investmentwatchblog--2020-05-15--Obama Legacy Unraveling – Worse than Watergate

Richard Nixon had to resign over the famous scandal of the June 17 , 1972 failed break-in of the Democratic National Committee headquarters at the Washington , D.C. Watergate Office Building .
After the five perpetrators were arrested , the press and the U.S. Justice Department connected the cash found on them at the time to the Nixon re-election campaign committee .
Several major revelations came about with presidential action to try to cover up what took place .
It was discovered that Nixon recorded meetings in the Oval Office .
The U.S. Supreme Court ruled that Nixon must release @ @ @ @ @ @ @ .
The tapes revealed that Nixon had conspired to cover up activities that took place after the break-in and had attempted to use federal officials to deflect the investigation .
Nixon , however , never ordered the break-in .
The Obama Legacy is coming undone .
It is looking more and more that President Obama was actually directing U.S. intelligence agencies to spy on Trump .
Clearly , like Nixon , Obama at the very least knew what was going on .
The likelihood that Vice President Biden also knew everything also remains @ @ @ @ @ @ @ the names of top Obama administration officials who had put in “ unmasking ” requests and might have gotten the identity of Michael Flynn , Mr. Trump ’ s former national security adviser who was captured on tape talking to Russia ’ s former ambassador before Mr. Trump was sworn in .
The list of officials provided by Acting Director of National Intelligence Richard Grenell included Mr. Biden , former FBI Director James B. Comey , and ex-intelligence chiefs John Brennan and James Clapper .
These are the men who have been most @ @ @ @ @ @ @ they have been taking that position knowing what they did was illegal to try to deflect blame if they became criminally indicted .
A federal judge is the Flynn case that appears to be acting more like a prosecutor .
He has yet to accept the Justice Department dropping the case .
The Judge himself in an unprecedented position suggested he might pursue contempt or perjury charges against Flynn .
This is showing deep bias in a political case regarding this judge .
Newly declassified House transcripts show that Hillary Clinton presidential campaign @ @ @ @ @ @ @ Senate Intelligence Committee aide to join forces regarding the dossier with Fusion GPS for the post-election phase of trying to dig up dirt on President Trump .
This is the same Fusion GPS that Mueller never mentions in his report and pretended that it was not part of his investigation .
The ex-aide is Daniel Jones , who in 2017 formed the secretive nonprofit The Democracy Integrity Project .
For the project , Mr. Jones hired Fusion GPS , the Clinton campaign ’ s opposition research firm .
During the election , Fusion @ @ @ @ @ @ @ Clinton campaign and the Democratic Party and retained Christopher Steele in June 2016 .
A former British intelligence officer , Mr. Steele went on to compile a dossier filled with felony allegations against Mr. Trump and aides that turned out to be bogus .
Mr. Jones also hired Mr. Steele .
The House Permanent Select Committee on Intelligence ’ s final Russia election report revealed that Mr. Jones met with the FBI in March 2017 , a month after he met with Mr. Podesta .
He went to the FBI to brief them @ @ @ @ @ @ @ had raised $ 50 million from Democratic donors to investigate the president and Russia .
Mr. Jones , who then heads the Penn Quarter Group , said seven to 10 “ wealthy donors , ” primarily in New York and California , provided money to “ continue exposing Russian interference in the 2016 U.S. presidential election .
Mr. Jones ‘ plan was to share with Congress and the news media , ” an FBI report said .
It would be very interesting to see who are those donors .
Podesta appeared twice to @ @ @ @ @ @ @ .
It was during his testimony when Republicans him to detail his interactions with Fusion GPS .
In the campaign , Fusion had introduced Mr. Steele to a number of Washington reporters to persuade them to write of his allegations of an enormous Trump-Russia conspiracy in the press to get the story going and manipulate the Americans .
The manipulation of the country into this Russia conspiracy was orchestrated in an effort to interfere with Trump ’ sagenda .
It is truly amazing to the extent that the Democrats have been so intent @ @ @ @ @ @ @ when he ran in 2016 .

