$37 Trillion Risk Vs $62 Billion in Equity

Take a moment and try to comprehend what a $37 Trillion Risk (liability) is all about.

Here’s what it looks like in decimals $37,000,000,000,000.

Now, compare that with the decimals of 62 Billion, $62,000,000,000.

You must admit that both figures are ominous.

And, unfortunately, they both represent the balance sheet of the largest bank in Europe…Deutsche Bank.

Let’s break this down.

The $37 TRILLION represents the exposure Deutsche Bank (DB) has in derivatives.

[Wait! You mean the same Derivatives that blew up the market in 2008-2009 that nobody understands?

Yes!  Only now they’re much worse than back then…Groan!]

The $62 Billion represents DB’s total equity.

So, In Plain English that means DB’s derivative position is over 600X greater than their equity.

Wait! What?

Or to put it in a different way, their equity is 0.17% of their outstanding derivatives (liabilities).

Do the math.

A loss of 0.2% will wipe out the bank and all of its capital.

What’s at Risk

Cue up the recent implosion of Archegos Capital Management (We wrote about it on April 7^th HERE).

The $30 billion in Archegos derivatives that went up in smoke over a weekend is just the tip of the iceberg.

Archegos lost everything.

And the normal uber-leveraged players Goldman Sachs, Morgan Stanley, Credit Suisse, Nomura etc. lost at least another $30 billion…or much more.

They all say that they’re covered with NET positions.

LOL!

What they don’t say is Derivatives can only be netted down on the basis that counterparties pay up.

So, who has an extra $37 Trillion laying around?

Obviously, no one.

But in a real systemic crisis, counter-parties simple disappear (like back in 2008).

And that’s when gross exposure (liability) remains gross.

This is one of the many reasons we’ve been telling you to avoid buying the major bank stocks.

They’re all up to their eyeballs in derivative exposure.

It’s a time bomb called “Financial Weapons of Mass Destruction.”

And it’s another reason why we continue to say you need to own physical gold AND silver.

If you haven’t read our FREE special report: “Gold, If You Don’t Hold it, You Own it” check it out (HERE).

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