Hey There Income Hunter,

We saw blood in the Crypto markets as the FTX exchange ran into liquidity issues yesterday.

As you can see in the snapshot below, there has been serious damage done 

Woof.

The problem here is exchanges take in altcoins as collateral against loans but as soon as there are any whispers of trouble traders pile on and sell.

In the past couple of days, $6 billion was pulled out of the exchange.

The question is where does that money go now … 

There is always a market out there that benefits from these crashes.

Today we will look at the one that did.

The New Gold

Remember back in 2020 when the Fed and government were pouring trillions of dollars into the economy and the markets? Bitcoin was soaring while gold was languishing and the narrative turned to “Bitcoin is the new gold.”

But the major difference between the two is one of confidence.

It is really important to remember that gold provides investors with a proven store of value – it has proven the test of time.

Bitcoin was built on the foundation of a Ponzi scheme.

Now please don’t take this the wrong way … the concept and the technology are ingenious. 

But it will take many more years of solidifying the network and building a proven track record of stability before it will gain the same confidence gold has earned over thousands of years.

Even then, the big question is will the central banks allow Bitcoin to survive as a decentralized network?

Central banks do not want competition for their own digital currencies.

Let’s take a look at how the gold-to-bitcoin ration has shifted in the past few years.

Get In On The Gold Rush

We are now on the verge of a major breakout for gold as events like the FTT altcoin collapse reveal the risks within the crypto space.

The financial system is loaded with what I call a daisy chain of potential failures. That will start with counterparts who use maximum leverage to build a business to maximum capacity.

These situations will pop up in the weeks and months ahead and will ultimately be the force that puts pressure on the Fed to pivot back to QE. That will be when gold soars much higher.

Yesterday provided great follow through buying for gold as it hurdled over another resistance obstacle at 1700.

Traders should consider buying diagonals on the VanEck Gold Miners ETF (GDX). Diagonals are great for longer-term trades.

I executed a diagonal in silver miners yesterday and bought calls that expire in January and sold calls 10% higher that expire in November.

The beauty of this strategy is traders are always taking in income along the way, which offsets the time decay of just holding the outright calls.

Bring It Home

It’s unclear how the market will ultimately react to the midterms. Certainly a split congress would dampen the government’s ability to pass any spending bills.

That to me is most important, because the Fed needs to keep tightening to fight inflation and the central bank relies on some government spending to offset it.

Without that offset, a crisis could build quickly and then the Fed will be forced to come to the rescue with trillions more in new money. 

That is another reason to invest capital in the precious metals sector. Precious metal prices always hold central banks accountable for their massive money printing.

Once civilians lose confidence in their central banks, they spend their cash to buy “real assets.” Smart money gets out ahead of that trend.

Stay tuned and as always …

Live and Trade With Passion My Friend,

Griff