by Martin Armstrong
Richard Nixon had to resign over the famous scandal of the June 17, 1972 failed break-in of the Democratic National Committee headquarters at the Washington, D.C. Watergate Office Building. After the five perpetrators were arrested, the press and the U.S. Justice Department connected the cash found on them at the time to the Nixon re-election campaign committee. Several major revelations came about with presidential action to try to cover up what took place. It was discovered that Nixon recorded meetings in the Oval Office. The U.S. Supreme Court ruled that Nixon must release the Oval Office tapes to government investigators. The tapes revealed that Nixon had conspired to cover up activities that took place after the break-in and had attempted to use federal officials to deflect the investigation. Nixon, however, never ordered the break-in.
The Obama Legacy is coming undone. It is looking more and more that President Obama was actually directing U.S. intelligence agencies to spy on Trump. Clearly, like Nixon, Obama at the very least knew what was going on. The likelihood that Vice President Biden also knew everything also remains very high.
Several Republican senators released the names of top Obama administration officials who had put in “unmasking” requests and might have gotten the identity of Michael Flynn, Mr. Trump’s former national security adviser who was captured on tape talking to Russia’s former ambassador before Mr. Trump was sworn in. The list of officials provided by Acting Director of National Intelligence Richard Grenell included Mr. Biden, former FBI Director James B. Comey, and ex-intelligence chiefs John Brennan and James Clapper. These are the men who have been most vocal against Trump – it appears that they have been taking that position knowing what they did was illegal to try to deflect blame if they became criminally indicted.
A federal judge is the Flynn case that appears to be acting more like a prosecutor. He has yet to accept the Justice Department dropping the case. The Judge himself in an unprecedented position suggested he might pursue contempt or perjury charges against Flynn. This is showing deep bias in a political case regarding this judge.
We are primarily funded by readers. Please subscribe and donate to support us!
Newly declassified House transcripts show that Hillary Clinton presidential campaign chairman John Podesta met with a former Senate Intelligence Committee aide to join forces regarding the dossier with Fusion GPS for the post-election phase of trying to dig up dirt on President Trump. This is the same Fusion GPS that Mueller never mentions in his report and pretended that it was not part of his investigation.
The ex-aide is Daniel Jones, who in 2017 formed the secretive nonprofit The Democracy Integrity Project. For the project, Mr. Jones hired Fusion GPS, the Clinton campaign’s opposition research firm. During the election, Fusion co-founder Glenn Simpson took money from the Clinton campaign and the Democratic Party and retained Christopher Steele in June 2016. A former British intelligence officer, Mr. Steele went on to compile a dossier filled with felony allegations against Mr. Trump and aides that turned out to be bogus. Mr. Jones also hired Mr. Steele.
The House Permanent Select Committee on Intelligence’s final Russia election report revealed that Mr. Jones met with the FBI in March 2017, a month after he met with Mr. Podesta. He went to the FBI to brief them on his Trump findings and disclosed he had raised $50 million from Democratic donors to investigate the president and Russia. Mr. Jones, who then heads the Penn Quarter Group, said seven to 10 “wealthy donors,” primarily in New York and California, provided money to “continue exposing Russian interference in the 2016 U.S. presidential election. Mr. Jones‘ plan was to share with Congress and the news media,” an FBI report said. It would be very interesting to see who are those donors.
Podesta appeared twice to testify during the summer and late 2017. It was during his testimony when Republicans him to detail his interactions with Fusion GPS. In the campaign, Fusion had introduced Mr. Steele to a number of Washington reporters to persuade them to write of his allegations of an enormous Trump-Russia conspiracy in the press to get the story going and manipulate the Americans.
The manipulation of the country into this Russia conspiracy was orchestrated in an effort to interfere with Trump’sagenda. It is truly amazing to the extent that the Democrats have been so intent upon preventing the promises that Trump made when he ran in 2016.


investmentwatchblog--2020-05-15--Economic growth German style has hit the buffers

Today gives us the opportunity to look at the conventional and the unconventional so let us crack on via the German statistics office .
So we start with a similar pattern to the UK as frankly a 0.2 % difference at this time does not mean a lot .
Also we see that this is essentially what we might call an Ides of March thing as that is when things headed south fast .
However some care is needed because of this .
For newer readers this brings two of my themes into play .
The first is that I @ @ @ @ @ @ @ with a 0 % number at the time ( and this has implications for the Euro area GDP numbers too ) .
If they were trying to dodge the recession definition things have rather backfired .
The second is that Germany saw its economy turn down in early 2018 which is quite different to how many have presented it .
Some of the news came from later downwards revisions which is obviously awkward if you only read page one , but also should bring a tinge of humility as even in more stable @ @ @ @ @ @ @ think we do .
Switching now to the context there are various ways of looking at this and I have chosen to omit the seasonal adjustment as right now it will have failed which gives us this .
No big change but it means in context that the economy of Germany has grown by 4 % since 2015 or if you prefer returned to early 2017 .
In terms of detail we start with a familiar pattern .
But then get something more unfamiliar when we not we are looking at Germany .
@ @ @ @ @ @ @ more although yesterday brought some context into this .
As he was talking about June I added this bit .
Actually they have already agreed this or we were told that .
There is this about which we get very little detail .
If we switch to the trade figures it looks as though they were a drag on the numbers .
Ironically this gives us something many wanted which is a lower German trade surplus but of course not in a good way .
A factor in this will be the numbers @ @ @ @ @ @ @ to take from the German version .
The caveats I pointed out for the UK about seasonality , inflation and the ( in ) ability to collect many of the numbers will be at play here .
The Federal Statistics Office has been trying to innovate and has been looking at private-sector loan deals .
That provides food for thought for the ECB and Christine Lagarde to say the least .
Also in an era of dissatisfaction with conventional GDP and the rise of nowcasting we have been noting this .
That is @ @ @ @ @ @ @ a 10 % + drop for GDP in Germany this quarter especially as we note that many service industries have been hit even harder .
I promised you something unconventional so let me start with this .
I expect this to be a trend now and will be true in much of the western world .
But this ball bounces around like Federer versus Nadal .
Why ?
Well I immediately thought of Ireland which via its tax regime has ended up with a large pharmaceutical sector which others may now be noting @ @ @ @ @ @ @ we have looked at the “ pharmaceutical cliff ” there when a drug has lost its patent and gone full generic so to speak .
That might seem odd but remember there were issues about things like paracetamol in the UK for a bit .
That is before we get to China and the obvious issues in may things have effectively been outsourced to it .
Some will be brought within national borders which for Germany will be a gain .
But the idea of trade having a reversal is not good for @ @ @ @ @ @ @ continues to be hit .
Perhaps it realises this hence the German Constitutional Court decision but that risks upsetting a world where Germany is paid to borrow and of course a new Mark would surge against any past Euro value .

