hitting us in the back of the head when we least expect it.  How many of you were aware that a domestic revolt is brewing in Spain or that the Spanish financial system is one-step removed from sliding down the avalanche chute behind Greece?   If you only follow U.S. mainstream news you are unaware of a significant amount of realities hurtling toward the U.S. financial, economic and political system.

I mentioned in April based on some data from Fed – data that is well-hidden, arcane, and well-above the intellectual capacity of U.S. financial media – that a derivatives accident of some sort occurred behind “the curtain” in December.  I believe the sell-off in AAPL and the sudden waterfall sell-offs in the SPX may be just one of the ripple effects we’re seeing related to whatever occurred in December.

Of course, please ignore the collapsing price of oil…after all, that has nothing to do with economic demand – or lack thereof…Perhaps that train in that slow motion train wreck we’re observing has started to accelerate.

 

Gold Manipulation: It’s Much Bigger Than You Think

From Michael Edwards, editor of the Activist Post:   All of your work is outstanding, but this one goes beyond – wow, thank you very much for your analysis. This is one of those stories that can really open people’s minds on a broad scale that there truly are things called “conspiracies.”  Maybe if people can face the obvious, they will dig even deeper.

The gold price manipulation scheme will go down as the biggest financial market scandal in US history for numerous reasons. They include the destruction of the free market system in the United States. The manipulation of the gold and silver prices eventually led to the manipulation of US interest rates via the Fed, the stock market via the Plunge Protection Team, and to the currency markets.  – Bill Murphy, GATA.org

The gold manipulation scheme has taken on historic proportions.  It’s been going on for several decades – witness the London gold pools of the 1960’s which were implemented to prevent the price of gold from taking off because the U.S. was running out of gold with which to back the Treasury debt it had issued to foreign creditors who were redeeming their Treasury notes for gold per the Bretton Woods Agreement.

Ultimately this scheme failed when Charles de Gaulle famously began redeeming France’s Treasuries for gold because he had calculated that the U.S. had issued significantly more Treasuries than it had gold to back those Treasuries.  France pulled out of the London gold pool operation and a couple years later Nixon was forced close the gold window or, rather, end the convertibility of foreign-owned Treasuries into gold.

Frank Veneroso, who wrote the brilliant “Gold Book” in 1998, told Sprott’s John Embry and I many years ago that the gold price suppression scheme was “much bigger than you think.” Frank found out the US Government was taping his phone calls and ever since has shut up about what GATA has to say. Frank was the one who exposed the gold leasing scheme, which is how The Gold Cartel did their thing so many years ago. It is how GATA knows the central banks have well less than half the gold they say they have in their vaults. Frank got his information from a Bank of England source who has since died.  – Bill Murphy

Each new financial crisis (emerging market debt, Long Term Capital, tech bubble, housing/credit bubble, etc) was met with successively larger amounts of money printing and credit creation.   Print money to keep the banks and the markets from collapsing and create more credit to keep the giant Ponzi scheme going.  Once the gold bull market got underway in late 2000/early 2001, in order support the monetary intervention required to keep the U.S. systemic “shell game” going, the manipulation of the gold markets began to intensify.  It also started to become more obvious in nature to those where researching, trading and investing in the precious metals sector.  GATA was and is instrumental in exposing and reporting the facts about the manipulation of the gold market.

At the end of 2000, the Treasury had $5.6 trillion in debt outstanding.  The current amount is $18.15 trillion but there is a debt issuance ceiling in force now for which the Obama Government is circumventing by raiding Federal pension funds, the Social Security Trust, issuing IOU’s and other cash “reservoirs” that will soon run out.  The debt ceiling will have to be lifted again, like to $20 trillion.  That’s nearly a 400% increase in just Treasury debt since 2000.  At the end of 2000, the Treasury debt to GDP ratio was 54%.  Today it is 102.5% and this does not include the Treasury’s Fannie Mae and Freddie Mac guarantees.  In other words, the amount of Government debt has grown at twice the nominal rate of the U.S. economy in the same time period.  Note: the “wealth” produced by the U.S. is part of the theoretical backing of the dollar.

