As the global economies collapse and confidence is lost, investors will begin to realize that fiat currencies have nothing to back them other than bankrupt governments. As a result, investors will turn to gold and silver as the only ‘real’ money that exists.
If any currency is to survive this global systemic crash, it will have to be backed by gold.
In 2008, the banking system was in crisis and on the verge of collapse. For the past 7 years the Fed’s intervention and stimulus temporarily paused the systemic crash that was coming; however, the interventions by the Fed never fixed the underlying problem.
Reality is now setting in as the bubbles created by the Fed have reached the breaking point and the markets natural forces are taking over.
The greed and hubris of the criminal banking industry is what has brought us to this point and the banks are now going to pay the price for their misdeeds. Unfortunately, so will the average citizen. We are heading towards depression. No one wants to say the ‘D’ word, but that’s going to be the final result.
The global banking industry is now in free fall along with stock markets around the world. Their derivative exposure is taking them down as the leveraged bets they placed with all of the free money they’ve been given from the Fed has now backfired.
The largest banks in the world are now in big trouble. Banks like Deutsche Bank, Credit Suisse, Bank of China, Goldman Sachs, HSBC, JP Morgan Chase and Barclays, just to name a few. These are some of the biggest banks in the world and it will only take one going under to cause a chain reaction that will bring down the whole system.
The Fed is out of options, the only thing left when these banks go is nationalization. They will have to be taken over by their respective governments. Complete socialism will result and I think that might have been the plan all along for the elites who dream of a one world government.
The collapse of the system will cause massive layoffs in all industries as the global economies come to a grinding halt.
If you don’t have a plan in place to protect your current net worth or to protect your family in case of a loss of employment, you could be in serious trouble.
Options Trading ‘Delta’
When trading options, you have a choice between choosing a strike price that is either ‘at the money’, ‘in the money’ or ‘out of the money’. The farther the underlying security goes into the money, the more gain you will have. When you buy an option that is ‘at the money’, you are choosing a strike price that is the same as or very close to the actual current trading price of the underlying security.
For every dollar that the underlying security goes up, your option will increase in value by the ‘Delta’ related to that option strike price. I know this sounds like Greek and no pun intended, but the ‘Delta’ is known as one of the Greeks of option trading.
‘Delta’ is the numerical value given to the strike price of an option which shows how much an option will increase in premium value with every $1 move in the underlying stock price.
For example: If your Delta is .40, your option will move up .40 cents with each $1 move up in the stock price. One option contract represents 100 shares of the underlying stock, so a .40 cent rise of the option contract would equal $40.
But here’s the thing, the Delta is not a static number. As the stock price moves up, so does the Delta. In other words, as your option position rises more ‘into the money’, so does your Delta until it eventually reaches $1.00.
Once your option value reaches a Delta of $1.00; that means that for every dollar the underlying security goes up, your option position will also go up $1.00.
By the same token, if you are trading Put options, the Delta works the same way, but in reverse. A Delta of -.40 would mean that as the underlying security drops in value, your option will go up in price by .40 cents or $40 for every contract you hold.
When I trade long term options or Leaps, I typically pick a strike price that is out of the money. This allows me to buy the option at a much lower price when I feel fairly confident that the price will rise into the money before my expiration date.
Out of the money options tend to have a very low Delta. I try to pick a Delta no lower than .40 when buying ‘out of the money’. If you look at the Delta’s for each strike price, you will see that the delta increases. This shows where your Delta will be as the price of the underlying security goes higher.
I know this can be confusing, but I hope you understand what I’m trying to explain. If you are interested in option trading and would like a more thorough explanation, please feel free to email me at email@example.com.
If you bought gold positions when I recommended them a few weeks ago, you should be sitting on some pretty good profits right now, but there is much more to come, so sit tight on your positions and if you haven’t already bought gold stocks, you need to get in now.
2016 will be epic as the bull market in gold and silver is just beginning. As global bank risk increases and stock market indexes worldwide crash, investors are turning to the only remaining safe haven investments of bonds and precious metals.
