Total Notional Value Of Derivatives Outstanding Surpasses One Quadrillion

The notional value of all outstanding derivatives now totals approximately $1.144 QUADRILLION.

This appears to be Bank of International Settlement Spin to announce the largest gain in derivatives outstanding since they started to report. As of the last report it appeared that both listed and OTC derivatives was under $600 trillion. Now listed credit derivatives alone stood at $548 Trillion. The OTC derivatives are shown as $596 trillion notional value, as of December 2007. One can only imagine what number they are at now.

Well we hit a QUADRILLION. We have more than $1000 trillion dollars in all derivatives outstanding. That is simply NUTS because notional value becomes real value when either counterparty to the OTC derivative goes bankrupt. $548 trillion plus $596 trillion means $1.144 quadrillion.

It would be an interesting piece of research to see what the breakdown is of listed derivatives according to exchange to see if it adds up to the reported number. Spin is now everywhere.

This means that no OTC derivative house can be allowed to go broke. This means that whatever funds are required to rescue failing international investment banks, banks and financial entities will be provided.

Keep this economic law in mind. Monetary inflation proceeds price inflation and is its primary cause in economic history from Rome to present.

Nothing can stop the juggernaut of price inflation heading towards every nation like a runaway freight train down a mountain.

Gold is going to at least $1650. I am probably way too low with that estimate.

The US dollar will trade down to at least .5200 as measured by the USDX.

Gold is the easiest market to trade for the aggressive investor. Sell 1/3 when the market looks like a Rhino Horn which you will see with your French Curves at the point of the rollover.

Buy 1/3 back when the price of gold looks like a fishing line hanging off a fishing rod. Your maximum power down trend line will give you this.

Monday, June 09, 2008
Author: Jim Sinclair

Source: Jim Sinclair’s Mineset

4 thoughts on “Total Notional Value Of Derivatives Outstanding Surpasses One Quadrillion

  1. Mr. Sinclair, will you give me a mathamatical example of notional value of a direvative. What happens when interest rates go up. If I understand corrctly, when that event happens, rates head north, direvative values head south or as more homes go into default/foreclosure, notional values decrease. Tks, Bill R

  2. This seems incredibly high. I thought it would be more like 50 trillion. This is based on estimates of 3 to 5 trillion of actual derivative assets for the USA and a leverage of between 10-30 to one.

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