Dollar Dominos: El Salvador Commits to Bitcoinn

Hey There Income Hunters,


Very big news yesterday as El Salvador became the first nation to add Bitcoin as legal tender — and pushed the dollar aside as a tag along.


Seems like a pretty good day for my Digital Currency Arms Race webinar!!


El Salvador’s legislative assembly officially approved making Bitcoin legal tender in the country only a couple of days after new president Nayib Bukele proposed the solution.


Washington must be furious!


I don’t think they will take this lightly … don’t forget we went into Iraq and initiated a war simply because they were going to ditch the dollar for the Euro.


Ditching dollars will continue to be an ongoing theme…


Tune in today at noon when I reveal new information on much more powerful countries not only ditching the Dollar but planning to destroy it!


What Does This Mean for Bitcoin


  • I always felt Bitcoin could be a niche market. El Salvador and other countries that lack the infrastructure to have their own viable currency could benefit from its use.

  • The question is, will Washington allow it to succeed? I mean, as hedge fund star Ray Dalio said, Bitcoin’s greatest risk is its success. Central banks hate it because it’s competition for them

  • There are ways Washington can make Bitcoin a miserable proposition by penalizing people for using it.

As you can see in the chart below, Bitcoin’s technicals have taken a hit and are now bearish …


I do think Bitcoin can recover… and if it can regain its bullish trend, then once the US asset bubbles burst, it could attract flows as a safe haven, regain strength and make new highs.

The Dollar Is Hanging by a Thread


The dollar is a different story. There will be pressure on the dollar from so many angles that collapse is inevitable…


When volume begins to build at the lows like this, it makes it hard to overcome the pressure.


The scary part is who wants to come to the dollar’s rescue? Every nation is in a similar situation … 

I actually think the Fed needs the dollar to collapse, but they may want to keep kicking the can down the road to stave off a stock and bond collapse for now.


However, I don’t think the Fed is in control of its own destiny…


Join me today at noon to find out why …


Until then …


Live and Trade With Passion My Friends,


Griff

Will the European Central Bank Go Bankrupt?

Hey There Income Hunters,


As I’ve been preparing for the Digital Currency Arms Race coming up this Thursday at noon Eastern, I’ve noted one major difference between the Federal Reserve and the European Central Bank. 


The Fed can’t go bankrupt because it can print unlimited amounts of credit to fill any holes in the banking system — something it proved during the Lehman Brothers collapse.


The ECB, on the other hand, doesn’t have that capacity. It’s only tool is the European version of quantitative easing, and lately, as rates have risen dramatically, even that’s not working.


The situation has become so serious that ECB President Christine Lagarde recently doubled the rate of bond buying within the Eurozone to keep rates under control — to little avail.


Lagarde, incidentally, has never struck me as a “market” person. She always seemed more comfortable as a high level politician …


Now, she needs to quickly make some decisions, and the one thing she can do that the Fed can’t, is use gold as a tool for eliminating all the bad debt that is being accumulated.


As for what that means at home, on Thursday, I’ll reveal how far the U.S. has fallen in the rankings of holding “real money” — and I’ll warn you now, it’s startling.


Before that, today, I’ll share the dire situation in Europe, and how events there are setting the stage for an imminent U.S. dollar collapse.


Rising Interest Rates in Europe


Can you believe rates have risen by .50% in Germany and are still negative? Meanwhile, the Germans are buying tons of assets via QE — only come out and warn of elevated financial stability risks.


What do they expect will happen when you pump all that money into the system?


This appears to be getting pretty serious as $7.2 trillion in securities sits on Germany’s balance sheet losing value as rates rise:



Cutting Out the Banks?


It’s becoming increasingly clear that one of the few choices the ECB and Fed have is cutting out banks and moving quickly to launch a digital currency.


The problem is changing a system that has been in place for a hundred years is like turning the Titanic — and we all know how that worked out.


Without the ECB in its corner, however, the Fed will be lost — along with its vision and for a western bloc of nations coming together to launch a digital currency.


The Fed doesn’t have enough gold to use as a tool for devaluing debt, so it has to continue its insane balancing act of just enough inflation to devalue the currency and debt — without losing the confidence of their consumer.


When I look at the situation most central banks face today, I can only come to one conclusion:


Real Money will save the day for everyone and the ones that move the quickest will win.


Bring It Home


The Digital Currency Arms Race is on.


The end game is taking shape and the players are positioning for the winning move …


The clock is ticking and the deadline is approaching. More on that Thursday at noon eastern.


Until then …


Live and Trade With Passion My Friends,


Griff

TLT Trade Tuesday

Hey There Income Hunters,

 

I smell a rat.

 

That’s right, I have a sneaky feeling the Fed is playing games in the bond market..

 

There are so many reasons for bonds to be going down right now, and yet.

