CelenteGold and derivatives expert Jim Sinclair has sent subscribers an alert this morning warning on the severity of the global derivatives market, which Sinclair has dubbed the Global Derivative Graveyard Problem.
The IMF, which currently estimates the global derivatives market to be approximately $600 trillion (rather than the true $1.26 QUADRILLION notional), has come out and stated that the entire derivatives market is a WMD time bomb

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From Jim Sinclair:

Here is the recent IMF conclusion on page #47 & #48 on the potential still remaining in the OTC derivative graveyard. This is not from me, but rather from the establishment itself.

The number the IMF is using is way below the huge number of the global problem, and still they conclude that the derivative market is a world class WMD time bomb.

The following is courtesy of CIGA DC browsing on our behalf. This should be a huge concern to any analyst with their eyes open.



TITF – Too Important to Fail Risk

SIFI – Systemically Important Financial Institution Risk

Topology (from the Greek τόπος, “place”, and λόγος, “study”) – A major area of mathematics concerned with the most basic properties of space, such as connectedness. (wikipedia)


A major hallmark of SIFIs is their activity in financial derivatives markets. The analysis of this paper has one clear message. The global derivatives markets in the post Lehman period, despite considerable compression of bilateral positions, are unstable and they can bring about catastrophic failure. Quite simply, a threat of failure to any of the SIFIs is an immediate threat to the others. The network topology where the very high percentage of exposures is concentrated among a few highly interconnected banks implies that they will stand and fall together. This topological fragility of the derivatives markets as risk sharing institutions has an implicit moral hazard problem that undermines their social usefulness. The empirically calibrated network for derivatives liabilities manifests a highly clustered core- periphery structure and extreme form of TITF as seen in Figures 5.a- 5.f. The implied socialized losses are very large (to the tune of US$350 billion) and the liabilities arising from extant derivatives network structures cannot be supported by the existing capital base. The good news is that the highly clustered network structure permits targeted management of systemic risk. One of the main contributions of the paper is to use network analysis to design a set of surcharges that will enable the SIFIs in the derivatives markets to internalize the costs imposed on other FIs and also the tax payer by their failure.

Link to full report…



  1. Implied Socialized Losses of $350 billion!  That loss is ours, my silver brothers and sisters.  If these derivatives FUBAR we are on the hook.  The banks keep profits private and losses public.  Or pubic if one cares where the wild goose goes.

    • @AGXIIK
      Do you really think that any bail out would occur when JPM’s 79 Trillion in derivatives fails along with the other rotten banks that hold much of the almost 150 Quadrillion World derivatives market? 350 Billion is chump change and we ain’t in the ball park for any liability.

    • I don’t think the American public would swallow a derivative bailout, government is already broke, transferring that level of wealth is not possible and of tried the government would have to file bankruptcy. As it sits I don’t think any public bailouts are going to go over well. To many are taking a tax hit from Obamacare, inflation bordering on hyperinflation, and other taxes snuck in as fees.

    • IMHO, it does not matter to whom the bill will be sent for a derivatives market implosion.  There simply is not enough money on this planet to bail them out.  This is the BIG RED RESET button in the financial system because that is the ONLY way to rationalize debt of this incredible magnitude.

  2. This is what I want to hear and read more of. The Derivatives Market is going to send everything crashing and the PM’s sky high. We don’t hear or see much of this and I believe it’s intentional because it is a bomb.
    To hell with the spot price for now, just keep Stacking and the Derivatives Market will do the rest.


  3. I thought the time bomb was the bond market bubble?  Oh well, maybe there are a few black swans out there that will visit.  I can’t wait until the sheeple find out they have to pay for big government. Lets get out of the denial stage.  Lets get it over with. Fireworks are needed.

    • The Fed has some control over treasuries as long as public has confidence in the U.S. dollar.  Derivatives are another matter.  They are very dependent on counter-party risk.  If the counter-party can’t make good, the notional value becomes the real loss.  Domino effect could crash the derivative market in a week or less.