by Shaun Richards
Today gives us the opportunity to look at the conventional and the unconventional so let us crack on via the German statistics office.
WIESBADEN – The corona pandemic hits the German economy hard. Although the spread of the coronavirus did not have a major effect on the economic performance in January and February, the impact of the pandemic is serious for the 1st quarter of 2020. The gross domestic product (GDP) was down by 2.2% on the 4th quarter of 2019 upon price, seasonal and calendar adjustment. That was the largest decrease since the global financial and economic crisis of 2008/2009 and the second largest decrease since German unification. A larger quarter-on-quarter decline was recorded only for the 1st quarter of 2009 (-4.7%).
So we start with a similar pattern to the UK as frankly a 0.2% difference at this time does not mean a lot. Also we see that this is essentially what we might call an Ides of March thing as that is when things headed south fast. However some care is needed because of this.
The recalculation for the 4th quarter of 2019 has resulted in a price-, seasonally and calendar-adjusted GDP decrease of 0.1% on the previous quarter (previous result: 0.0%).
For newer readers this brings two of my themes into play. The first is that I struggled to see how Germany came up with a 0% number at the time ( and this has implications for the Euro area GDP numbers too). If they were trying to dodge the recession definition things have rather backfired. The second is that Germany saw its economy turn down in early 2018 which is quite different to how many have presented it. Some of the news came from later downwards revisions which is obviously awkward if you only read page one, but also should bring a tinge of humility as even in more stable times we know less than we might think we do.
Switching now to the context there are various ways of looking at this and I have chosen to omit the seasonal adjustment as right now it will have failed which gives us this.
a calendar-adjusted 2.3%, on a year earlier.
No big change but it means in context that the economy of Germany has grown by 4% since 2015 or if you prefer returned to early 2017.
In terms of detail we start with a familiar pattern.
Household final consumption expenditure fell sharply in the 1st quarter of 2020. Gross fixed capital formation in machinery and equipment decreased considerably, too.
But then get something more unfamiliar when we not we are looking at Germany.
However, final consumption expenditure of general government and gross fixed capital formation in construction had a stabilising effect and prevented a larger GDP decrease.
So the German government was already spending more although yesterday brought some context into this.
GERMAN FINANCE MIN. SCHOLZ: OUR FISCAL STIMULUS MEASURES WILL BE TIMELY, TARGETED, TEMPORARY AND TRANSFORMATIVE. ( @FinancialJuice )
As he was talking about June I added this bit.
and late…….he forgot late….
Actually they have already agreed this or we were told that.
Germany has approved an initial rescue package worth over 750 billion euros to mitigate the impact of the coronavirus outbreak, with the government taking on new debt for the first time since 2013. The first package agreed in March comprises a debt-financed supplementary budget of 156 billion euros and a stabilisation fund worth 600 billion euros for loans to struggling businesses and direct stakes in companies. ( Reuters )
Warnings
There is this about which we get very little detail.
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Both exports and imports saw a strong decline on the 4th quarter of 2019.
If we switch to the trade figures it looks as though they were a drag on the numbers.
WIESBADEN – Germany exported goods to the value of 108.9 billion euros and imported goods to the value of 91.6 billion euros in March 2020. Based on provisional data, the Federal Statistical Office (Destatis) also reports that exports declined by 7.9% and imports by 4.5% in March 2020 year on year.
Ironically this gives us something many wanted which is a lower German trade surplus but of course not in a good way. A factor in this will be the numbers below which Google Translate has allowed me to take from the German version.
Passenger car production (including motorhomes) was compared to March 2019
by more than a third (-37%) and compared to February 2020 by more than a quarter (-27%)
around 285,000 pieces back.
The caveats I pointed out for the UK about seasonality, inflation and the (in)ability to collect many of the numbers will be at play here.
Looking Ahead
The Federal Statistics Office has been trying to innovate and has been looking at private-sector loan deals.
The preliminary low was the week after Easter (16th calendar week from April 13th to 19th) with 36.7% fewer new personal loan contracts than achieved in the previous week. Since then, the new loan agreements have ranged from around 30% to 35% below the same period in the previous year.
That provides food for thought for the ECB and Christine Lagarde to say the least.
Also in an era of dissatisfaction with conventional GDP and the rise of nowcasting we have been noting this.
KÖLN/WIESBADEN – The Federal Office for Goods Transport (BAG) and the Federal Statistical Office (Destatis) report that the mileage covered by trucks with four or more axles, which are subject to toll charges, on German motorways decreased a seasonally adjusted 10.9% in April 2020 compared with March 2020. This was an even stronger decline on the previous month than in March 2020, when a decrease of -5.8% on February 2020 had been recorded, until then the largest month-on-month decline since truck toll was introduced in 2005.
That is quite a drop and leaves us expecting a 10%+ drop for GDP in Germany this quarter especially as we note that many service industries have been hit even harder.
Comment
I promised you something unconventional so let me start with this.
Covid-19 has uncovered weaknesses in France’s pharmaceutical sector. With 80 percent of medicines manufactured in Asia, France remains highly dependent on China and India. Entrepreneurs are now determined to bring France’s laboratories back to Europe. ( France24 )
I expect this to be a trend now and will be true in much of the western world. But this ball bounces around like Federer versus Nadal. Why? Well I immediately thought of Ireland which via its tax regime has ended up with a large pharmaceutical sector which others may now be noting. Regular readers will recall the times we have looked at the “pharmaceutical cliff” there when a drug has lost its patent and gone full generic so to speak. That might seem odd but remember there were issues about things like paracetamol in the UK for a bit.
That is before we get to China and the obvious issues in may things have effectively been outsourced to it. Some will be brought within national borders which for Germany will be a gain. But the idea of trade having a reversal is not good for an exporter like Germany as the ball continues to be hit. Perhaps it realises this hence the German Constitutional Court decision but that risks upsetting a world where Germany is paid to borrow and of course a new Mark would surge against any past Euro value.