Gold soared above the 200 day moving average last week, the most in 2 years, and this time it appears the surge will continue. Gold broke a critical resistance level at 1200 this week and the next serious resistance level is all the way up to 1300. (See chart below)
There has been a lot of news in the precious metals markets in the past couple of weeks. The COMEX is reaching a critical point. The gold held in the COMEX vaults is being bled dry and a default on delivery could be in the works very soon. This could cause a massive short squeeze in gold and silver. The LBMA was caught red handed manipulating the price of silver two weeks ago and it appears that further manipulation may be coming to an end.
The recent surge in the price of gold is from the major players, the ‘smart money’, who knows the ‘jig is up’ in the financial markets and things are going south very quickly. Mom and Pop investor still have no clue and they are going to be blindsided.
After yesterday’s massive spike in gold, we can expect a bit of a retrace. The hourly gold chart below shows the Fibonacci Retrace back to the 38% mark. This is classic action after a move like we had yesterday. Expect gold to build some energy to soar up to the 1300 level next week.
I think 1300 will provide enough resistance to cause a slight retrace to balance some of the overbought technical indicators. Therefore, I plan to add a trailing stop to my short term positions as we get closer to the 1300 level.
If you own 2017 Leaps, I would let them ride out the volatility. In the long run, gold has a tremendous amount of upside coming.
Folks, everything I’ve been predicting and warning you about in these pages is happening now and it will only pick up speed from here.
Stock Market Indices: (SPY) (QQQ)
Stocks broke through the bear flag trend line and are now headed lower. Expect them to break the lower resistance line of the bear flag next week.
I own late 2016 or 2017 ‘out-of-the-money’ Put options on (SPY) and/or (IYF). You can expect to see massive profits as the stock market plunges throughout the rest of the year.
The chart below shows where the potential bottom could eventually end up when this bear finally bottoms.
Energy Stocks: (XLE) (UNG) (USO) (LNG)
Oil appears to be headed even lower as a swarm of bankruptcies begins in the oil markets. Look at this chart of Chesapeake Energy Corporation (CHK) as a perfect example of the carnage taking place in the oil markets. This is not worth trading, as it has already tanked to virtually zero.
I thought we could possibly see a spike in oil this month due to the historical seasonal trends, but this market is unlike anything that’s happened in recent history. I’m beginning to think that the only thing that will cause oil to spike from here is war and that might not be too far off, as Saudi Arabia and Turkey are planning to send ground troops into Syria with the support of NATO, which means U.S. support, whether direct or indirect.
Oil is so oversold right now that I still think we will see a break-out of this descending wedge pattern in the weeks ahead, but I think for the short term, we may see more downside to go before we break back to the upside and the start of World War III in Syria may be the catalyst.
Financial Stocks: (XLF) (IYF)
Financials are taking a beating as the world’s banking industry collapses. Expect more carnage from this sector in the weeks ahead. I’m short IYF and SPY.
Commodities: (FCX) (JJG) (DBA)
Based on the slowdown in global economic activity, I just don’t think commodities have bottomed yet, but just like oil, the bullish wedge pattern is setting up for a break to the upside in the coming weeks.
US Treasury Bonds: (TLT)
Investors are moving into Treasuries as a safe haven asset from the stock market. But the yield has crashed to the 1% level and falling, which will not keep up with inflationary decay of the dollar. Besides gold, it’s the only source investors consider as a safe haven. When the credit markets finally implode, gold will be the only safe asset left.
(SLW) January 2017 CALLS
(GDX) January 2017 CALLS
(ABX) January 2017 CALLS
(FNV) January 2017 CALLS
(RGLD) January 2017 CALLS
(SPY) December 2016 PUTS
(IYF) August 2016 PUTS
February 2016: Bank Stocks Collapsing… Again!
This video is about how many large bank stocks may be on the verge of collapsing while the mainstream financial media, like Barron’s, tells Main St that now’s the best time to buy bank stocks!