This is just Government on-balance-sheet debt.  Total Government contingent liabilities, i.e. on-balance-sheet plus off-balance-sheet, is now estimated by several different sources to be at least $200 trillion.  This would include pension, Social Security, and several other Government entitlement programs.  Recently it was estimated that State pension funds are now underfunded by at least $2 trillion.  Student loan debt  is now well over $1 trillion, of which 30%-40% in arrears or in outright/technical default,   Most private pension funds are at least underfunded by 50%.  

An “underfunded” liability is a socially correct term for “debt.”  When the stock and credit markets re-collapse, the underfunded status of most if not all pensions will likely approach more like 90%.  Some pensions will  be wiped out.

Then there’s the derivatives…

The point here is that the fundamentals underpinning the precious metals market have strengthened cumulatively since the gold bull market began.  There has not been one point in time in the last 15 years, in fact, when these fundamentals have weakened.  What has changed is the degree of intervention engaged in by the Central Banks and U.S. Government as a means of preventing the price of gold from rising and signalling to the world that the U.S. political and economic system – the system which issues the world’s reserve currency – is increasingly corrupt, criminal and entirely fraudulent.

Yes, China has its issues as well but it has two things that the U.S. does not:  $3.4 trillion in foreign currency reserves backed by a big trade surplus and a massive amount of gold.  On the other hand, the U.S. foreign reserves are roughly $39 billion and it runs a $40 billion/month trade deficit.  It is highly unlikely that the U.S. Government possesses legal title to little if any gold.

In my opinion, the ability of the U.S. in conjunction with its European vassals and the BIS to keep the U.S. dollar fiat money system in motion is largely dependent on the ability to keep the price of gold suppressed.  In 2011, when silver threatened to take out $50 and gold was headed in the $2000’s, the U.S. elitists were staring into the abyss.  That’s when the gold market intervention took on a whole new dimension.  This is best visualized with this graphic:

FEDBALGOLD1

The dislocation in the correlation between the price of gold and the size of the  Fed balance sheet shown in the graph above is further supported by the manipulation activity reflected in these two graphs (inset chart on the right graph sourced from Zerohedge, with my edits) – click to enlarge image:

UntitledGOLD_Q1

The graph on the left shows the massive paper ambush on the gold futures market on Sunday evening July 19. An enormous amount of paper gold contracts were dumped into the Comex’s globex electronic trading system during one of the slowest trading periods at any point in time during the trading week. A bona fide seller trying to sell a big position at the best possible execution prices would never have dumped a position like this. The only explanation is that someone wanted to drive the price the price of gold lower and make a point of doing so. This particular occurrence in the gold market has been a recurring event over the life of the gold bull market. However, the frequency of the above trading pattern has significantly increased since 2011.

The graph on the right is the daily, year-to-date graph of the price of gold. As you can see, despite the continuous strengthening of the underlying fundamentals supporting the price of gold, including the heightened risk imposed on the global financial system by the probable financial collapse of Greece, the price of gold trended lower during Q1 2015. The inset graphic, however, shows the big spike in gold OTC derivatives issued and held by the big banks, JP Morgan being the largest issuer of OTC gold derivatives. There is a definitive correlation between the big spike in gold OTC derivatives and the downward pressure on the price of gold.

PaperGoldRatio

This graph on the right, prepared by the TFMetalsReport, shows the record level of the ratio of paper gold to physical gold on the Comex – 117x.  You can see the ratio exploded and went vertical starting mid-2013, which is right around the time Bernanke delivered his infamous “QE taper speech.”  This graph unequivocally reflects the sense of desperation by the Fed and the Treasury in its efforts to push the price of gold lower using the extremely fraudulent paper gold market.

Finally, since mid-December, when it seems some sort of derivatives bomb exploded – LINK –  the anti-gold propaganda from the media has significantly intensified.  This especially true since the July 19 ambush.  It’s not just anti-gold propaganda, however,  it’s a grotesque preponderance of insidious misinformation and disinformation.  The blatant manipulation of the gold market in conjunction with the rabid dissemination of anti-gold rhetoric from both the financial press and Wall Street reeks of desperation – desperation to keep a lid on the one market signal that would undermine the elitists’ perpetuation of the U.S. dollar-based systemic Ponzi scheme which enables them to loot and confiscate middle class wealth (“middle class” being defined as anyone not wealthy enough to buy their own politician or not in the privileged position to benefit from the wealth confiscation schemes).

