Gold derivatives in crisis

derryb

Yes Virginia, there is a Santa Claus gold counterparty risk, and it lies in bullion bank derivatives.

"Officially described as speculators, but better described as suckers, gold and silver futures are the medium for a repeating cycle whereby market makers supply them contracts by drawing on the ability of their banks to create bank credit out of thin air. Once the suckers run out of buying power, the market makers pull the rug out from under them, taking out their stop-loss points. It has been an immensely profitable exercise for swap dealers. Fortunately for swap dealers, the suckers have short memories."

blitzdude

Not another gold crisis. Wake me up when we hit $5,000. Yawn

ReadyFireAim

When will the announcements on June contracts be made?
Is that what everyone is looking at?

bronco2078

who are the dummies that volunteer to get their pockets picked ?

roadrunner

Approx $650,000,000,000 in gold over-the-counter derivatives held by the big banks per the BIS. That's "only" 3-4 yrs of annual world gold production. All paper and of course with counter-party risk. These basically didn't exist before 1989.

derryb

In addition to upward pressure from a very possible gold derivative failure there also remains a good chance of a currency crisis. The FED has rolled out in eight days more than twice the dollars than it did over 18 months after the last crisis. And on top of the FED's new Trillion$, congress just dumped $2Trillion cash on the economy with its CARES Act. Mix in all of the new sovereign debt from this mess and you could end up with a perfect storm opportunity.

Might be a good time to buy anything gold.

derryb

@bronco2078 said:
who are the dummies that volunteer to get their pockets picked ?

In this instance it is speculation from banks who are using money they created via fractional lending in hopes of turning it into more money. They fail to realize that they got sucked into the up and down fantasy pricing by those with bigger pockets.

derryb

@blitzdude said:
Not another gold crisis. Wake me up when we hit $5,000. Yawn

It's not a gold crisis, its a crisis of promises. Gold is the benefactor. You might want to be awake and buying before $5000 gold. $5000 will be only momentary.

jmski52

Once the suckers run out of buying power, the market makers pull the rug out from under them, taking out their stop-loss points.

Leverage is a cruel mistress.

derryb

@jmski52 said:
Once the suckers run out of buying power, the market makers pull the rug out from under them, taking out their stop-loss points.

Leverage is a cruel mistress.

wash, rinse, repeat

derryb

End of gold, silver paper markets?

So there are many factors which will be extremely favourable for the precious metals:

Fear and loss of confidence in economy
Financial system collapsing
Failure of paper market
Debasing of currencies and hyperinflation
Exponential increase in demand
All current gold production absorbed annually so no surplus
We have reached peak gold and production will decrease