investmentwatchblog--2020-05-15--Unprecedented Risks, Heightened Uncertainty, And Expecting A Second Wave

“ We are expecting a new wave and we ’ re prepared for it.
” Over the last couple of months , we ’ ve witnessed unprecedented changes in the global economy , in the markets and in our societies .
The corona crisis and the governmental measures that were introduced had a dramatic and direct effect on all of us , as investors and as citizens .
That is especially true of precious metals investors .
A new gold rush is now underway , with impressive price gains and elevated demand levels that are expected to persist .
However @ @ @ @ @ @ @ the panic in stock markets , coincided with a historic supply shock back in March , creating serious and widespread disruptions in the physical precious metals market .
To discuss exactly what happened , what the experience was like in the “ frontline ” and what to expect going forward , I turned to Robert Hartmann , one of the founders of pro aurum , whose experience in the investment world and in precious metals spans decades .
Claudio Grass ( CG ) : The corona crisis has introduced unprecedented risks and heightened @ @ @ @ @ @ @ and among the general public .
What is your own reaction to this extraordinary shift and your overall outlook of the global economy going forward ?
Robert Hartmann ( RH ) : I think it is important to understand that the risks in our financial system were already considerable before the corona crisis .
I ’ m not an economist , but common sense clearly tells me that the gigantic orgy of debt on the part of governments and companies , coupled with ever lower interest rates , is not sustainable in the @ @ @ @ @ @ @ with negative real interest rates simply no longer make sense , due to the intervention of the central banks .
Debtor risks have long ceased to be reflected in valuations .
The corona crisis is exacerbating and accelerating this mispricing even further .
It is no longer billions of euros that are being created out of thin air , as in previous crises ; this time it ’ s trillions .
Also , in contrast to the last rescue operation in 2008-2009 , this time a large part of the money is being @ @ @ @ @ @ @ This means that more money is now chasing a decreasing amount of goods .
I learned at school that this will have an inflationary effect .
It looks to me as if the central banks are using more and more resources in their effort to resuscitate and reactivate the global financial system with their respective bailouts at more or less regular intervals of around 10 years .
In the process , more and more anomalies are being created , which certainly would not have occurred without this interference .
When I look at @ @ @ @ @ @ @ as the gold/oil ratio , the gold/silver ratio , the gold/platinum ratio or the valuations of major stock markets in comparison to the GDP of their respective countries , the extreme deviations from the historical averages can be seen very clearly .
Decisions on where to invest your capital in the medium to long term are becoming increasingly difficult for investors .
CG : The physical gold market was especially affected by the supply chain and production disruptions that governmental measures introduced .
We saw very unusual premiums and widespread shortages in March @ @ @ @ @ @ @ ” gold diverged from the physical .
Can you explain what happened and why ?
RH : We experienced the perfect storm in the precious metals markets in general and gold and silver in particular .
Practically without warning , all major gold producers in Switzerland , that account for around 70 % of global bullion production , were shut down by official channels .
At the same time , there were dramatic restrictions on air travel , so the import of the most important bullion coins , such as the Krugerrand ( @ @ @ @ @ @ @ ( Canada ) or the American Eagle ( USA ) , was simply no longer possible .
As for the silver coins from Australia and Canada , we had to wait about four weeks for deliveries from the producers , for coins we had already paid for .
Amid this supply shock , demand from German and European investors rose to an all-time high .
Many traders were only able to obtain goods on the secondary market ( i.e .
not from the producers ) , refinancing rates for precious metal loans multiplied @ @ @ @ @ @ @ of 10-20 and the bid-ask spread for an ounce of paper gold rose to a peak of almost USD100 .
These are all hard costs that precious metal traders had to pass on to their customers .
CG : How about now ?
Is the situation in physical gold normalized or do you expect there might be further disruptions and risks down the road ?
RH : After the bar producers in Switzerland partially resumed their production and the volatility has abated , the premiums for physical bars and coins have already decreased @ @ @ @ @ @ @ the past 8 days and we are receiving around 30-35 % fewer orders from customers than we did at the end of March .
Now that the stock markets have recovered , many investors are probably relatively more optimistic about what the economy will look like after the end of the shutdown .
That gives us some breathing space .
We are , however , expecting a new wave and we ’ re prepared for it .
Regardless of the rosy picture that stock markets might paint at the moment , the corona @ @ @ @ @ @ @ its impact becomes even more apparent , we expect another gold rush and the higher the prices rise , the more demand there will be .
At the end of the day , gold and silver in their physical form can not be created at will like paper money or bonds .
I have repeatedly highlighted this simple fact at every opportunity over the past 20 years .
So many people still seem to be oblivious to the nature of fiat money and its inherent risks .