    • Many of those who vote for BIG government do so because they expect to receive either power or goodies.  Since they perceive government as the provider of THEIR needs, it is up to others to actually PAY for it.

  4. PK  I think some of those land mines are the BASEL III Accords requiring collateral improvements. While bank collateral is increasingly worthless.  Gold is now a important tier that is  valued 100%for collateral.  But most of the collateral of banks under Basel, including our TBTF banks is about as worthless as used Citroen DSII or a Chevy Vega.  Collateral for derivs.  fuggedaboutit.   That’s why so many banks are buying gold, a short supply commodity.  All Spanish and Greek banks have multi billion Euro negative net worths, completely underwater and unable to meet BASEL III.  Greece, Italy, Portugal and Spain are unable to pay their loans much less their obligations to goods and services supplies.  These account payables are as much as 6 months in arrears with virtually no chance of getting current.  Any private or public firm that bad off would be bankrupt.
    The other thing is a certain US debt rating reduction, at least 1 and maybe to 2 ticks downward. The way the Congress handled the FC, a complete clustere munch, handling the debt ceiling is going to be something to behold and I’m not talking about a view of a nice sunrise.
    This will make it impossible for a pension, MMA or other investment fund, required to only purchase AAA rated debt, to buy this JUNK BOND Fiasco. They will probably be forced to offload what they hold thus forcing them to sell the UST bonds at discounts due to the super low yields.
    That will be a terrrible mess when those tranches of debt are sold into a market with little appetite for low rated debt declining steadily in value. There’ll be few willing buyers unless the rates are bumped to maybe 3.5% to 5%   Good luck with that. Maybe those nice IRAs can be forced to buy this nasty stuff.

    • how close is basel 3 to being ratified. I recall gold supposedly going to tier 1 status on jan1, which I believe was now delayed. What happened to the deposit insurance rules set to lapse causing the potential for bank runs? Did that go in.
      There are in theory probably a dozen things that should make metals go hog wild

    • Absolutely. The idea that the unholy alliance of the banks and the govt would allow something in place which either makes it tougher for the banks to do what they do, or makes something like gold or silver, their mortal enemy look better is in my view a long shot.
      Like the famous sign on the front of the Saloon – FREE BEER TOMORROW.
      Delays, changes, whining about “systemically important entities” not being able to be constrained. All the while the dumbed down idiots no their heads and eagerly await finding out the sex of Kim K and Kanye’s baby, and buying something new from amazon.com

    • Canadian Dirtlump is exactly right–FREE BEER TOMORROW!
      The ratification of Basel 3 will keep getting delayed…
      Lots more can kicking will still go on…all the vabbering about the can getting too heavy is just smoke too….
      This can kicking will keep going on & on….diff now is that inflation is really starting to strengthen is grip on the Average Joe.
      So like M45 always says—–“just keep stacking!”

  5. derivatives. sanctioned by governments, and likely used by them through their evil henchmen, the banks to keep the game going.
    Another branch of a government sanctioned ponzi market that won’t end until it has to end and what the trigger is is anyone’s guess.
    Many people have said “hey you won’t see silver over 100 dollars until the shit hits the fan.” This in THEORY is not true, but until the government led fraud system collapses they are still in control so as I see it that has to be the trigger to let silver loose. So maybe it is true in practice. I hope not though.
    Yet here we are with everyone under the sun finally calling for a metals explosion AGAIN / STILL and they are against all odds… getting pasted.. again… after getting the shit beaten out of them..

  6. So, what will trigger the derivatives blow-up, and seeing how ‘they’ have been so adept at kicking the can down the road, what makes you think they can’s stave off a derivatives collapse?
    Yet one more New Year’s prediction:
    A cable TV network will launch a new reality show in which computer programmers compete weekly in algo-challenges; the winner at season’s end will get full US citizenship.
    Keep your humor (humour, in case you are outside the US) because you are going to need it in 2013.

