U.S. Banks' Precious Metals Derivative Exposure Surged In The Beginning Of 2017

According to the most recent report on the U.S. Financial Institutions Derivatives trading activity, the U.S. banks held a record amount of precious metals contracts in the first quarter of 2017.

Not only did the U.S. banks report a record amount of precious metals contracts, but they also held an unprecedented quantity in notional value of commodity and equity derivative contracts.

There just seems to be a lot of paper floating around in our highly inflated stock, bond, and Forex markets. And… there needs to be. Without an ever increasing amount of leverage via their derivative bets and hedging, these markets would be in serious trouble.

Furthermore, the practice of using contracts to hedge bets upon on other derivative bets has put the financial market in a highly fragile state.