Goldman's Derivatives Clearing Service: The Better To Cheat You With My Dear

Say, aren't Goldman the fellows that just pled to fraudulent dealing in financial instruments like MBS, and paid a fairly hefty 500+ million dollar fine? The company is starting a centralized clearing facility for derivatives, which may be among those mandated for use by market participants, in the US government mandated efforts to reform.

When one considers the information available to a central clearing facility, somewhat like an exchange, it does give one pause to have the owner of that facility as a somewhat notorious and aggressive market participant with a known penchant for exploiting information for its own ends.

Financial reform and change you can believe in. It pays to have friends in high places.

Economic Policy Journal
If Regulators Say Trade Through a Central Exchange...
By Robert Wenzel

...Goldman Sachs starts a central exchange.

Is it me, or does it just seem that whatever the rules or regulations, Goldman comes out on top and pretty much ends up running the show?

Regulators are preparing rules that will require the majority of privately traded derivatives be cleared through central counterparties.

Goldman Sachs announced today the launch of its Derivatives Clearing Services (DCS) business. The DCS will provide clients with a comprehensive global OTC clearing service for interest rates, credit, foreign exchange, equities and commodities, says Goldman.

“In partnership with our clients, regulators and multiple clearing venues, we are committed to improving market structure for derivatives,” said Michael Dawley, Managing Director and Co-Head of Futures and DCS, Goldman Sachs. “The DCS offering provides our clients with a host of value-added services and multi-product expertise to successfully navigate this dynamically changing environment.”

According to a press release,Goldman Sachs said it recognizes that clients will be faced with new reporting, connectivity, and regulatory requirements. The firm is committed to investing in innovative solutions to help clients address these changes.

“The move to central clearing for OTC derivatives is a significant turning point in the marketplace," said Jack McCabe, Managing Director and Co-Head of Futures and DCS at Goldman Sachs. “Our strong trading franchise, coupled with our market leading futures and prime brokerage services, enables us to provide our clients with the foundation they need to adapt to these important industry developments."

Net Asset Values of Certain Precious Metal Trusts and Funds

Gold Daily Chart; Shock and Awe for Comex Option Expiration

Today is yet another Comex option expiry, and the metals, which have been subject to bear raids for the past week, were hit hard and heavy from the New York crowd. This is also the "roll" week, as anyone not intending or funded to take delivery of August gold has to be out of their long positions by the end of the day Thursday.

Why anyone would bother to invest in Comex options is beyond me, or Comex futures for that matter, given the position abuses it tolerates. While we welcome Bart Chilton's stirring message of reform, we'll have to wait and see what the actions taken by the CFTC in position limits and disruptive manipulation are. I think the traders on the NY commodities exchanges have given Bart their answer to his proposed changes, and put him in his place.



Besides the usual market manipulation generally seen around key events like the end of quarter or an option expiration, what reason is there for this incessant capping and smackdowns of the precious metals? Is it a simple question of confidence in the dollar? Surely it is not because of the $30 billion being made available for subsidized small business lending. Or are their preparations being made for another large round of Quantitative Easing II, or even the pre-emptive bombing of Iran? It is hard to say, since the fraud option has been on the table as an instrument of US policy since the 1990's at least.

Obama has proven to be a good talker for reform but a very poor performer when it comes to curbing the excesses of his supporters and contributors at the large corporations particularly in the financial sector. This taints his entire administration.

At 11:00 AM



Here is an intraday update on the Gold Daily Chart. 1166.50 is an important level because it marks a prior low. We have reached it intraday today, so we would look for some support and a potential double bottom.

The formation as a 'cup and handle' is still valid, with the retracement less than 50% off the final high (1154 would be 50%) but there are other formations worth considering. We'll keep an open mind on that depending on how this week finishes.



Unfortunately for Larry Summers, Ben Bernanke, and their friends at the BIS, they have not yet figured out how to print physical gold, silver, and the world is reaching the point where it might start simply ignoring the New York markets with respect to essential commodities such as basic materials, oil, foodstuffs, metals, and the like, as they become increasingly irrelevant, fraudulent, and Orwellian. And then where will the financial engineers be, except with no more excuses and no place to hide?