Derivatives—A Recipe for Disaster And Systemic Collapse

The comments above & below is an edited and abridged synopsis of an article by Egon von Greyerz

Gambling: the wagering of something of value on an event with an uncertain outcome. If you make a bet you may win a prize, but you can also lose it all.

The odds are 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 on massive proportions.

Over the last 100 years, governments and central bankers have made the investment markets into a casino with winners that primarily have been the bankers themselves.

Gold and silver represent incredible value in a financial system that is unlikely to survive in its present form. Precious metals is the only asset class that will maintain its purchasing power in the coming financial crisis. But gold and silver will do much better than just maintaining value. Commodities are now finishing a major bear cycle and will outperform all asset classes in coming years. Gold and silver will be the winners among all the commodities and will reach levels that are hard to imagine today.

What is guaranteed is that paper money will become worthless in the coming crisis, and that most bubble asset classes will decline 75-95% in real terms. Gold is nature’s money, and as such will be the only money that will survive the coming crisis, just as it has for over 5,000 years.

Von Greyerz discusses: Derivatives—the house always wins; gold at $1.4 million per ounce to cover derivative failure; Deutsche Bank—650x leverage in derivatives; derivatives are too big to save; and gold and silver—incredible value.