Hi cockerel,

The only difference is the bankers have a gun held to the head of international governments with their OTC derivatives ponzi scheme. It appears failure to save the derivative implosion will result in systemic worldwide financial collapse and governments are simply not willing to accept this option and will shift the burden onto the taxpayer by becoming the market counter-party.

I certainly do not claim to fully understand the derivative market, however I liken this ponzi scheme to sports betting. Like a bank, a sports bookie will use odds to evenly distribute the collective wager amount on either side of the bet and collect his "juice" or commission regardless of the outcomes. His goal is to adjust the odds in order to facilitate an equalization on either side of the bet. The bookie (banks) is content to collect a relatively small commission on the vast number of bets (derivatives) with a relatively small bank roll (assets) used to supplement his expenses.

This ponzi scheme works fine as long as all the loosing counter parties pays up their losses needed to pay the winners since the bookie may have the resources to pay for small defaults, but simply cannot cover any large loosing defaulters. Defaulting in the sports betting area is highly discouraged since we all know what the consequences are when the bookie will send his "Shylock" to collect his pound of flesh. The problem with the derivative ponzi scheme is that there is no Shylock to enforce payment and once some of the largest counter parties default (i.e. Bear Stearns & Leehman Bros.) the winning party cannot be paid and therefore, cannot pay on a loss they have on another OTC derivative loss...an so on they fall like dominoes.

It doesn't seem that bad until you consider the entire OTC derivative market is closing in on $700 trillion and accelerating in size, and to put that into perspective the total nominal world GDP currently stands at $55 trillion.

I also agree that gold and silver ETFs will ultimately be exposed for not providing the 100% backing in assets that they claim, leaving gold/silver stocks at the last remaining proxy for bullion.

As for the JPMs, the market is finally showing signs of encouragement as the venture exchange appears to be coming off a bottom and appears to be poised for a strong move higher. The chart belows shows the JPMs are not dead and leading gold higher over the past 6-8 weeks. The next few weeks will be key to see if the reversing 50dma holds a support.