"I want to stress the very important observation that I made in my article "Was it all just an honest mistake" published yesterday. The massive quadrillion dollar derivative market that grew up in the space of 15 years must have been based on illegal insider knowledge. The only way that such a massive bet could be placed is if the few players that were writing the contracts KNEW they were going to win. The bet totaled more currency than exists in the world. It totaled 15 times world annual GDP!

When we observe that the majority of these derivatives were related to interest rates staying low one then has to ask how could insiders know interest rates were going to remain low? This brings you to Gibson’s Paradox and Summers & Barsky paper that by suppressing the gold price interest rates could remain low….the economic theory that underpinned the "Strong Dollar Policy" of Rubin. The so called "Bond Vigilantes" became extinct even when M3 was increased promiscuously from 4T$ to 15 T$ in 14 years! The market was rigged and the money was to be made by illegally playing that non-public knowledge. The OTC derivatives on gold mushroomed to many times the size of the underlying market and the interest rate derivatives exploded to nonsensical levels. The circumstantial evidence is "Elementary, My Dear Watson". If a stock speculator suddenly invested 1B$ in a company stock when the speculator only had assets of $50 million one could be absolutely certain that the speculator had non-public information. Clearly when a handful of banks bet one quadrillion dollars on the direction of interest rates, or related credit instruments, they were not speculating, they were insider trading.

Once these entities were loaded up to the gills with these "guaranteed" bets, then those that were not part of the Cartel doing the rigging became defacto market riggers because they had a vested interest to manipulate the gold price, the dollar and treasury markets and other credit instruments to keep markets from triggering their derivatives into pay-outs. But all scams eventually fail and this one is failing too. As defaults ripple through the markets derivative contract payouts are being triggered that the highly leveraged banks can not pay which is leading to other parties defaulting. The nuclear fuel rods of the scam are paper promises for gold.

The ability to sell paper substitutes for gold hinges on enough gold being available to meet the fraction of those promises that are redeemed in physical gold. The growing trend to take delivery of physical gold by investors and the buying by some central banks will implode the derivatives scam and the upward gold price reaction will be sudden and awe-inspiring.
Cheers
Adrian