Only 10-15 % of Germans are @ @ @ @ @ @ @ : How is pro aurum positioned for the challenging months that follow ?
How have you prepared for possible risks ahead ?
RH : We have done very well compared to other retailers over the last 3 months .
To a large extent , we owe this to our dealers , who already ramped up our inventories to the limit in the run-up to the crisis .
This enabled us to supply not only our private customers , but also our banking partners and even other precious metal traders .
We also took @ @ @ @ @ @ @ deployed our staff flexibly , so that our customers could always reach us .
In our newsroom , we published an update almost daily on the situation at pro aurum .
Currently , we are in the process of replenishing our stocks as much as possible , while we are also processing all orders that are still open from the time after Easter .
Overall , the corona crisis was a valuable experience that we will undoubtedly benefit from in the future , like we did from the lessons learned during the stormy @ @ @ @ @ @ @ the buying spree in December 2019 , shortly before the lowering of the cash limit for anonymous precious metal purchases in Germany .
CG : What are your expectations for the gold price in the coming months ?
Do you anticipate this strong demand we ’ ve been seeing to persist ?
RH : The price of gold is already trading near its all-time high in many currencies .
Compared to the euro , gold costs more than five times as much as it did at the turn of the millennium .
This @ @ @ @ @ @ @ 85 % of its value against gold since then .
In view of the renewed glut of money , this uptrend is very unlikely to be reversed anytime soon .
To the contrary , I expect an exponential rise in the gold price within the next five years , similar to that of the 1970 ’ s .
Then we should leave the party and invest in productive capital again .
CG : Silver seems to have been often overlooked lately , while everyone ’ s been focused on gold ’ s bullish @ @ @ @ @ @ @ opportunity there ?
RH : The gold/silver ratio recently reached an all-time high of over 125 , meaning that for the price of 1 ounce of gold you get more than 125 ounces of silver .
There is about 15 times more silver than gold in the earth ’ s crust .
The average gold/silver ratio over the last 20 years has ranged between 50 and 60 .
Thus , silver is clearly undervalued and should perform significantly better than gold in the next few years .
CG : For years , we @ @ @ @ @ @ @ of holding precious metals in their physical form and avoiding paper products and I think this is especially true in a crisis like the current one .
What are the main practical advantages that you see in physical metals at this stage ?
RH : Since the foundation of pro aurum in 2003 , we have pointed out in thousands of articles that physical gold and silver belong in every well-diversified portfolio .
And this is completely independent of whether one is living in a time of crisis or not .
Physical gold @ @ @ @ @ @ @ does not carry counter-party risk and can not be devalued by third parties .
These are unique advantages that no other asset class offers .
CG : In the uncertain months and years that await us , it would appear that political risks could prove as dangerous as the economic ones for investors .
We ’ ve already seen serious threats to property rights in many jurisdictions .
Do you think Switzerland will continue to be the exception to the rule when it comes to legal stability and respect for private property ?
@ @ @ @ @ @ @ in the Eurozone with skepticism .
During the corona crisis , freedom of movement has been severely and abruptly restricted and open borders now seem to be a thing of the past .
As for the fate of the euro , that ’ s not a foregone conclusion either .
“ Whatever it takes ” was the answer of former ECB boss Mario Draghi to the question of what means would be used to save the euro .
It remains to be seen to what lengths the ECB will go to this time @ @ @ @ @ @ @ .
What we do know for sure , is that the spending and printing spree is already of a gigantic scale .
I don ’ t think there is any harm in keeping some of one ’ s assets in Switzerland and thus also diversifying geographically .
Despite the very strong currency , the Swiss economy is robust , the people are friendly and , very importantly , there is still a bit of direct democracy here .
So the political class can not go against the interests of the people for too @ @ @ @ @ @ @ bigger picture , what do you expect the wider impact of this global economic freeze to be ?
Apart from the obvious economic implications , do you also see the potential for geopolitical and social changes that investors need to factor in ?
RH : This is a dramatic and unprecedented shift , which I believe will affect us for a long time .
It will have a lasting impact and life will be different , even after the lockdown and shutdown measures are lifted .
This crisis clearly demonstrated how fragile our @ @ @ @ @ @ @ .
Everything we knew and took for granted changed , practically overnight .
Perhaps the “ higher , faster and further ” motif that we were so used to has had its time .
The pursuit of ever greater profit could now partly give way to other things , such as better , socially and ecologically more advantageous solutions for customers .
We are not yet able to assess the exact consequences , as we do not know when this chapter will end .
However , I personally assume that in a second @ @ @ @ @ @ @ will be more and more people who do not follow the rules .
People want to work , meet friends and go on holiday .
It will also be very interesting to see when and which of our fundamental rights will be restored .
Hopefully , none of them will fall by the wayside or be lost as “ collateral damage ” of the corona crisis .

