Model Portfolio Change, Watch CPI Numbers Today

The Fed is holding off on another rate hike, and that could be very embarrassing if the consumer price index rises faster than anticipated. The numbers will be released at 8:30am eastern, 3;30pm here. Analysts are anticipating a 0.2% rise in core CPI which is the index minus food and energy. If it rises by 0.4% or more, gold is going to go much higher quickly. I wrote about this at 247 Wall St. yesterday.

Here is the article.

I have always maintained that once inflation gets obvious, the Fed will have to start chasing inflation with higher and higher interest rates regardless of economic conditions. This is what happened in 1980 when Volcker jacked up the effective fed funds rate to 22%. That is impossible today because it would force a hard default on US Treasuries. That would be a bona fide bankruptcy. So instead the Fed will simply let inflation run away into hyperinflation because there is no other choice.

That is when gold will move higher than anyone has ever seen, faster than it did in 1980.

This will happen, guaranteed. Eventually. I don’t know if it will start tomorrow or 5 years from now, but I’m willing to risk 10%¬†of the model portfolio on it. It’s time to use some leverage.

I’m adding a $5,000 position in the 3x leveraged gold miners fund NUGT, and $5,000 position in the 3x silver fund USLV.

I’m also adding another $500 on shorting the bond market with puts on TLT.

This is risky and could make me look like an idiot. We’ll see what happens. For legal reasons because Congress has made a law imposing on the freedom of speech, this is a game and I am not a financial adviser, and I am making no recommendations to anyone.

Check the model portfolio page at the menu bar for updated positions.


Peter Schiff’s 2015 Gold Prediction

I’m getting word and sentiment from multiple sources that I follow that 2015 will be the year of gold. Here is Peter Schiff‘s forecast for this year.

My followers will know that the highest-paying gold move, one that will pay close to 1800:1, is 2016 or 2017 GLD Call Options as far out of of the money as you can go. Put $1000 in January 2017 GLD Calls at $225, and if gold does what it did in 1980, you will be a millionaire by 2016.

That is not a move to put more than 1% of your portfolio in, just to caution you. If GLD does not reach $225 by 2017 you will lose the entire investment. If anyone is interested in a post on how options work, let me know and I’ll write one. For now check my article on this specific investment move at TheStreet.