Are you scared, yet?

After the price of Gold expressed in Euros breaks out, I expect a free for all and my initial target is $1275.00, which is equivalent to the 1980 high, adjusted for the differential in Dollar and Gold supply during the last 27 years.

Next disaster in line is the SIV for which the big bankers are trying to arrange a $100 BILLION rescue fund to keep the losses off the Balance Sheets. But these and the CDO's are nothing compared to the illiquid $450 TRILLION worth of OTC Derivatives overhang that has NO precedent in history...

How ILLIQUID these OTC Derivatives are? Here is the short answer from Wikipedia:

Over-the-counter (OTC) derivatives on the other hand are not traded on exchanges, so their market prices are not as readily available. During their early development, OTC derivatives such as interest rate swaps were not marked to market frequently. Deals were monitored on a quarterly or annual basis, when gains or losses would be acknowledged or payments exchanged.

Products such as swaps, forward rate agreements, and exotic options are almost always traded in this way. The OTC derivatives market is huge. According to the Bank for International Settlements, the total outstanding national amount is USD 298 trillion (as of 2005)

As the practice of marking to market caught on in corporations and banks, some of them seem to have discovered that this was a tempting way to dress up the books, especially when the market price could not be objectively determined (because there was no real day-to-day market available), so assets were being 'marked to model' using estimated valuations derived from financial modeling, and sometimes marked to fantasies. See Enron.

Are you scared, yet???