  7. without alot of gold in the bank vaults BASEL III?  Considered can kicked.  Gold equals 100% value.  1982 Ford Escape, 50%
    Dodge Power wagons  30%.   The FDIC cliff was breached from what I heard. $250 billion shifted to MMA accounts  They don’t know what to do with the money due to ZIRP.  Big banks are still considered safe haven but are not lending worth beans so the funds sit.  Small Banks are being stripped of capital due to loss of the unlimited insurance so their capital bases are reduced.  Dodd Frank is not friendly to small banks so see many fall into the hands of bigger banks. 

  8. hey there we go that’s more like it DOWN 80+ cents.. yeah the bottom is in and we’re on our way to 300 bucks..
    bullshit ponzi emporium alive and well.

    there we go, 85 cents now. let’s get into the 20s.. since we’ll be at 50 bucks by valentine’s day apparently.

    even better 93 cents… if anyone has any ideas on the timeline fo these multiple meltdowns I’m all ears. lmao.

    • This is just my opinion which isn’t worth much.  If you already have a nice stack then be patient for a smash down into the 20’s before you back up the truck.  If you do not have any silver than you should start stacking right now.  Not worth waiting.  I do not believe for a minute that we have seen the last smack down.  The Feds have the legendary ESF to use to keep silver and gold tame.  They haven’t quit with the manipulation game just yet.  When things really break down for them we will all get the message.  By that time silver will move higher very quickly.  It will be Mad Max volotility time and it will be a chaotic phase.  I think we have a 50% probability of this starting later in the year.  

    • They will continue the suppression of the PM prices until they’re good and ready to change course (or that black swan comes flying in).  I don’t see why people think there is a real market.  I guess it’s because we all hope for our private gain and are still deluded that the system has some fairness left.

    • “I don’t see why people think there is a real market.”
      Neither do I, but as it happens, it IS possible to make money in a manipulated market.  Once the market is studied for a time, it becomes possible to determine the general motion of the beast and thereby buy and sell at times that won’t make us rich but that do provide some decent earnings.  In my case, that was sufficient money to retire 8 years ago at age 55.  Just because we do not have a real market does not mean that money cannot be made in it, only that the manipulation makes it more difficult.

  9. Down 88 cents – well that New Years Fiscal Cliff resolution-induced bounce didn’t last very long, did it?
    Where is that picture of the waterfall?
    Or, as they say here in Boeing country:  “Controlled flight into terrain!  Pull up!  Pull up!”

    • maybe a sell off on a more hawkish FOMC meeting, after it already got the shit beaten out of it AFTER QE4 was announced.
      Perfectly organic market with impeccable price discovery… lmao

  10. Ranger  That was a funny back channel post.   When this who mess goes tits up, these intellectual dunderheads are going be sitting there, looks of fear and shock, and they will not be able to grasp what happened. Their pucker factor will be higher than a pederast in the Super Max  I like the fear factors that show up in movies like Margin Call and other wall street flicks.  We will be watching that movie for real, just like 8-10 countries now circling the drain
    As for the price of silver, PK, we’ve fiddley-farted around from $26-49 for 20 months.  Something’s going to give and there ain’t  nuttin gonna stop it.  I’m laughing at the event horizon that will blow up the little universe of mini-me bankers thinking they have so say about this.  LOL.  It beats the heck out of
    Admittedly I talk a lot of trash on this channel but I’ve been through 3 major bank industry meltdowns,  1981-84, 1989-1994 and 2009-now.  It’s sucks for the banker schmoes in the path of the Grim Reaper.  He’ll grind them to chicken fried dog crap.  The last one was so close to complete shutdown it had me more than a bit scared.  I was one of the lucky ones with lots of FIAT to buffer the worst but my life style and income dropped about 80% from the peak. The pressure of that lifestyle was not worth it so it’s no great loss  Working the blog rolls is a heck of a lot more fun cuz I get to hang out with folks like you all.
     Blankfein thinks he does God’s word.  Got new for you slick, you have no idea what the big man upstairs got’s in store for you.  But be assured it will be something really nasty

