Money Supply beats Fundamentals and Technicals

My latest article for TheStreet hits the homepage must read section. In it, I discuss why, before fundamentals, technicals, sentiment, chart patterns or anything else, what matters most is money supply. If the money is not there, stock prices cannot go up.

Here’s an excerpt.

Before fundamentals, technicals, interest rates, sentiment or anything else, the bottom line of why stock prices go up or down is money supply.

If money is available, one of the places it can go is the stock market. That is a necessary but not sufficient condition for the market to rise. But if not enough loose money is available, all the fundamentals and technicals in the world won’t matter. The market has to go down.

Continue reading here

 

The US Monetary Base Crosses $4 TRILLION, my latest article for TheStreet

In this article I explain why the ultimate inflation hedge is not gold, silver, gold miners, silver miners, commodities, silver options, or options in miners.

It’s actually 2016 GLD $225 call options, with a risk/return of a whopping 1379:1. That means for every $1,000 you put in, the risk is $1000, but the return is $1,379,000.

Talk about the ultimate inflation hedge.

Here’s an excerpt:

Go to the GLD 2016 calls and the farthest strike out is $225. Assuming a quintupling of gold in a two-year time frame (either from January 2014 or January 2015, as 2017 LEAPS in GLD will also be available come November) that puts GLD at roughly $625. $225 LEAPS on GLD are currently available for 29 cents, and only 6,688 contracts have been traded. Compare that with SLV’s 55,000 and this trade seems extremely neglected.

If GLD quintuples in two years, that puts the options at $400 a contract, for a return of 1,379-times, or an astronomical 137,800%. Meaning, for every $1,000 you put into 2016 or 2017 $225 GLD LEAP options, you will have $1,379,300. That is nearly twice the return on SLV LEAPS, putting the risk/return ratio at 1379:1, and that already takes into account that gold is generally half as fast in rising as silver.