 

Here are a couple of examples:

 

      • Forward looking inflation expectations are over 3% with 10-year rates at 1.55%. That’s a real rate of return of -1.45%, which is a new all-time low for this cycle — and it means 10-year rates should be higher.
      • Russia announced recently that it’s ditching US assets for gold, Euros and Yuan.

 

Yet U.S. stocks and bonds are higher in price!

 

Sometimes this will happen in supply and then the auctions go terribly.

 

This could be one of those times.

 

We are right at the top of the range in the 10-year yield, so this is an excellent low risk/high reward spot to short iShares 20 Plus Year Treasury Bond ETF (Ticker: TLT).

 

On the Charts

 

 

We are right at the top of the short-term trading range in TLT.

 

In environment’s like this — high inflation, increasing supply, foreign selling and non-buying of Treasury securities — auctions never go well.

 

It’s possible the Fed is working with the banks by using additional quantitative easing (QE) to absorb inventory and request greater participation in the auctions.

 

We have to be aware of the Fed’s urgency to find ways to inject stimulus into the market while the money supply is drying up

 

TLT Trade I am Putting on Today

 

I am going to take a flier today on TLT puts expiring this Friday.

 

The TLT 139-strike puts are trading at around $.60 for June 11 expiry.

 

I am going to hold a couple of puts into the consumer price index (CPI) number on Thursday when we also get a $24 billion 30-year Bond auction.

 

We could easily see a $2 down trade into Friday, which would provide a 150% return.

 

Not bad for a three-day trade …

 

Bring It Home

 

Nothing surprises me when it comes to the Fed.

 

There is tremendous pressure coming at them, especially from China and Russia as they have been buying up gold to back their currencies.

 

That has to put fear in our central bank.

 

The race for dominance as the world transitions to a new monetary system is heating up.

 

And I’ll cover that and much more during a LIVE event this week …

 

Register now to join me at noon EST on Thursday!

 

Until Then …

 

Live and Trade With Passion My Friends,

 

Griff

Archegos Failure Is a Preview of What’s to Come

Hey There Income Hunters,

 

Here’s your first big thought for the week …

 

We need to use the Archegos failure — remember that? — as a warning of what’s to come.

 

Why?

 

Because today I’ll reveal a developing crisis in the gold derivatives markets that may only be months, or even weeks, away from triggering seismic disruptions worldwide.

The coming crisis may well result in a revaluation of gold prices to MUCH higher levels as we continue the transition to a new global monetary system … 

And it will also be a signpost that bank counterparty risk is rising — which may be the catalyst for bursting the financial asset bubble.

(Check out my video Archegos Failure and the Role of Derivatives to gain an understanding of the part derivatives play in the overall risk embedded in bank operations.)

The chart below illustrates a total of almost $600 trillion nominal size or face value of over-the-counter (OTC) derivative transactions outstanding.

OTC global derivatives present tremendous systemic counterparty default risk due to its lack of transparency, oversight and regulation. It will continue to be a critical signpost to monitor for counterparty failures and potential contagion that could trigger a daisy chain of misfirings leading to a global banking crisis.

Today, I will take you through the gold derivatives market crisis that began in 2019 and accelerated during COVID-19. It led to a change in bank rules that may cause banks to shut down their gold derivatives operations and allow physical gold to trade at it’s true price — and much higher — price

The Bank’s Role Under Question

Systemic risk has always been the major concern in capital markets. Today, it’s concentrated among a handful of global banks that are deemed too big to fail, so this risk goes ignored.

COVID-19 has proven to the Fed that the Banks' role as intermediary may be interfering with their goal of transferring wealth from the wealthy to the lower and middle class. Meanwhile, COVID has become a scapegoat for many market players who share an attitude that once the pandemic is over everything will return to normal.

I have never been in the “return-to-normal” camp because of what I have been talking about for months and that is this …

The US is at the end of its long-term debt cycle and in all of history the end of a long-term debt cycle was anything but normal.

The Gold Derivatives Markets

BLBelow is an overview of the London Bullion Market Association (LBMA) forward contract market and Commodity Exchange (COMEX) gold futures market.

      • Gold derivatives markets are controlled by bank bullion derivatives desks. These desks are basically trading desks required to trade for profit.
      • The LBMA members consist of 12 market makers, all from the top banks, and 31 other banks, which may or may not take positions. All bank desks are funded by the expansion of bank credit.
      •  According to the Commodities Futures Trading Commission (CFTC) there are 28 swap dealers who are active in gold futures on COMEX.

Systemic Risk in Gold Derivatives

Similar to the way bank prime brokerage operations facilitated Archegos’s financing of equity trades, LBMA member banks extend forward swap agreements, which are simply unregulated futures contracts on the price of gold, to customers desiring exposure to physical gold…

The banks open “unallocated gold” accounts for the customers, allowing the bank to maximize profits by never actually putting physical gold in the account.

The banks instead let customers believe they have access to physical bullion … when the accounts are actually backed by forward swap contracts to maximize the bank's leverage while helping them to avoid using capital to finance the gold bullion.