    • “Got new for you slick, you have no idea what the big man upstairs got’s in store for you.  But be assured it will be something really nasty”
      No doubt, for as we all know, banksters tend not to be especially imaginative unless they can squeeze a buck out of thin air or pull some other nifty little trick.  I am pretty sure that God is NOT amused by bankster antics here on Earth and will, no doubt, be informing them of that fact when they come before Him.

  11. Ooooh  I’m quakin’ in me breeches silverrrrr   Warren B is going to give me the hairy eyeball, no doubt.
    Funny about WB. I fired him as my insurance provider thru Geico. Stomped the gecko too.  Berk Hath went down 3% on that action. LOL   I used to admire him until he started that NWO increase tax crap with his buddy BHO. 

  12. Let it crash, let it crash. I went all-in again just before Christmas pretty much on the Dec bottom, but have a biggger purchase to make end of this month, maybe later if the trend seems to be down. Every percent it goes down, means a couple more ounce come my big purchase. 3% down today? I suppose I need to adjust my holding for Feb by quite a few ounces then. My wildest predictions are being bettered, I really am going to make up some ground after coming to the game way too late. I’d love a crash to $15 but doubt I’d be getting any silver. So, $28 or so would be simply awesome. I did buy last year under $28 twice, all I could, so no complaining.
    Smack it please, and I’ll stack it.

  13. I am not sure if I trust Sinclair anymore…. in case you didn’t catch my post on the other article about this, you should read this blog post about JS…. He did after all work in collaboration with the Fed to help loan the Hunt Brother’s $1 Bn… anyways, supposedly his father Bertram J. Seligman is related to the great Seligman and is responsible for creating GoldmanSachs, Lehman and Solomon Brothers. Here is an interesting post from Sinclair circa 2003, talking about his great business and entrepreneuralistic spirit:
    “Outing” JIM SINCLAIR: The Sinclair-Rothschild-Goldman Sachs-Lehman Bros. Connections

    Submitted by pandora on Tue, 2010-05-18 22:27

    “The single reason Jim Sinclair would be able to accurately predict the exact timing of the dollar collapse would be his access to inside information at the highest level.  It should not be overlooked that Jim Sinclair’s ancestors, the House of Seligman, partnered with the House of Rothschild and the House of Morgan, which places him in the inner circle of the Learned Elders of Sion. ”

      The Sinclair Bloodline
    A prominent economic and financial analyst has been predicting for several months that the U.S. dollar will collapse in early November 2009.  James Sinclair is the Chairman and CEO of Tanzania Royalty Exploration Corp. which procures royalty interests in gold production in Tanzania in central East Africa.  Jim Sinclair is also the son of Bertram Seligman whose family started Goldman Sachs, Solomon Brothers, Lehman Brothers and other major investment banking firms.
    “…I know how things end in the market even before they begin. I am the son of one of the world’s greatest traders, Bertram J. Seligman, who like, Jesse Livermore, always knew what was over the horizon.  I do not pretend to have all the talent of those market giants but just some of it. Goldman Sachs, Solomon Brothers, Lehman Brothers, and Bache were a few of the firms started by my family. All this appears in a book called ‘Our Crowd.'” (Jim Sinclair, GATA
    Our Crowd: The Great Jewish Families of New York by Stephen Birmingham relates details of the powerful New York banking alliance in which the House of Seligman—the ancestors of Jim Sinclair and his father, Bertram Seligman—became partners with the House of Rothschild and the House of Morgan:
    “…in the autumn of 1874, Baron Rothschild summoned Isaac Seligman to his office to give him a piece of news. Some $55 million worth of United States bonds were to be offered for sale, and, the Baron suggested, the issue might be backed by a combination of three houses — the House of Rothschild, the House of Morgan, and the House of Seligman. For the first time, August Belmont would act as agent for both the Rothschilds and J. & W. Seligman & Company… The Seligmans were now participating in the most powerful financial combination in the history of banking.
    “At last they were able to consider themselves the Rothschild’s peers. The Seligman–Belmont–Morgan–Rothschild alliance, furthermore, was so successful that by the end of the decade there were complaints on Wall Street that ‘London—and Germany—based bankers’ had a monopoly on the sale of United States bonds in Europe—which they virtually did. The Seligmans were now being called ‘the American Rothschilds’…” (Our Crowd: The Great Jewish Families of New York, Stephen Birmingham, pp. 138-139)  
    The family of Bertram Seligman also started the Bache Group which loaned money to Herbert William Hunt and his brother Nelson Bunker Hunt after they declared bankruptcy in 1981, having reportedly lost billions of dollars trying to corner the silver market.  Jim Sinclair advised the Hunt brothers:
    “From 1981 to 1984, Mr. Sinclair served as a Precious Metals Advisor to Hunt Oil and the Hunt family for the liquidation of their silver position as a prerequisite for the $1 billion loan arranged by the Chairman of the Federal Reserve, Paul Volker.” (Jim Sinclair’s Mindset)
    (See also: The Synarchy: Part 3
    Does this scenario sound familiar?
    “Many Government officials feared that if the Hunts were unable to meet their debts, some large Wall Street brokerage firms and banks might collapse.  To save the situation, a consortium of US banks provided a $1.1 billion line of credit to the brothers which allowed them to pay Bache which, in turn, survived the ordeal. The U.S. Securities and Exchange Commission (SEC) later launched an investigation into the Hunt brothers, who had failed to disclose that they in fact held a 6.5% stake in Bache.” (Wikipedia
    Jim Sinclair, who received his mother’s maiden name, belongs to the high ranking Merovingian Sinclair/Saint-Clair bloodline.
    “Although Bertram Seligman was my father, James Sinclair (from my mother) has been my name since birth.  If it had been possible, I would have changed my surname back to my father’s prior to entering my career.” (GATA)
    The Sinclair surname is the Scottish variant of the French Saint-Clair.
    “The Scottish Sinclair family, which includes the Earls of Caithness, originally held the Norman barony of Saint-Clair. Sir William Saint-Clair (1240 – 1303), was a leader of a rebellion against Edward 1 of England; his son, Sir Henry Sinclair, fought for Bruce at Bannockburn, and Sir Henry Sinclair was created Prince of Orkney in 1379.” (Internet Surname Database)
    The Merovingian Sinclair/Saint-Clair bloodline, which claims to be the lineage of Christ, is really the bloodline of the false Christ:
    “The modern Priory of Sion…must nurture and protect the bloodline of Christ – those few members of the royal Merovingian bloodline who have survived into modern times… Only two direct lines of Merovingians remain. Their family names are Plantard and Saint-Clair.” (The Da Vinci Code, pp. 279-280)
    (See: The Merovingian Dynasty)
    “The knowledge of Wall Street runs in my blood, my heart, and my soul.”  In his commentaries below, Mr. Sinclair is quite certain of a November dollar collapse.

    130 Day Warning
    Posted: Jun 29 2009     By: Jim Sinclair     
    Yes, that is right. You have a little more than 130 DAYS before MOPE (management of perspective economics) falls into the abyss of loss of confidence in the US dollar.
    The event will be the birth of hyperinflation in the US and elsewhere to the horror of the spin media. Crude has been trying to explain this to the public, but so far they have not gotten a clue. Crude strength is being called a hedge against the dollar as fundamental energy analysts are hard pressed to explain a rise from $30 into the $70s with NO pick up in US economic activity and NO massive draw down on supplies. The oil price is an example of the arcane and exoteric mechanism of hyperinflation soon to take gold to $1224, $1650 and then on to Alf and Armstrong’s numbers. This phenomenon is something that the murderous Children of the Corn that run the hedge funds will not accept until it happens.
    Happen it will.
    130 days is no time at all. Are you prepared?

    The next day, June 30, Jim Sinclair wrote from China: “Dear Friends, It has been a busy day here. China is not just talking, but preparing for what we know is coming in 127 days.” (Update from China
    Mr. Sinclair spent one week in Beijing meeting with business and government people. His company, Tanzania Royalty Exploration Corp., is part of the China Africa Business Council (CABC) which is headquartered in Beijing, Peoples Republic of China.  Beijing is 12 hours ahead of U.S. EST, so 127 days from July 1 would be November 5, 2009, which is the announcement day for the November 9 Treasury Auction. 
    Sinclair’s countdown from August 14, 2009 pinpoints Saturday, November 7, 2009 as the beginning of the end for the U.S. dollar.

    The Motivation Behind The Countdown
     Posted By Jim Sinclair On August 14, 2009 @ 12:34 am
     Dear Friends,
     85 days to go!
     …what is the motivation behind a countdown of days for the USDX…
     The primary reason for this “out on the limb statement” is that the recent China/US financial Summit meeting in Washington which was requested by China, was not significantly pre-planned.
     As I understand it there are two things wanted and one thing disapproved of.
     The US financial leadership wants, but more so needs, Chinese buying of US Treasury offerings to remain at these levels but more so to increase to offset the wholly unavoidable increase in offering of US Federal Debt.
     The Chinese wish to see the USA support the creation of a Super Sovereign Currency as an offset to dependence on the dollar for international settlements and national reserves.
     The Chinese rightly feel that the greatest risk to their present dollar position’s valuation is quantitative easing. or simply put, the  monetization of one’s own debt by the electronic creation of money for funding yourself.
     I am informed that Chinese interests want to see both in 2009.
     You will note that the QE program was extended until October, particularly the end of October…
     Quantitative easing cannot be curtailed in 2009 or 2010. To curtail QE as the US Federal Deficit explodes would be to release interest rates to the marketplace that could easily take them to late 1979 early 1980s levels due to a currency event.
     The USA cannot support a Super Sovereign Currency. To do so would be to disavow the US dollar as the universal reserve currency which the financial leadership of the USA still adheres to, seeing this period as only an aberration in the constant.
     The USA, due to market considerations, cannot yield to Asia and China as spokesperson for the BRIC on the two criteria required to remain as purchasers of the US Treasury instruments, which is the only real support the dollar presently has…
     Tools of timing, some I have not shared with you, indicate a major potential turning point that could easily see a break below .7600 or .7200 coming in the final quarter of this year.
     Add this all together and you get a November bull’s eye for a loss of confidence in the US dollar internally as well as externally…
     Van Mises, Ricardo and Adam Smith have not been laid to rest by market manipulation. The wind is in the face of business now as a long—term trend. We are returning to basics and moving away from the fancy, complex and fraudulent.
     All of this could have been fixed prior to the event of Lehman declaring bankruptcy. Now there are no PRACTICAL SOLUTIONS and NO PRACTICAL EXITS FROM CONSTANT QE.
     Pandora’s Box is open, only to be closed by markets as the downward spiral goes to its practical end, a return to commodity money.
     We, here, will be proven correct in time and in price.
     Respectfully yours,

    • Those ain’t fingers. Ranger, they’re tentacles.  While this may sound like testicles, there are VAST differences between the two.  It is for this reason that banksters must be cloned and then programmed, because they have no natural method of procreation!  😉

  14. regardless of wether jim sinclair is trustworthy or not … fact is the derivative market is controlled by a few banks if there is a collapse or failure in any part of the derivative trade the repercussions are enormous … to the point that the US government via the fed will end up bailing it out because they will not allow the whole dirty system to collapse

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