In the movie The Big Short, banks were buying and selling derivatives on mortgage bonds at rates of hundreds if not thousands of times the actual number of houses tied to those bonds. In fact, it was the advent of the Synthetic CDO (collateralized debt obligation) that turned a housing crisis into a global financial collapse.
Yet because global governments didn't unwind these trades when the need for a bailout came, and jail the bankers who created the environment for global collapse, they simply gave the criminals on Wall Street and London the motivation to keep committing fraud and manipulation in not only the housing market, but in every market.
Following the decision to keep interest rates down to near zero, and initiating a program of money printing that was labeled as 'Quantitative Easing', central banks desperately needed to keep the price of gold down so that the true value of the dollar, euro, and yen would not be realized by the public or general economy. And they did this by removing all protections to the gold market and allowing paper derivative contracts to dictate the physical markets. And now five years later, that manipulation has reached levels where more paper gold contracts are traded everyday in London than the total amount of physical gold that is available in the entire world.
Currently, the number of contracts on the COMEX represents 300 times as much paper gold as there is physical metal in the COMEX vaults. Moreover, this number has ballooned at a faster pace over the past two years or so. The 300:1 ratio of contracts to physical ounces is propped by powerful restrictions. The COMEX forbids delivery of gold on the ramps to satisfy a gold contract, under threat of banning the party from participation and entry in the door. Almost nobody takes actual delivery of their metal, except for the big Wall Street banks which steal gold from other depositors. These banks also routinely rig the windows to enable removal of investor gold in the GLD Exchange Traded Fund, and silver from the similar SLV fund. Imagine a gold futures contract with no delivery possible. How absurd! But it has been the reality since June 2012.
The situation is perhaps even more frightening in the London Bullion Market Assn (LBMA). This market sees $trillions worth of gold trades every day. The activity is truly baffling. On individual trading days, more gold changes hands within contract trading (paper shuffling) across the London market than all the available gold in the world. Yet no metal moves anywhere, in a grand charade. These are merely paper transactions, with almost no actual metal ever in movement. The staggering leverage and dilution should not make any sense to the rational observer. However, in sharp contrast, the Eastern nations are accumulating gold in large volume. - Dr. Jim Willie, Silver Doctors