by Claudio Grass via Claudiograss.ch
“We are expecting a new wave and we’re prepared for it.”
Interview with Robert Hartmann, Co-Owner ProAurum
Over the last couple of months, we’ve witnessed unprecedented changes in the global economy, in the markets and in our societies. The corona crisis and the governmental measures that were introduced had a dramatic and direct effect on all of us, as investors and as citizens.
That is especially true of precious metals investors. A new gold rush is now underway, with impressive price gains and elevated demand levels that are expected to persist. However, this skyrocketing demand, triggered by the panic in stock markets, coincided with a historic supply shock back in March, creating serious and widespread disruptions in the physical precious metals market. To discuss exactly what happened, what the experience was like in the “frontline” and what to expect going forward, I turned to Robert Hartmann, one of the founders of pro aurum, whose experience in the investment world and in precious metals spans decades.
—–
Claudio Grass (CG): The corona crisis has introduced unprecedented risks and heightened levels of uncertainty, both among investors and among the general public. What is your own reaction to this extraordinary shift and your overall outlook of the global economy going forward?
Robert Hartmann (RH): I think it is important to understand that the risks in our financial system were already considerable before the corona crisis. I’m not an economist, but common sense clearly tells me that the gigantic orgy of debt on the part of governments and companies, coupled with ever lower interest rates, is not sustainable in the long run. The interest-bearing asset classes with negative real interest rates simply no longer make sense, due to the intervention of the central banks. Debtor risks have long ceased to be reflected in valuations.
The corona crisis is exacerbating and accelerating this mispricing even further. It is no longer billions of euros that are being created out of thin air, as in previous crises; this time it’s trillions. Also, in contrast to the last rescue operation in 2008-2009, this time a large part of the money is being injected directly into the real economy. This means that more money is now chasing a decreasing amount of goods. I learned at school that this will have an inflationary effect.
It looks to me as if the central banks are using more and more resources in their effort to resuscitate and reactivate the global financial system with their respective bailouts at more or less regular intervals of around 10 years. In the process, more and more anomalies are being created, which certainly would not have occurred without this interference. When I look at some key metrics and indicators, such as the gold/oil ratio, the gold/silver ratio, the gold/platinum ratio or the valuations of major stock markets in comparison to the GDP of their respective countries, the extreme deviations from the historical averages can be seen very clearly. Decisions on where to invest your capital in the medium to long term are becoming increasingly difficult for investors.
CG: The physical gold market was especially affected by the supply chain and production disruptions that governmental measures introduced. We saw very unusual premiums and widespread shortages in March, while the price for “paper” gold diverged from the physical. Can you explain what happened and why?
RH: We experienced the perfect storm in the precious metals markets in general and gold and silver in particular. Practically without warning, all major gold producers in Switzerland, that account for around 70% of global bullion production, were shut down by official channels. At the same time, there were dramatic restrictions on air travel, so the import of the most important bullion coins, such as the Krugerrand (South Africa), the Maple Leaf (Canada) or the American Eagle (USA), was simply no longer possible. As for the silver coins from Australia and Canada, we had to wait about four weeks for deliveries from the producers, for coins we had already paid for.
Amid this supply shock, demand from German and European investors rose to an all-time high. Many traders were only able to obtain goods on the secondary market (i.e. not from the producers), refinancing rates for precious metal loans multiplied, freight rates exploded by a factor of 10-20 and the bid-ask spread for an ounce of paper gold rose to a peak of almost USD100. These are all hard costs that precious metal traders had to pass on to their customers.
CG: How about now? Is the situation in physical gold normalized or do you expect there might be further disruptions and risks down the road?
RH: After the bar producers in Switzerland partially resumed their production and the volatility has abated, the premiums for physical bars and coins have already decreased.
The pressure has eased somewhat over the past 8 days and we are receiving around 30-35% fewer orders from customers than we did at the end of March. Now that the stock markets have recovered, many investors are probably relatively more optimistic about what the economy will look like after the end of the shutdown. That gives us some breathing space. We are, however, expecting a new wave and we’re prepared for it. Regardless of the rosy picture that stock markets might paint at the moment, the corona crisis is far from over. When its impact becomes even more apparent, we expect another gold rush and the higher the prices rise, the more demand there will be.
At the end of the day, gold and silver in their physical form cannot be created at will like paper money or bonds. I have repeatedly highlighted this simple fact at every opportunity over the past 20 years. So many people still seem to be oblivious to the nature of fiat money and its inherent risks. Only 10-15% of Germans are invested in physical precious metals.
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CG: How is pro aurum positioned for the challenging months that follow? How have you prepared for possible risks ahead?
RH: We have done very well compared to other retailers over the last 3 months. To a large extent, we owe this to our dealers, who already ramped up our inventories to the limit in the run-up to the crisis. This enabled us to supply not only our private customers, but also our banking partners and even other precious metal traders. We also took important proactive steps internally, as we deployed our staff flexibly, so that our customers could always reach us. In our newsroom, we published an update almost daily on the situation at pro aurum.
Currently, we are in the process of replenishing our stocks as much as possible, while we are also processing all orders that are still open from the time after Easter. Overall, the corona crisis was a valuable experience that we will undoubtedly benefit from in the future, like we did from the lessons learned during the stormy times of the 2008 crisis and from the buying spree in December 2019, shortly before the lowering of the cash limit for anonymous precious metal purchases in Germany.
CG: What are your expectations for the gold price in the coming months? Do you anticipate this strong demand we’ve been seeing to persist?
RH: The price of gold is already trading near its all-time high in many currencies. Compared to the euro, gold costs more than five times as much as it did at the turn of the millennium. This means that the euro has lost around 85% of its value against gold since then. In view of the renewed glut of money, this uptrend is very unlikely to be reversed anytime soon. To the contrary, I expect an exponential rise in the gold price within the next five years, similar to that of the 1970’s. Then we should leave the party and invest in productive capital again.
CG: Silver seems to have been often overlooked lately, while everyone’s been focused on gold’s bullish ride. Do you see a buying opportunity there?
RH: The gold/silver ratio recently reached an all-time high of over 125, meaning that for the price of 1 ounce of gold you get more than 125 ounces of silver. There is about 15 times more silver than gold in the earth’s crust. The average gold/silver ratio over the last 20 years has ranged between 50 and 60. Thus, silver is clearly undervalued and should perform significantly better than gold in the next few years.
CG: For years, we’ve been talking about the importance of holding precious metals in their physical form and avoiding paper products and I think this is especially true in a crisis like the current one. What are the main practical advantages that you see in physical metals at this stage?
RH: Since the foundation of pro aurum in 2003, we have pointed out in thousands of articles that physical gold and silver belong in every well-diversified portfolio. And this is completely independent of whether one is living in a time of crisis or not. Physical gold cannot be multiplied at will, does not carry counter-party risk and cannot be devalued by third parties. These are unique advantages that no other asset class offers.
CG: In the uncertain months and years that await us, it would appear that political risks could prove as dangerous as the economic ones for investors. We’ve already seen serious threats to property rights in many jurisdictions. Do you think Switzerland will continue to be the exception to the rule when it comes to legal stability and respect for private property?
RH: Many observers view the developments in the Eurozone with skepticism. During the corona crisis, freedom of movement has been severely and abruptly restricted and open borders now seem to be a thing of the past. As for the fate of the euro, that’s not a foregone conclusion either. “Whatever it takes” was the answer of former ECB boss Mario Draghi to the question of what means would be used to save the euro. It remains to be seen to what lengths the ECB will go to this time and whether they’ll prove effective.
What we do know for sure, is that the spending and printing spree is already of a gigantic scale. I don’t think there is any harm in keeping some of one’s assets in Switzerland and thus also diversifying geographically. Despite the very strong currency, the Swiss economy is robust, the people are friendly and, very importantly, there is still a bit of direct democracy here. So the political class cannot go against the interests of the people for too long.
CG: Looking at the bigger picture, what do you expect the wider impact of this global economic freeze to be? Apart from the obvious economic implications, do you also see the potential for geopolitical and social changes that investors need to factor in?
RH: This is a dramatic and unprecedented shift, which I believe will affect us for a long time. It will have a lasting impact and life will be different, even after the lockdown and shutdown measures are lifted. This crisis clearly demonstrated how fragile our “normal” everyday life really is. Everything we knew and took for granted changed, practically overnight.
Perhaps the “higher, faster and further” motif that we were so used to has had its time. The pursuit of ever greater profit could now partly give way to other things, such as better, socially and ecologically more advantageous solutions for customers. We are not yet able to assess the exact consequences, as we do not know when this chapter will end. However, I personally assume that in a second or third wave of the pandemic there will be more and more people who do not follow the rules. People want to work, meet friends and go on holiday. It will also be very interesting to see when and which of our fundamental rights will be restored. Hopefully, none of them will fall by the wayside or be lost as “collateral damage” of the corona crisis.
Claudio Grass, Hünenberg See, Switzerland