The Shadow of Truth will be releasing a podcast in two-parts of a two hour conversation with Jim Willie sometime tomorrow.  In a portion of the podcast, Jim Willie lays out the elaborate scheme being used to keep interest rates low and to push the dollar higher in one last desperate attempt to maintain the reserve status of the U.S. dollar and global hegemony of the United States, both of which are being systematically dismantled. Keeping a lid on the price of gold is the nexus of the blueprint for implementing the extreme market intervention by the Federal Reserve and the Treasury’s Working Group on Financial markets.

When the intervention in the gold market fails, which it inevitably will as have all other market interventions in history, it will have the systemic affect of delivering a massive blow from a 2 x 4 on the back of the heads of the unsuspecting public in this country.  In other words, be prepared for life to become very uncomfortable in every respect.  My personal view is that will be the case even for those of us who have taken steps to prepare for this inevitability.

SoT Ep 44 – Rob Kirby: We’re Coming Into End Of Times

The gold smash going on right now reeks of desperation…the manipulation has become utterly in your face.  It tells me we’re getting close the end when you have the likes of John Hathaway and Ross Norman starting to talk the gospel of GATA. These guys over the years have literally sniveled at GATA and told us we were tinfoil hat conspiracy theorists.  And now these guys are reading out of the GATA book and that’s a mind-blower and this tells me this is close to blowing up.  – Rob Kirby, Shadow of Truth

I was chatting this morning with a close friend in NYC who I know going back to my days as a junk bond trader at Bankers Trust.  He works as a consultant to investment/hedge funds now and is extremely perceptive in his insights about what is going on in the financial markets.

I asked him what he’s hearing from some of the big hedge fund managers he calls on every week:

Everybody hopes they a have chair when the music stops and it will stop when this thing cracks it will crack hard.  Carl Icahn going after Larry Fink the way he did is a very big deal and it reflects the amount stress in the system when the big fish turn each other.

What’s remarkable to me is that gold has held up as well as it has.  The insiders are throwing multi-billion manipulation trades [Comex, LBMA, OTC derivatives] and yet there’s still a big bid for physical gold under the market…The one thing I’m sure of is that the “market” price we see of everything is not a market-clearing price.

What most people are missing is that Obamacare is a financial trainwreck.  Not only that you have two trillion in underfunded State pension funds – and that number doesn’t include private pension underfunding  – what are you going to do, let those people eat grass clippings and die?

There will be a mad scramble in the west by the elitists to grab what physical gold is left before the Comex completely defaults. It is quite possible, if not highly probable, that this final looting of GLD is part of that process.  – Rob Kirby

The Shadow of Truth podcast with Rob Kirby is a natural extension and elaboration of the comments from my friend in NYC.   This a highly engaging discussion about several topics connected to the precious metals market and how the blatant and non-stop outright Central Bank/western Government intervention in gold and silver trading directly reflects the fact that the western financial, economic and political systems – including and especially the United States – is on the verge of collapse:

I’ve grown weary with people writing me and asking for my opinion on Martin Armstrong. I have laid out the historical facts intermittently over time between this blog and the predecessor The Golden Truth.  People who follow and put faith in Martin Armstrong have no knowledge of his background or any understanding of just how psychopathically corrupt this guy is.

Jay Taylor: Turning Hard Times Into Good Times

I will be making my first appearance on Jay Taylor’s “Turning Hard Times Into Good Times” internet radio show – Voice of America – on Tuesday, July 21 at 3:25 p.m. EST/2:25 CST/12:25 PST. You can access the live link or the podcast on demand here: Jay Taylor/Voice of America.

JayTaylor

JP Morgan And Citi Are Using OTC Derivatives To Manipulate Gold And Silver

Financial regulators around the world have recognized an immediate and pressing need to address possible regulatory protections in the OTC derivatives market.   – Brooksley Born, 1998 as Chairman of the CFTC – LINK

(Please note:  this scheme too will blow up in their face just like Long Term Capital, Enron, Bear Stearns, Lehman, AIG/Goldman.  The taxpayers will be bailing out the banks – and now we know why Citigroup wrote the legislation that enabled banks to move their OTC derivatives positions to their FDIC insured units – but gold and silver will go parabolic)

Back in the late 1990’s, the then head of the CFTC – Commodities and Futures Trading Commission,  the Government entity which is supposed to oversee futures and derivatives markets (enforce the laws in place to prevent criminal activity in these markets) – Brooksley Born embarked on an effort to impose oversight and regulation on the burgeoning OTC derivatives markets.  We all saw back then the dangers they impose on the system when Long Term Capital imploded and almost took down the global financial system.