This process is identical to the prime brokers' use of equity swaps with Archegos.

At the top-end, gold dealer banks executed gold swaps with clients in an amount equal to $114 billion a day at today’s gold price…

The LBMA market makers would state that their short positions in the gold derivatives was backed by sufficient bullion held in the vaults so as not to alarm the markets. However, as you’ll see below, that was not the case

Meanwhile, running long positions for forward settlement at the banks in London led to larger and larger dangerously leveraged operations with as much as 50% still on today…

Banks Busted

Corruption among traders peaked in August 2019 when a JP Morgan trader pleaded guilty to manipulating the precious metals market for nine years. In the past 12 years, cases against traders for rigging settlement prices of gold futures and swaps have been brought against 16 defendants with most pleading guilty.

All along, banks continued the process of pumping up COMEX gold futures then dumping long contracts on their clients, prior to selling futures to push prices down and force the closeout of customers’ positions, allowing banks to profit on their trades …

However, toward the end of 2019 as gold broke out, customers had the upper hand on the banks. Interest rates were softening after the repo spike to 10%, driving gold futures higher:

The customers — considered suckers by the banks — were finally breaking the banks, who held most of the shorts.

Gold Trading Desks Crushed

Once COVID hit, businesses turned to banks for massive liquidity. That shifted the banks’ focus from making profits to fearing losses.

The scenario is common for banks when a negative shock hits the economy. They are forced to take every opportunity to reduce their balance sheet and free up space to make emergency loans to customers.

So, the gold trading desks were told to unwind their positions at the worst possible time. These massive short positions were a result of never buying physical gold bullion against the constant customer buying of gold….

The forced closing out of positions caused the collapse of the all-time-high in open interest (see below) …

This has all caused a panic for LBMA and COMEX since throughout the industry there are still many short positions held by bank trading desks.

Bank of International Settlements (BIS) Forced to Pull the Plug

After years of talk about how corrupt the paper precious metals market is, the BIS has been forced to shut it down.

The BIS is the “central bank of central banks,” responsible for working on behalf of all central banks to ensure the stability of the global monetary system.

So, with the U.S. dollar as the reserve currency, maintaining a strong dollar via suppression of gold was a main priority for BIS …

Until now.

BIS’s main role now shifts to facilitating the smooth transition to a new monetary system — based on a basket of currencies backed by gold.

In meeting its current goals, leaders want to eliminate the gold derivatives market so gold can be used by all central banks in a way that strengthens the new global monetary system.

This ensures further volatility in the currency and financial markets as posturing from China, the U.S., Canada, the U.K., Japan and Europe all have a say in the overall makeup of this new monetary system.

Much more to come on this …

Bring It Home

Today I wanted to give you the background that led to the BIS rule changes that will impact the precious metals market in a HUGE way.

There is much more inside intel for me to reveal on what is happening behind the scenes and its impact on precious metals and all related markets.

Please join me this Thursday at noon EST when I share information that is critical to trading in the weeks ahead. I’ll also reveal three new trades that capitalize on the major changes coming …

Don’t miss it!

Live and Trade With Passion My Friends,

Griff

Central Banks Have a Golden Plan for Digital Currencies

 

Hey There Income Hunters,

 

Another Power Income prediction is closer to becoming a reality …

 

Central banks are planning to use gold as the vehicle to devalue paper currency.

 

As Trump would say — but can’t because even his personal blog has now gone dark — “this is yuge!”

 

It all begins with the central bank of central banks — the Bank for International Settlements (BIS). The BIS, you see, is rolling out new rules this month that will all but eliminate unallocated paper trading of silver and gold.

 

These rules require an 85% haircut — which means 85% of the value of the asset must be held as a buffer against the position on all gold and silver derivative contracts that are not covered by the physical metal. 

 

The wholesale physical metal does not require a haircut, which essentially lifts the physical from its derivative, and opens the door for a revaluation of physical silver and gold.

 

And there is a lot more to this story, including what the Chinese have been doing behind the scenes.

 

A Corrupt, Bank-Manipulated Derivatives Market

 

This is another tale of banks taking advantage of their role as middleman between end investors and their central bank. It’s essentially the London version of the U.S. primary dealership.

 

There are 43 approved London Bullion Market Association (LBMA) dealers who up to now have been responsible for providing liquidity in gold, silver and other commodities derivative markets.

 

The largest markets are the SPDR Gold Trust ETF (TICKER: GLD) and iShares Silver Trust ETF (Ticker: SLV) products, which are the most popular ETFs to trade as a proxy for Physical metals 

 

The moral hazard created in these markets stems from the banks’ ability to lease physical gold and silver from the Bank of England (BOE), the U.K. central bank.

 

I will take you through the structure, similar to how the U.S. prime broker model operates, which we discussed during the Archigos default.

 

Creating Gold and Silver Out of Thin Air

 

The LBMA rules allow the banks to short GLD and SLV derivatives and lease the physical underlying product from the BOE.

