DERIVATIVES – A RECIPE FOR DISASTER & SYSTEMIC COLLAPSE
BY EGON VON GREYERZ
THEDAILYCOIN.ORG
MARCH 17, 2018
Gambling is according to Wikipedia the wagering of money (or something of value) on an event with an uncertain outcome. Three elements are required for gambling, Consideration, chance, and prize. Thus, you make a bet and if you are lucky you win a prize but you can also lose it all. Gambling has been around for thousands of years and maybe longer. The first 6-sided dice dates back 3000 years. Eventually gambling became more organised as casinos were established. The first well known casino was set up in Venice in the early 1600s.
Casino means a small house and the house was the banker. The odds were naturally always in favour of the house and that has not changed for centuries. In the last 100 years, the bankers or the House have made fortunes and especially in the last 25 years as market manipulation has taken massive proportions.
Over the last 100 years, governments and central bankers have made the investment markets into a casino with only winners which primarily have been the bankers themselves.
Central and commercial bankers have created the most perfect Casino model, a model where the banker is the winner every time. Firstly, the banker issues the money with the help of infinite leverage. Then he sets the conditions – interest rates, fees, terms etc. To further improve his odds, the banker also manipulates markets so that they are always in his favour.
The most perfect market from the bankers’ point of view is the derivative market. This is the biggest financial market in the world. It consists primarily of unregulated Over the Counter (OTC) instruments. A derivative is an instrument which derives its value from underlying assets such as stocks, stock indices, bonds, foreign exchange, gold, silver etc.
Derivatives is the biggest money spinner of the financial system and has made many bankers very wealthy. The system is totally skewed against the buyers of the derivatives. Prices are set so that the issuer of the derivative cashes in virtually every time. Prices are always set for the bank to collect 100% of the premium and never pay out. As maturity of a derivative in the money approaches, the bank will do its utmost to manipulate the price to make the derivative worthless.
t is important to understand that the value of a derivative is derived from underlying assets but there is absolutely noting backing a derivative except for the credit standing of the issuer.
GOLD AT $1.4 MILLION PER OZ TO COVER DERIVATIVE FAILURE
Total derivatives outstanding is around $1.5 trillion. The Bank for International Settlements (BIS) reports a figure of $500 trillion. But that figure is not credible since it was adjusted some years ago after netting off a major part of the gross exposure. The gross derivative exposure is 1070x central bank gold. So if central banks needed to cover an implosion of the derivative market with gold, the gold price would increase over 1,000 fold from here to $1.4 million. This might not seem a plausible price but we must remember that gold reached 100 trillion Marks during the Weimar Republic and is now in Venezuela 53 million Bolivars. (The black market price is 370 million bolivars). As global credit markets implode and money printing starts in earnest, a $1.4 million gold price might be much too low.
DEUTSCHE BANK – 650X LEVERAGE IN DERIVATIVES
The Rest…HERE