I was a junk bond trader back then and vividly remember the entire affair.  In fact, Bankers Trust was the pioneer in OTC derivatives and it also had to pony up the most amount of money to bail out the system from Long Term Capital.  I also had been involved in using OTC high yield derivatives – unregulated – to hide large, risky and illiquid junk bond positions from the Bankers Trust risk management team.  We always did this right before the period in which the bank began calculating bonus pools.  In other words I know first-hand the many ways in which OTC derivatives can be used in corrupt ways to game the system and squeeze enormous profits from the markets.  “Markets” meaning, the people on the other side of your trade.

Of course, Robert Rubin,  Larry Summers and Alan Greenspan put on a full-force lobbying effort to destroy Ms. Born’s effort in Congress and the rest is history.  OTC derivatives are not only financial nuclear weapons of mass destruction, they are right now about the only source of real cash flow for the big banks.

But they are also used to inflict criminal manipulation on the gold and silver markets.  Dr. Paul Craig Roberts and I have written an article outlining the most likely way in the which the big big bullion banks – primarily JP Morgan and Citigroup – are implementing the recent massive spike up in gold and silver OTC derivatives in order to manipulate and suppress the price of gold and silver.   Bear in mind that, thanks the Rubin/Summers/Greenspan triumvirate, we have absolutely no way of knowing exactly how these securities are structured.  And yet – as we’ve seen with Long Term Capital, Enron, Bear Stearns, Lehman, AIG and Goldman – they can catastrophically effect our lives financially.

Are Big Banks Using Derivatives To Suppress Bullion Prices?

Paul Craig Roberts and Dave Kranzler

We have explained on a number of occasions how the Federal Reserves’ agents, the bullion banks (principally JPMorganChase, HSBC, and Scotia) sell uncovered shorts (“naked shorts”) on the Comex (gold futures market) in order to drive down an otherwise rising price of gold. By dumping so many uncovered short contracts into the futures market, an artificial increase in “paper gold” is created, and this increase in supply drives down the price.

This manipulation works, because the hedge funds, the main purchasers of the short contracts, do not intend to take delivery of the gold represented by the contracts, settling instead in cash. This means that the banks who sold the uncovered contracts are never at risk from their inability to cover contracts in gold. At any given time, the amount of gold represented by the paper gold contracts (“open interest’) can exceed the actual amount of physical gold available for delivery, a situation that does not occur in other futures markets.

You can read the rest of this here:   OTC Derivatives Are Used Manipulate Gold And Silver

Click to enlarge:

GOLD_Q1SilverOTCderivs1

A Conversation With Financial Survival Network: The Collapse Is Accelerating

Kerry Lutz of The Financial Survival Network invited me back on to his podcast show to chat about what’s going on in the financial markets, the housing market and the overall economy.

The body count is starting to mount on Wall Street. Both co-ceo’s of Deutsche Bank were unceremoniously dumped. Massive layoffs to follow there and HSBC and elsewhere. Massive manipulation of gold and the stock market?  The Dow Transports has had a major divergence.

As I’ve discussed on this blog, the Orwellian media disinformation has intensified in the last six months, as has overall market volatility in the stock, credit and commodity markets. I believe these are signals that the elitists are becoming more desperate to cover up the epic amount of wealth transfer from the middle class to those who are in a position to extract that wealth – big corporate insiders, wealthy elitists and corrupt politicians.   It’s also a sign that they are losing control of their ability to control the markets.

Something deep and dark has transpired behind the Orwellian “curtain” used by the elitists to hide the inner workings of the financial markets, especially with regard to big bank balance sheets and OTC derivatives. What’s happening right now reminds of the movie “Jurassic Park.” You can hear and feel the monster coming but you can’t see it yet and you don’t know it will pop up in your face or how big it is

You can listen to the podcast conversation here:   Did A Derivatives Bomb Just Explode?