The $2.3 Quadrillion Global Timebomb
The comments below are an edited and abridged synopsis of an article by Egon von Greyerz
As von Greyerz warned recently on Archegos and Credit Suisse, investment banks have created a timebomb with the $1.5 quadrillion derivatives monster.
A few years ago, the Bank of International Settlements reduced the $1.5 quadrillion to $600 trillion with a pen stroke. But the real gross figure was still $1.5 quadrillion at the time. According to von Greyerz, the real figure today is probably over $2 quadrillion.
A major part of the outstanding derivatives are OTC, hidden in off-balance-sheet special purpose vehicles.
Up for discussion: Leveraged assets go up in smoke; Deutsche Bank—derivatives 600x equity; and focus on wealth preservation.
Investors have a choice: Either they follow the coming crash in bubble assets like stocks, property and bonds all the way to the bottom, which is likely to be 75-95% lower in real terms (measured in gold), or they can protect their wealth in physical precious metals, stored outside a fractured financial system.
As always, history gives the answer on which path to take.