 

The actual metal never leaves the BOE, yet that initial lease can be borrowed and re-leased many times over … 

 

If this sounds familiar to you, it should. This process also supports the U.S. financing market, including Treasury repo and stock loan.

 

Once the ability to rehypothecate assets out of thin air is created, counterparty exposure is multiplied. That’s called a daisy chain — and in a crisis, when one link defaults, it causes a chain of failures.

 

However, I congratulate the BIS on removing moral hazard from the global system, and I need to show you the motivation behind the change …

The Great Reset in a Couple of Keystrokes

 

Folks, you are going to love this.

 

The original structure for the precious metal derivatives markets was facilitated by the central banks leasing underlying assets so the banks could gain leverage and manipulate the system.

 

That is one way the central banks get other banks to buy a country’s debt. However, now that the central banks want to cut out the banks and take total control of their monetary system, they are changing the rules.

 

By requiring the banks to hold 85% capital against the underlying value of their derivatives trade, they are forcing the banks to close down their operation.

 

This disconnects the physical from the derivative and creates a pure physical wholesale silver and gold market …

 

Revaluation of the Metals Will Boost Prices

 

If you are a holder of physical, derivatives or miners, you should be getting pretty excited right about now

 

The ten European banks that are London Bullion Market Association members have to unwind their unallocated derivative contracts by June 28 or put aside the 85% capital requirement against them. The capital requirement removes the economics of holding positions, so most bank positions will be closed. UBS, Julious Baer and Credit Suisse have already unwound their derivatives book.

 

Following the June 28 deadline there will be a revaluation of the physical metals. Andrew Maguire, a British commodities trader and whistleblower, is an expert on this topic. He recently shared that Tier 1 banks think it will play out this way:

      • On a Friday night, the physical and derivative market will be settled…
      • On Monday morning, the Gold market will trade on it’s own for physical delivery and revalued to $2,500. (Gold is currently trading at $1,865.)

The major central banks work closely with the BIS. In my opinion, it is highly likely this was all put together to create a facility for increasing the price of gold and devalue fiat or paper currency in preparation to launch digital currency backed by gold and silver.

A Central Bank Gold War

 

Once the physical market is revalued, which could be a 2022 event, the fight for digital currency dominance will begin.

 

Like other currency wars, the nation with the strongest currency wins. That means whoever owns the most gold wins.

According to Maguire, China holds 20,000 tonnes of gold and recently lifted its cap on imports of gold for investors.

 

20,000 tonnes, by the way, is twice the official amount of gold the U.S. holds.

 

After June 28, and after the official amount is announced, there could be a massive amount of central bank money flowing into physical gold and silver to strengthen their currencies, as well.

 

Bring It Home

 

June 28 will be here in a flash, and you can be sure there will be a lot of volatility in GLD and SLV right up to the end.

 

The banks still have the power to manipulate prices, and they will push prices down whenever they can to help them unwind positions favorably.

 

Meanwhile, I am building a diversified portfolio of miners …

 

Here is my logic: miners are already making a nice profit at current levels of gold and silver. They will be less volatile than the outrights, but they’ll also completely participate in further upside.

 

My current portfolio is listed below.

 

History is about to be made, #IncomeHunters. Let’s stay focused and make some money.

 

Until then…

 

Live and Trade With Passion My Friends,

 

Griff

Gulp! The Money Supply Is Drying Up

The Fed is out of bullets for now and it raises a very important question… Without the addition of new money into the market can it continue to trend higher?

Today I will show you what the inside info is showing and where I think stocks are headed…

From the very beginning Power Income and being an #Income Hunter has been all about Trading the Fed

So far, it has worked like a charm… We had full confidence the Fed would keep printing money to create inflation so be long equities, especially equities in the energy and commodity sectors…

Inflation is now here and it removes the ability for the Fed to print new money for now… So, let’s take a look at where money supply and S&P stack up against each other….

You can see from the graph below how tight the S&P tracks money supply… They have converged with S&P at 4,200 and M2 at 20 trillion… The S&P must now stand on its own merits of value… 

That may be a problem because during this powerful 10-year uptrend when money supply was neutral or even worse going lower the S&P went down…

I have a few other important signposts to show and then look at the technicals and trades to consider…

Where is All the New Money Going?

As I’ve said for months, for inflation to really explode, we not only need new money injected into the economy — but it also needs to be spent on goods and services.

Our measuring stick for the spending activity is velocity (or the number of times a dollar is spent).

The Fed graph below illustrates that velocity continues to languish at the lowest levels in decades. It is barely above 1!

 

The Fed could ultimately be right about inflation being temporary if velocity stay’s down throughout the reopening recovery

Precious Metals Win in Inflation or Deflation

We’re at an inflection point for an allocation shift. If growth slows, industrial metals — which are driven by economic needs — could go through a drawdown phase.

However, silver and gold are monetary metals, so they will track interest rates and the dollar more closely than they would a strong or weak economy. 