investmentwatchblog--2020-05-15--Jim Sinclair: Debt jubilees everywhere … Nouriel Roubini: The debt crisis will become explosive … Ma

Jim Sinclair : Debt jubilees everywhere … Nouriel Roubini : The debt crisis will become explosive … Marin Katusa : @ @ @ @ @ story going forward … Mike Maloney : The biggest event in world history …

BY JOHN RUBINO
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Jim Sinclair: Debt jubilees everywhere … Nouriel Roubini: The debt crisis will become explosive … Marin Katusa: Dollar shortage is the big story going forward … Mike Maloney: The biggest event in world history …


investmentwatchblog--2020-05-15--Wait a minute… I thought the housing market wasn’t the problem this time.

I thought the housing market wasn ’ t the problem this time .
The Fed just bought a record amount @ @ @ @ @ last week .
It accounted for 84 % of its most recent stimulus .
Looks @ @ @ @ @ economy could be swimming naked .
pic.twitter.com/J0DzekWJ4x

Wait a minute…
I thought the housing market wasn’t the problem this time.
The Fed just bought a record amount of mortgage backed securities this last week.
It accounted for 84% of its most recent stimulus.
Looks like another part of the economy could be swimming naked. pic.twitter.com/J0DzekWJ4x
— Otavio (Tavi) Costa (@TaviCosta) May 14, 2020


investmentwatchblog--2020-05-15--What will undoubtedly happen from a macroeconomic (big picture) perspective…

OKAY .
So demand has been reduced dramatically around the world , our $ 21 trillion GDP has basically been paused for 2 months , so to keep it afloat ( rough math ) , the government had to add $ 3.5 trillion to keep the economy running somewhat smoothly .
That ’ s a lot of printing , you idiots probably expect inflation .
Wrong , step away from the US and look at what other countries are doing , the ECB ( European Central Bank ) and BOJ ( Bank of Japan ) are having to print trillions @ @ @ @ @ @ @ to keep their economies going , along with every other country getting pounded .
Not only that , but since the US dollar makes up 70 % of global transactions , in liquidity terms , trillions worth of euro and yen is MUCH MUCH more than any amount Jpow feels like printing , there ’ s no way our printing could offset what the rest of the world is doing , so inflation isn ’ t coming .
If you want proof , just look at the euro/usd ( going lower ) and @ @ @ @ @ @ @ absolutely clapped vs the dollar .
Furthermore , not only is US corporate debt at an all time high , but emerging markets , the eurozone , and asia has borrowed more dollars than ever before at any point in history , basically everyone around the world ’ s debt is denominated in US DOLLARS .
So what ’ s about to happen ?
It ’ s already happening , demand for US dollars is going up because everyone around the world wants to borrow more to offset cash flow concerns and pay @ @ @ @ @ @ @ the dollar to increase in value .
What happens when the whole world has debt in dollars and the dollar goes up in value ?
DEBT BECOMES MORE EXPENSIVE .
This is DEFLATION , and in particular and even more terrifying DEBT DEFLATION , a phrase that would make Jpow absolutely shit himself ( and he knows its coming ) .
This has already started before the whole beervirus nonsense , look at Venezuela and Zimbabwe , they had too much dollar debt , no one wanted to lend to them anymore and @ @ @ @ @ @ @ .
It ’ s going to be like a game of musical chairs for people trying to get access to dollars , starting with emerging markets and eventually moving into the more developed economies .
The result : massive corporate bankruptcies , countries defaulting on debt ( devaluing their currencies ) and eventually a deleveraging of massive proportions .
This WILL occur and no amount of printing can stop it , it ’ s already too far gone .
It doesn ’ t matter what the stock market does , other markets around @ @ @ @ @ @ @ it might cause the market to go up because of all the money fleeing other countries trying to find a safe place to live .
Here are the plays assholes .
TLT will go up because no matter what Jpow says , he doesn ’ t control the fed funds rate , the market does , and US treasury bond yields have already priced in bonds going negative .
CPI shows that we may see up to -3 % inflation ( 3 % deflation ) , meaning at .25 % fed funds rate @ @ @ @ @ @ @ , that is the worst thing possible during a deleveraging because it makes it harder to stimulate the economy , the fed has no choice , rates MUST go lower .
Rates go lower , bond prices go up , TLT 12/18 $ 205c .
Remember how I said scared foreign money will want to find a nice safe place to go when we go into the biggest debt crisis the world has seen in over 300 years ?
GLD 12/18 $ 240c .
Finally , the dollar will rise in value as @ @ @ @ @ @ @ As far the actual market , we hit a high of SPY 339.08 in February , fell to a low of 218.26 by mid March , and have since then retraced EXACTLY to the 61.8 % Fibonacci retracement level at 290 , and started to bounce lower from there .
I ’ m no technical analyst , but I do know history .
During the greatest crashes in stock market history , 1929 , 2001 , 2008 , the Nikkei in 1989 ( Japan ) this exact same thing happened , market got @ @ @ @ @ @ @ smoked that good hopium for a few weeks or month to retrace between 50 % and 61.8 % back to previews highs , then absolutely fell off a cliff .
If you don ’ t believe me , go look at the charts .
Now , I ’ m personally not going to be betting on the US market falling because of the fact that its just straight up not reflecting reality and there are much better ways to trade on what ’ s occurring ( see trades above ) , but I @ @ @ @ @ @ @ seeing new highs at any point any time soon .
TLDR ; The world is going to shit due to the dollars over-dominance of the world market , we will soon see the worst deleveraging in human history , and may very well have to come up with a new fiat money system ( probably not bitcoin , but it wouldn ’ t hurt to have some ) .
TLT 12/18 $ 205c , GLD 12/18 $ 240c , and UUP 12/18 $ 28c .
If you wan na be an autist and @ @ @ @ @ @ @ help you , but I basically just gave you the next big short , so you ’ re welcome .
DISCLAIMER : I didn ’ t say what price to buy at for a reason , timing is extremely important for trades like this , so don ’ t FOMO in and overpay , you will get clapped .

