Most of you know that just 2 financial institutions hold 75,7% of all derivates contracts. Think about this for a moment. normally we see other big Wall Street firms being active in the derivates market. Normally the free market ensures that we have competition. But this is no big news, at least not for me.
Why are regulators keeping other financial institutions out of this market? After all: every merchant bank or big financial institution loves to trade. So why are regulators keeping new institutional parties outside this market?
Something else is more interesting and important for us to be aware off. This is the size of the intervention. Since the financial collapse of 2008, we saw an increase of 157%. Yes, I know that you need to know about the size of the market. From $15 billion to $33.6 billion now.
So if JP Morgan and Citibank control over 75% of this market, then they have the power to set market prices. Due to the fact that there is no limitation on how many contracts can be printed, we see that the market is just rigged. But market regulators are turning a blind eye towards it.
We see the pile of evidence that market parties are pushing the prices down, by going short and so allowing you to gain more Gold or Silver for your money.
The futures market is highly leveraged. Yes, those credit lines are also provided by the 2 earlier mentioned financial institutions.
The decision to operate leveraged contracts in the market is putting a massive risk on the financial markets. With taxpayers get likely to be forced to bail the banks out.
What when they are prosecuted and held accountable and have to pay the damages the banks did to the society? How can they pay this money? It will mean that the banks will go bankrupt. As both banks are FIDC protected it is a fair question to ask: is there enough money to compensate all accountholders? Let me tell you the answer: no it is not.
At the moment one Vice President at JP Morgan is being investigated by the Justice department. So what will happen? Likely he will lead to a deal. A deal which will result in a complete confession. Which will include all crimes the banks were engaged in.
So when the financial system is collapsing you are likely to pick up the bill. Does this sound fair to you?