A case in point is the copper/gold ratio below. The calculation used is copper divided by gold.. An uptrend is copper outperforming gold and vice versa. Copper has outperformed gold since COVID hit and the trend recently turned.

 

This could be an indication of a shift in perception that the economy is expected to weaken in the second half of the year while inflation remains high… 

The Three Possible Scenarios for Precious Metals:

      • During this down period for stimulus, the Fed’s hands are tied. But if the stock market corrects, the Fed will jump on an opportunity to increase quantitative easing (QE)  or work with the Treasury to inject money directly into the economy. That is bullish for the metals and all commodities.
      • If interest rates rise due to ever increasing inflation, the Fed would step in and implement yield curve control — basically QE on steroids — to buy enough bonds to hold rates down. That would be mega bullish for precious metals.
      • The only scenario that would be bearish for precious metals is if the Fed did nothing and just let the economy melt down, creating massive deflation in which all assets had to be sold in order to remain solvent. That would be a 1929-style depression.

I am confident the Fed won’t let No. 3 happen, so at this point I believe institutional investors will allocate money away from stocks and into precious metals on any signs of economic weakness.

Bring It Home

This is the first fork in the road that we have reached since COVID hit. It is a very difficult one for the Fed, because they know they need to keep feeding the market new money, but they need  a reason…

That reason will most likely be a significant correction in stocks, and I will continue to monitor for signs that give us an edge.

 Until then…

Live and Trade With Passion My Friends,

Griff

 

 

 

Cash Is Trashed

Hey There Income Hunters,

 

What makes team sports so interesting to me is how successful sides adjust strategy as circumstances change during the game.

 

Whether it’s the pitcher, pass rusher or power play — if players and teams don’t make adjustments, they usually get slaughtered. 

 

Well, it’s no different trading.

 

If #IncomeHunters don’t adapt as investor psychology shifts, they (you!) run the real risk of getting slaughtered.

 

And guess what …

 

It’s time to adjust.

I have good reason to believe the dollar will collapse soon.

The latest sign pointing that way is that central banks in Canada, China and the U.K. are tightening monetary policies as the Fed continues to be ultra-easy with its approach to U.S. currency.

As you can see in the graph below, China’s yuan is strengthening to the dollar — and it’s fueling a non-dollar equity rally.

Those money flows are dollar bearish since global investors will sell their dollar reserves to invest in non-dollar equities…

The graph below shows the damage on the dollar so far — and we still have a long way to go.

 

The $89.43 level was the low close in January. A close below that would trigger further selling of dollar assets, which would take the U.S. Dollar Index (Ticker: DXY) down quickly to 88.62 and ultimately 78.88.

Three Macro Forces Driving a Weaker Dollar

1)    The global reopening has a much larger impact on global growth overall than it does on the U.S. itself. Some $64 trillion in global GDP for non-U.S. countries will give a boost as economies come back, especially with Brexit out of the way and trade restrictions reduced.

2)    The central banks leading the way as inflation surges globally are the People’s Bank of China and Bank of England as they fight inflation by tapering and pulling back credit. This will strengthen their currencies at the expense of the dollar…

3)    U.S. fiscal and monetary policy continue to add pressure on the dollar internally by letting inflation run, which reduces the wealth inside the U.S.

These are all critical points because they point to a changing world order.

Developed countries outside the U.S will turn into sellers of dollars and Treasury bonds. The Fed will be happy about the extra pressure on the dollar since it fuels the inflation they want so badly.

However, the Fed will not be happy about the pressure on U.S. bonds and they WILL be forced to respond with yield curve controls (YCC), meaning to hold down the yield on bonds.

US 10-year Yield Projections from the Congressional Budget Office (CBO) 

The CBO projects that by the end of the decade, the yield on the 10-year bond will rise to 3.5%.

But the Fed will never let the rates rise that high.

In the 1940s, even with rampant inflation as high as 8%, the Fed held 10-year rates below 2.5% — and they held them there for most of the decade.

The CBO also projects that in 20-years, 30% of all fiscal revenues will be used to pay back interest on government debt, up from 8% today. This will pressure the Fed to monetize the debt with YCC to slow down the inevitable rise.

DON’T MISS IT: Holding rates down while inflation rises will fuel even higher inflation. The necessity to keep long rates low is very bullish for precious metals and bearish for the dollar.

Cashing in on “Cash Is Trash” 

      • Be short TLT, EDV, ZROZ and long ultra-short bond ETFs: The market will force the Fed to pull the trigger on yield curve control by selling bonds and pushing rates toward the 2% target, which may be the level at which they would launch YCC.

Just to give you an idea on trades being done to capitalize on the move to high rates and lower prices in bonds, here is a look at Michael Burry’s (aka big short) position’s courtesy of the Bear Traps Report (May 22). Burry must have read a couple of my Power Income letters.

