2012年11月2日 星期五

Greyerz - Gold & The Incredible Financial Destruction We Face

世上實金和紙金的比例, 一個人為吹出來的驚嚇埸面 !


kingworldnews.com

Earlier today King World News published the extraordinary chart sent exclusively to KWN by Egon von Greyerz.  In part II of his interview, Greyerz, who is founder and managing partner at Matterhorn Asset Management, discusses the incredible chart, and gives readers a shocking price for gold which is based on that ‘cubed’ chart.

Here is what Greyerz had this to say in Part II, along with his comments about the fascinating chart:  “I discussed the real over-the-counter derivatives earlier, which stand at $1.1 quadrillion, and this is worldwide.  Every time there is a problem in a bank it seems to be derivatives related, such as what happened with JP Morgan which recently lost $5.6 billion, and UBS which lost $2.3 billion.”

Egon von Greyerz continues:  

“They have young people, many times in their 20s, coming in and having derivatives positions of tens of billions or even one hundred+ billion dollars, and these young people have no idea what they are doing.  The individual from UBS, who is now defending himself, said, ‘I just came in to run these positions.  I had no idea about this market.’  He is only 27 years old.

So you have inexperienced people taking massive risks, and running positions which amount to an unthinkable total of $1.1 quadrillion....

“Every time we look at these positions closely and value them, which is when there is a problem, the banks realize the positions are not worth anywhere close to what they believed they were.  The real, underlying problem is that even management at the banks don’t understand these derivatives.  They don’t know how to value them, so they have no understanding of the true value of the positions.

Many times they are virtually impossible to understand, therefore the traders can value them at whatever they want.  Of course they are unregulated and they are not traded on any exchange, and most all of this is held off-balance-sheet.  Meaning they are not included on the banks balance sheet.

What the banks do is net down the positions to a very small total because they assume that counterparties will pay.  Well, we know when something happens in the banking world, take Lehman as an example, and we will have many more Lehmans in the future, the counterparty doesn’t pay or isn’t able to pay.

What that means is the gross remains the gross, and again, we have an outstanding exposure, worldwide, of an unfathomable $1.1 quadrillion.  You also have to realize that there are virtually no reserves against these enormous positions.

This is why investors that hold major assets in banks are taking risks they shouldn’t take.  The reality is the banking system is incredibly fragile because of the ongoing risk of the derivatives bubble blowing up at some point.  I would add that the risk of this happening is very high in my view.
 
This is the reason, as I’ve said, that investors have to hold assets outside of the banking system.  Let’s take a look once again at the cube chart, just to look at the proportion of outstanding derivatives to gold:



You have $1.1 quadrillion of derivatives, and all of the gold ever produced, which is in one corner of the chart, is $9 trillion.  If you take the gold said to be held by central banks, which assumes the central banks physically possess the 30,000 tons and I don’t believe they have anywhere near that, but hypothetically speaking, if they did, it is only $1.6 trillion worth of gold.

You can see in the above chart that the central bank gold only fits into a tiny corner of the cube.  So what I am saying with this chart is if there is a derivatives blow up, you can only imagine the amount of money that would need to be printed.  And, again, I think there is a very high probability of a derivatives blow up taking place.

If you then related the enormous derivative position to the percentage of gold allegedly held by central banks, if gold were to reflect that, you are not talking about gold at $10,000 or $20,000, you are talking about gold well above $100,000 an ounce.  This is what investors must focus on in terms of the bigger picture for gold.”

沒有留言: