- Derivatives are a trading vehicle. They are "advance
commitments" for a buyer or seller with time commitments at set prices.
(placing a bet)
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- The Commodity Futures Market are all derivative contracts
- http://www2.barchart.com/mktcom.asp?code=BSTK
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- Categories cover [ Metals; Currencies; Energy; Grains;
Meats; etc,]
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- A derivative contract can be traded in and out of in
5 minutes; five hours; five days; or a year or two. (no significance in
the use of five, it was just an example of time)
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- If you are a buyer, and let's use gold as an example:
You think gold is going from $1000 per oz to $1500 in three months so you
buy one August 2010 gold contract at $1000 (if the current market price
that day is $1000) and if your objective is reached of $1500 per oz two
months from now you then sell one August Gold contract at $1500 and that
closes the trade.
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- A gold contract is 100 oz so here a net $500 per oz was
locked in on the trade X 100 or a profit of $50,000
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- Now on the other hand if Gold was at $1000 and you though
the price was going to collapse down to $500 per oz, you would then sell
first. So you sell one August Gold contract at $1000 and if in two months
gold did collapse down to $500 per oz you then buy one AUG Gold contract
closing out the trade X 100 or a profit of $50,000
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- So up or down it does not make a difference the same
profit can be pulled. The same applies if you are a day trader and are
going for a $10 move in gold.
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- EXAMPLE: at 8:30 AM in the morning gold is at $1073 per
oz and you think it is going to pop to $1083 (or drop to $1063) you enter
your position to buy a contract (long) or sell a contract (short). If 10
minutes later gold moves $10 (up or down to your target price depending
if you are long or short) you then close out your trade and walk with the
cash, or $10 x 100 = $1000 made on the trade.
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- The same, same on all of the other commodities also.
The catch here is when you take a position there is a set margin requirement
(good faith money against loss) set for each and every commodity before
you can enter a trade - Additionally, you must maintain that dollar value
if the trade goes against you and if you can not, the "house"
will force liquidate your trade locking in the loss on your account. If
you have a profit on the position there is no problem, but a loss the margin
set must be maintained.
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- A derivative trade is yes only a paper record. But when
it allows for transfer of wealth to the tune of trillions of dollars a
year, those that say derivatives are worthless have their heads stuck in
a very dark, warm, and wet place.
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- Sounds easy for walking with tons of cash right? Wrong!
95% of the public looses all of their money. The public is caught in "the
only thing to fear is fear itself" syndrome. Oh. it is going up, no
down, no up - - - CRASH - loss on trade!
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- Keep in mind this is all about wealth transfer. Collective
Government is the #1 institutional trader in the derivatives market(thousands
of separate accounts).
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- They work hand in hand (networked through private associations)
with the syndicated media; political parties; controlled education locked
tighter than two dogs in heat in cooperation DUE TO THE MONEY AND CONTROL
INVOLVED.
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- Government through the CFTC (Commodity Futures Trading
Commission) and SEC (Security Exchange Commission) know every trade entered
by the public; institutional; etc., on a minute by minute basis. They also
have access to all historical trades over decades. They know historically
if they move the market with their own activity how many people will over
extend themselves; or bail on positions depending on how fast the markets
are moved and with what sound-bite conditioning the public is being saturated
with at the time.
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- They are pros at baiting the public into certain trades
and then cutting their you know what off and this amounts to MASSIVE wealth
transfer from the public each and every year. (Derivatives used, cash on
the trades accomplished!)
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- People who trade metals from the public seem to have
very short term memories. Over the last twenty years the same games were
played in conjunction with the same sound-bite conditioning (with a few
modifications) to run the price up over weeks and then to slam the price
down in a few days with most from the public in the trading arena getting
their you know what cut off so many times they could start a restaurant
serving Rocky Mountain Oysters and never run out.
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- I have learned from over 32 years trading derivatives
that when I say to myself "That looks like a really great buy or sell"
I then have to catch and ask myself one question: "Now where would
they push it to if they wanted to really screw everyone?" Now with
that question being asked and adjusting my target marks accordingly, the
bulls-eye is hit more often then not.