 

      • Puts on the iShares 20+ Year Treasury bond ETF (Ticker: TLT), equivalent of 1.27mm shares
      • Calls on ProShares 20+ Year Treasury Ultrashort ETF (Ticker: TBT), equivalent to 2.54mm shares
      • Calls on the ProShares 20+ Year Treasury Ultrashort ETF (Ticker: TTT), equivalent to 100K shares
      • Calls on the Direxion Daily 3x leveraged 20-Year Treasury Bear ETF (TICKER: TMV), equivalent to 38,400 shares
      • Outright long in the ProShares 20-Year Treasury Ultrashort ETF (Ticker: TBT), amounting to 300,000 shares

 

Burry was in the press not long ago talking about U.S. hyperinflation similar to 1920s Weimar Germany — and YCC is an event that brings the potential for hyperinflation into the picture…

A weaker dollar means higher commodity prices

There is global demand for commodity prices and that is what makes this period of inflation so serious. A massive amount of money is flooding the economy, along with a real demand for a limited supply of raw materials.

Materials most in-demand include: Copper, palladium, platinum, nickel, coal, uranium, oil, and natural gas. Because of the ongoing dollar debasement, silver and gold will be in high demand — especially as digital currencies are launched by global central banks who will demand gold as a potential backup.

Long/Short Equity Strategies 

Value really matters in an inflationary world, especially because we never know when a sharp correction could occur. So, long undervalued stocks against short overvalued stocks is a great strategy. Also, long value versus short growth will be a preferred strategy for the next couple of years.

Bring It Home

Like all long-term trends we will see violent corrections along the way, and they’ll likely come when we’re in between stimulus events.

The market is going to constantly need stimulus to remain at elevated prices, hedging or closing some of your core positions during lulls will help to maximize returns…

We may hit a slowdown in the next couple of months as the low base inflation effects from last year runoff.

Later this morning, I’m going to highlight a great long/short trade and run through the fundamentals and technicals so please join me at 8:45 for Power Income LIVE.

Until then …

Live a Trade With Passion My Friends,

Griff

 

’21 Bonnie and Clyde

Hey There Income Hunters,


Before I get started, let me tell you this …


The MOST important thing you can do to make money trading this week is to attend Mark Sebastian’s live event today where he will turn on the “Money Printing Machine.”


Mark has literally waited three years for a rare shift in a little regarded equity — and it FINALLY happened last week!


Now he’s absolutely ready to unload, and he already locked in a gain of 63% last Friday … in less than 24 hours.


So today — again, that’s TODAY — at noon EST, Mark will go live and release THREE more trades based on this long-awaited market change.


But there’s one more thing you should know about this event and you can only find out what it is by clicking here. 


*****

OK, here we go …

I knew it was just a matter of time.

Federal Reserve Chairman Jerome “J-Pow” Powell and Treasury Secretary Janet Yellen have created a new way to keep expanding the money supply, and I gotta say …

I like it!

It’s a Wild West approach I would have never imagined this couple could pull-off. I mean, just check’em out …

Wow, those two look pretty scary!

What’s really scary is that they can be so transparent in their approach to rob Americans — while thinking we won’t figure it out.

But by creating all this new cash through quantitative easing (QE) and then holding onto the excess instead of turning off the faucet, it’s just another sign of how serious they are about pouring gasoline on the inflation fire.

I’ll take you through the process AND give you trade for this week to capitalize on their gun-slinging antics.

Money Guns A-Blazin’

Well, since I first alerted you that banks are overstuffed with cash, the amount of excess money the Fed is taking in rose from $350 billion to $500 billion … 

Our central bank is turning into the Hotel California, and just wait, when they launch digital dollars, they’ll be singing, You can check out any time you’d like / But you can never leave.

The Fed, I fear, will eventually control everything we do with our money — that is not an overstatement!

Now, I get it, officials believe they are saving us from the economic devastation caused by the pandemic.

However, they are doing it at the cost of completely crushing U.S. monetary policy. 

The funny thing is, no one will call them out on it — because should they stop, the markets would almost certainly crash and we would transform into a zombie economy for years.

The Greatest Money Grab in History

The graph below represents the amount of cash held at the Fed via the agency’s reverse repo facility (RRP).

RRP is simply quantitative easing (QE) in reverse. Approved investors and banks deposit money at the Fed, and the Fed temporarily sells them Treasury securities.

As you can see, there is currently an all-time-high amount of cash being held via RRP.

Now let’s put QE and RRP together …

The Bonnie & Clyde Show

You may be familiar with what I call the “Bermuda Triangle” by now. That’s the black hole of quantitative easing (QE), in which the Fed buys Treasury securities from the banks, then credits the banks’ accounts at the Fed with the proceeds.

The diagram below shows the complete QE process. Banks buy Treasury bonds through the Treasury auction process, then sell the bonds to the Fed when QE is executed.

QE helps the Fed keep interest rates on Treasury securities low. But when the supplementary leverage ratio (SLR), which is a capital charge on bank assets, was reinstated earlier this year, bank's capacity for QE was reduced.

