There was intraday commentary here that included an interesting perspective from the audacious one percent and their enablers.
"It is not meaningful that there are 107.7 claims per registered ounce. you should consider that the ratio between paper SPY and real SPY is infinity.You are making the fundamentally flawed assumption that you need a physical commodity to determine price. You do not.It doesn’t matter how many physical ounces there are per claim. It can be 1 or 1000 or 107.7 or infinity and it simply doesn’t matter.The purpose of commodity markets is not to trade commodities, it is to determine price. There are zero SPY physical contracts and the market works just fine.>I was a commodities broker and part of the test is to ask the function of commodity markets. Every commodity broker understands you don’t need a physical product.It’s not a broken system, it’s existed in one form or another for a longer time than currency in any form. But to use it you have to understand it and you do not.Everyone who owns physical gold or silver bought it with paper. There is no difference, they are fungible. The only difference is the price you are willing to take or to give. Physical and paper are exactly the same.Saying that financial markets are manipulated is about as meaningful as saying the sun rises in the East. Well, duh?"
The notion that the paper markets can set prices as they will without regard to risk or leverage is a not uncommon assumption held by those in the pursuit of unearned wealth. That is why we have market crises and crashes.
This flawed assumption of the extensible power of fiat is the basis of every black market and currency crisis in history.
Like the famous short seller Daniel Drew once said, 'He who sells what isn't his'n, must buy it back, or go to prison.' But it is not always just a matter price to someone who might really wish to have the thing with they think they are purchasing.
I understand the mindset. I really do. It is the same mindset that Kyle Bass calls out in his video below about the Comex about why he chose to take delivery of his gold out of a sense of fiduciary responsibility.
Leverage is a component of risk, but given the state of things, I feel the need to call it out separately since it seems to be fashionable now amongst 'market professionals' to believe that leverage is irrelevant to the point of infinity. Maybe it is when you are playing with other people's money, and there are no consequences for your actions.
This sort of nonsense used to be relegated to the intraday antics, in which markets are just a voting machine, but you could rely on markets on the longer term to obtain some greater efficiency. The breakdown is that the grift has completely taken over, thanks to the policy errors of the Fed and the regulators.
It may take some time to catch up with us, but we know that at some point there will be hell to pay in the real world. And there are those who simply do not care, who are sure they can just take their loot and blithely walk away, if they ever bother to think that far ahead.
How can we not see this lesson now, after all that we have seen and been through over the past twenty years?
If you do not get this by now, then you probably will not 'get it' until you are searching in the rubble for your face after the next financial crisis.