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- Government institutional fund management (much being
handled off-shore now) has been walking off with truck loads of cash through
the use of derivatives each and every year. The two years that they made
the quickest killings through derivatives were the end of 2001 and the
end of 2008. (Primarily short positions established)
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- Not a peep from the syndicated media; talking heads;
political parties; or controlled education being that they do an EXCELLENT
job for what they are PAID to do, and that is to ENTERTAIN the public as
the wealth transfer takes place right under the public's nose and in plain
sight.
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- What I find humorous (sadly) is that they do such a good
job that they get people to parrot comments like "derivatives are
worthless" when in fact they are used to transfer wealth "CASH"
each and every year (day) from the public. AND in fact were used at the
end of 2008 to suck 35 to 40 trillion dollars out of the world economy
at the end of 2008 in just a little over one and a half months.
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- Promoted by the media doing their job: "Massive
loses; Stock market tumbles with fortunes wiped out" Yeh right, BUT
WHO TOOK THE OTHER SIDE OF THE TRADE into which those loses and fortunes
were transferred into????
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- Might as well not keep everyone in suspense: Government
institutional trading accounts (and I repeat many handled off-shore now)
did.. you catch on the latest news Goldman Sacs made a profit on the collapse
at the end of 2008? Well, just a sacrificial lamb mentioned to appease
the masses and chump change involved compared to the collective government
institutional accounts....
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- A good example of a domestically handled clearing operation
for government institutional accounts just before the clip at the end of
2008 was the derivative holdings held by JP MORGAN CHASE BANK.
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- The amount shown held by them was primarily for their
government institutional accounts under management or that they were acting
as clearing agent for. It is a small figure of only 90 trillion dollars
worth. The Federal Government report put out by the Comptroller of Currencies
that shows the positions of CHASE Bank and a few others can be downloaded
here (March 2008 Bank Derivatives holdings) and when downloaded go 2/3rds
down in the report to "Table 1" - http://cafr1.com/STATES/US-TreasuryReports/BankDerivativesMa...
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- Now keep in mind this was a domestic clearing operation.
Many and larger "international" clearing operations are in place
now handling clearing operations for US local and federal Government institutional
accounts. If you did a cross comparison of their derivatives position plays
just before the market collapses at the end of 2001 and 2008, the public
never stood an ice cubes chance in hell of not being decimated.
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- Again, IT IS ALL ABOUT WEALTH TRANSFER! And when you
are talking this amount of wealth transfer in the tens of trillions of
dollars it is imperative to keep the public masterfully entertained off
in LA LA land parroting the exact opposite of what actually took place..
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- But then they do an EXCELLENT job due to the money and
control involved.
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- I Note: Ron Paul and most in the political hierarchy
are aware of this structure but they can NOT discuss it. Anyone in politics
that does so qualifying a cognitive though in the masses breaches the "Silence
is Golden Rule". It is political suicide to do so. Mr. Paul and many
other politicians would be taken out so fast they would not know what hit
them.
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- I like Ron Paul, he is a fence rider doing the best he
can and I understand that he can not cross this line if he wishes to do
what he can. I support him in whole being that he is "doing what he
can"
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- In 1999 virtually no one knew how this game is played.
Now in 2010 a lot (millions) of people now have had that cognitive thought
triggered in their minds to the dismay of the control structure who desperately
continues to obfuscate.
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- Who knows, all may be just a step away from a massive
awakening of clear comprehension where no longer are they "the easy
mark" and regain true ownership of their country again.
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- What I brought forward several months ago with the TRF
(Tax Retirement Fund) http://TaxRetirement.com when it is finally understood
and comprehended for it's true impact by the populace it may just burst
forward like the birth of a super nova benefiting not just the people here
in the USA but the entire planet with a mode of operation for government
that brings forth the proverbial millennium, a thousand years of prosperity
for all!
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- And then people like Ron Paul and others can openly discus
governments true "collective" investment ownership and the income
derived therefrom without fear of retaliation....
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- Walter Burien - CAFR1
- Prior CTA (Commodity Trading Advisor) 1978 - 1992 and
derivatives trader of 32 years.
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