In response, the next step for Janet Yellen was to inject Treasury funds held at the Fed into the economy. This increased the excess cash held by investors — but banks could not take the cash without putting rates into negative territory …

That’s where the Fed RRP facility comes in, soaking up excess cash while keeping rates above zero.

Ultimately, all that allows the Fed to keep printing money to support the markets until digital dollars are ready to go — at which point the Fed can cut out the banks and have all Amercian’s come directly through them for monetary usage.

I think we are closer to that day than many realize.

Trade This Week

Cboe Volatility Index (Ticker: VIX) & SPDR S&P 500 ETF Trust (Ticker: SPY)

We have entered June in the perfect storm — jobs report out on Friday, followed by bond auction and consumer price index (CPI) announcements.

And this month the jobs report will not disappoint the way it did in May.

Check how it went last month (red circles aboce). Vol comes in even lower now, and we’re looking at low risk/high reward play for June.

The nice thing is that it presents a two-way play …

Catch the short-term play into next week and then reverse the trade coming out.

That’s my plan.

Have a question about that? Drop a comment below.

Bring It Home

The Fed continues to show us the pedal is to the metal on inflation. Officials are biding time until they can find a way to get money directly into our pockets.

I have no doubt they’ll succeed

These next couple of weeks present an opportunity to play for some volatility and then play it back down again… 

There are some nice pair trades I’m looking at and will share them at Wednesday morning's Power Income LIVE. Be on the lookout for a link later today and be sure to join me!

Until Then …

Live and Trade With Passion My Friends, 

Griff

 

 

Enjoy the Coal Train

Hey There Income Hunters,

Mark my words here on the last day of May …

Within a year, coal prices will be up 300% and oil will hit $90.

Long ago, I said the day would come when our leaders would be scrambling to meet the demand of a reopening economy.

Now, all of a sudden, the administration is in love with … nuclear power.

Say what?  

Yes, the Biden team has completely flipped (no surprise to me) on nuclear. The American Jobs plan calls for funding to build advanced reactors and incentives for making current facilities more efficient. 

Better late than never, I guess

This shift creates some great profit opportunities for traders who do their due diligence and find the 2- or 3-bagger returns I expect in the coal and nuclear industries.

In the next 12-months, we will see a massive shift out of growth stocks into basic material, precious metals and value stocks.

Just keep your focus on this graph …

 

It is all relative in the world of investing, and being flexible to a changing environment is essential.

To paraphrase Jimmy Buffet, there’s a bull market somewhere. #IncomeHunters just need to be ready to pounce …

I have a couple of great names for you in the coal and uranium markets, low-priced producers with the potential to 2x or 3x your money.

 

Does Anyone Want to Sell 10 million Pounds of Uranium?

 

The world is short about 10 million pounds of uranium through the end of the decade.

 

China has to double its stated plan to bring at least 60 nuclear power plants online over the next eight years. India needs an additional 25 to 30 facilities.

In the U.S., our lack of uranium has the makings of a national security problem because we aren’t producing our own.

We now have a situation where the anti-fossil fuel policy, and reduced production because of it, is driving natural gas and coal prices higher.

That makes nuclear power much more competitive. This supply/demand dynamic creates an ideal scenario for front-running the institutional purchases.

Think about this, the uranium industry is only worth about $21 billion — that is half the size of Dogecoin. It’s a joke.

You have to have a minimum of 5% of your portfolio in the oil, natural gas, coal and uranium sectors. By my analysis, the upside is 10x the downside.

Uranium Producers

Denison Mines (Ticker: DNN) – DNN is a uranium developer and explorer based in the Athabasca Basin, a region in northern Saskatchewan and Alberta, Canada.

This is the world's biggest source of high-grade uranium, currently producing about 20% of the world’s supply.

DNN’s major project is Wheeler River, which is one of the lowest cost projects currently in development. Reserves in the probable category total 109.4 million pounds, with another 132.1 million pounds inferred.

The company’s other high-grade project is Waterbury. They own 67% of that undertaking, which recently received a positive preliminary economic analysis.

 

The U.S. announced it is considering extending uranium power plant licenses to 100 year. That shift would cause a substantial and long-lasting increase in demand.

So #IncomeHunters have a great opportunity to buy a miner in the early stages of development in an industry with government support.

DNN could be a 10-bagger if you sit with it for three years.

They do offer longer-term options so buying a long-term call and selling short-term calls to collect premium along the way would add more juice while you wait on the big prize.

Global X Uranium ETF (TICKER: URA)

URA offers exposure to a broad range of uranium mining stocks and producers of the nuclear component. These companies have large absolute revenues in the uranium industry.

 

The technical picture offers an excellent entry point as URA has recently broken out with good volume on a monthly chart.

Nuclear energy is clean, scalable and efficient, and with all the revised interest in it globally, I consider URA a potential 5-bagger

The company is a good addition since it offers liquid options and can be traded against a core holding.

