Who Is On the Other Side?

In the world of trading – stocks, bonds, real estate, futures, commodities, etc., – there’s a question you must always ask: “Who is on the other side of that trade?”

So, in Plain English it means several things:

1. If you’re a buyer of an asset, what proof do you have that the seller actually owns or can supply it on demand?
2. Is the asset tangible?
3. Can you take physical possession of the asset?

Ironically (or NOT) many cases taking physical possession of assets is an assumption but not often done.

The exception to that is real estate.

In the case of stocks and bonds your possession consists of a piece of paper showing your ownership and/or claim against a company or agency/municipality.

Unfortunately, pieces of paper and/or electronic digits can magically disappear with the click of a mouse.

Oooops!

“Sorry, Mr. investor, we don’t have any record of your ownership.  But get in line with the millions of others with the same claim.

And hopefully someday we’ll get to it.”

Think that can’t happen?

Think again.

On the other side…

And while you’re at it think of all the “promises to pay” issued by governments around the world for their bonds.

Because for decades they’ve been issuing debt without the means to pay it back.

Then consider that it is mathematically impossible for governments to pay the debt they owe.

So, to answer the question of “Who is on the other side of a trade with government bonds” the answer is…a promise with nothing to back it up.

Banks with Quadrillions…on the other side

And speaking of a promise to pay, America’s biggest banks are on the hook for Quadrillions in derivatives? *

Huh?

(* Note: derivatives are what brought the world to its knees during the 2008 meltdown)

And JPMorgan Chase, the biggest bank in the United States with an unprecedented five criminal felony counts since 2014, tops the list of offenders.

JP’s dangerous book of derivatives has been allowed to spike by $14.42 trillion in the first quarter of this year, soaring from $45.84 trillion on December 31, 2021 to $60.26 trillion on March 31, 2022.

We won’t dwell on this but simply say that there is absolutely No One on the other side of that trade.

The same is true for every other major bank.

So, to avoid having no one on the other side of a trade buy physical gold and silver AND TAKE POSESSION OF IT.

Be sure to read our July newsletter where we list, in order, the safest assets to own during Turbulent Times (HERE).

You’ll be surprised at some of them.

And share this with a friend…especially if they don’t own gold.

They’ll thank YOU later.

Remember:  We’re Not Just About Finance.

https://www.financialsmatter.com/category/in-plain-english/

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