 

This Christmas, Coal Will be on Everybody’s List

It’s funny how the “black bheep” of fossil fuels is now in such demand.

That is exactly when you want to get in on a purchase that I think will be at least a 3-bagger.

Peabody Energy Company (TICKER: BTU)

BTU has 3 Different Segments:

 

      • Seaborne Thermal: Composed of Australian thermal coal that is primarily exported to China, India and Japan
      • Seaborne Metallurgical: Hard-coking coal used in steel making.
      • Domestic Thermal: Thermal coal mined in the Powder River basin (Wyoming) and the Illinois Basin. 

Tailwinds from an impending resolution of a trade dispute between China and Australia, along with increased demand in China for coal plants and higher natural gas prices over the next 12-24 months, will be major drivers of higher coal prices.

You have to realize, even though coal is falling in demand in developed economies, it is still growing in developing nations. China is aggressively expanding plant capacity, which generates demand for BTU’s Seaborne Thermal coal going forward.

 

ARCH Resources Inc. (Ticker: ARCH)

ARCH is the coal leader and is on a roll.

The company’s most recent earnings show a nice improvement in financials, and they will be revving up a new mine in Q3. That will stoke growing momentum and higher earnings.

The nice thing with ARCH is they are growing earnings before interest, taxes, depreciation, and amortization (EBITDA) now and as the price of coal rises it will accumulate to their top line.

 

 

ARCH is further along in it’s uptrend and provides a bit more volatility for trading around a core holding.

 

Bring It Home

Keep moving into the asset classes that are hot.

You can see how institutional investors first moved into energy producers, then commodities. There’s been a recent shift into gold and silver and next up is fossil fuels.

With coal and uranium, I like playing them with outright calls or call spreads out as far as possible.

These assets are solid winners in a secular bull market.

When they become overbought you can sell shorter term calls against an outright long-term position…

It’s a short week ahead ending with an important jobs report on Friday. I think it will be a strong number and I have a few trade ideas I’ll share throughout the week.

Until then …

Live and Trade With Passion,

 

Griff

 

 

 

 

Newsflash: Biden Budget Won’t Pay for Itself

Hey There Income Hunters,

 

Where can we get one of those self-paying budgets?

 

I mean the Biden & Yellen Show never stops entertaining … 

 

Treasury Secretary Janet Yellen had a laugh-out-loud line in front of the House Appropriations subcommittee this week while defending President Biden’s $6 trillion budget.

 

“I believe it’s a fiscally responsible program,” she said.

 

LOL!

 

Fact Check Time

 

Every politician loves to say their budget plan will pay for itself.

 

But if that were true, we wouldn't have a 130% debt-to-GDP ratio to worry about… 

 

The graph below highlights the fact that just five years ago, the U.S. went into a decent economic growth period — and guess what? The deficit widened. It didn’t narrow, and it certainly didn’t pay for itself.

 

 

Now the dollar is ready for its third major bear market in the past 25-years …

 

And here’s a secret: when the dollar goes down, commodities go up!

 

Get ready for a renewal of the commodities bull run.

 

My Commodities Trades

 

I put a bullish vertical option spread on Southern Copper Corporation (Ticker: SCCO) yesterday. A couple of supporting fundamentals to consider:

 

      • In 2020, supply of most industrial metals tripled while copper only doubled.
      • Global inventories continue to decrease. London Mercantile Exchange (LME) reported inventories were down 20% mid-year last year.
      • Recently, many mines in Chile, which accounts for 28% of global copper supply, were forced to cut back on production due to political issues.

 

SCCO, which owns the largest copper reserves in the world, will continue to benefit immensely from the trend in lower supply/greater demand. In Q1 they only realized a price of $3.85 per pound, so with prices at $4.50 per pound now, their top-line number is much higher.

 

SCCO also captures by-product credits of $.74 per pound.

 

Technical Setup

 

SCCO has had a healthy correction since completing a double-top a couple of weeks back.

The company is down 20% from the high at $83.5 and is now rebounding from the bottom of a well defined $66-to-$84 trading range.

 

 

For SCCO I purchased a Sept. 17 70/80 call spread… 

 

      • I paid $3.40 for the spread and my net delta is 22.
      • I would stop myself out of the trade if SCCO closes below the $66.75 low.
      • So, my max profit would be $660 per contract, while my max loss would be $66 per contract — for a 10-to-1 risk/reward ratio.

Bring It Home

A complete game plan is incredibly important if you want to be consistently profitable.

 I was never a big fan of using stop loss orders… However, they can really save you from throwing money and, more importantly, they keep your head in the game

Unforeseen losses can set you back by distracting you from your next winning trade.

Take your lumps, ride your profits and move on to the next one.

 

Have a great long weekend and God bless the hard-fighting men and women who sacrificed it all for our freedom.

 

Live and Trade With Passion My Friends,

 

Griff