by formerbuck
OKAY. So demand has been reduced dramatically around the world, our $21 trillion GDP has basically been paused for 2 months, so to keep it afloat (rough math), the government had to add $3.5 trillion to keep the economy running somewhat smoothly. That’s a lot of printing, you idiots probably expect inflation. Wrong, step away from the US and look at what other countries are doing, the ECB (European Central Bank) and BOJ (Bank of Japan) are having to print trillions of dollars worth of EURO and YEN to keep their economies going, along with every other country getting pounded. Not only that, but since the US dollar makes up 70% of global transactions, in liquidity terms, trillions worth of euro and yen is MUCH MUCH more than any amount Jpow feels like printing, there’s no way our printing could offset what the rest of the world is doing, so inflation isn’t coming. If you want proof, just look at the euro/usd (going lower) and literally ANY emerging market currency is getting absolutely clapped vs the dollar.

Furthermore, not only is US corporate debt at an all time high, but emerging markets, the eurozone, and asia has borrowed more dollars than ever before at any point in history, basically everyone around the world’s debt is denominated in US DOLLARS. So what’s about to happen? It’s already happening, demand for US dollars is going up because everyone around the world wants to borrow more to offset cash flow concerns and pay off existing debts, which will cause the dollar to increase in value. What happens when the whole world has debt in dollars and the dollar goes up in value? DEBT BECOMES MORE EXPENSIVE. This is DEFLATION, and in particular and even more terrifying DEBT DEFLATION, a phrase that would make Jpow absolutely shit himself (and he knows its coming). This has already started before the whole beervirus nonsense, look at Venezuela and Zimbabwe, they had too much dollar debt, no one wanted to lend to them anymore and whoops, their currency is worthless now. It’s going to be like a game of musical chairs for people trying to get access to dollars, starting with emerging markets and eventually moving into the more developed economies. The result: massive corporate bankruptcies, countries defaulting on debt (devaluing their currencies) and eventually a deleveraging of massive proportions. This WILL occur and no amount of printing can stop it, it’s already too far gone.

It doesn’t matter what the stock market does, other markets around the world will be screwed, honestly it might cause the market to go up because of all the money fleeing other countries trying to find a safe place to live. Here are the plays assholes. TLT will go up because no matter what Jpow says, he doesn’t control the fed funds rate, the market does, and US treasury bond yields have already priced in bonds going negative. CPI shows that we may see up to -3% inflation (3% deflation), meaning at .25% fed funds rate, the REAL rate is 3.25%, that is the worst thing possible during a deleveraging because it makes it harder to stimulate the economy, the fed has no choice, rates MUST go lower. Rates go lower, bond prices go up, TLT 12/18 $205c. Remember how I said scared foreign money will want to find a nice safe place to go when we go into the biggest debt crisis the world has seen in over 300 years? GLD 12/18 $240c. Finally, the dollar will rise in value as well so UUP 12/18 $28c.
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As far the actual market, we hit a high of SPY 339.08 in February, fell to a low of 218.26 by mid March, and have since then retraced EXACTLY to the 61.8% Fibonacci retracement level at 290, and started to bounce lower from there. I’m no technical analyst, but I do know history. During the greatest crashes in stock market history, 1929, 2001, 2008, the Nikkei in 1989 (Japan) this exact same thing happened, market got scared and fell to lows, then smoked that good hopium for a few weeks or month to retrace between 50% and 61.8% back to previews highs, then absolutely fell off a cliff. If you don’t believe me, go look at the charts. Now, I’m personally not going to be betting on the US market falling because of the fact that its just straight up not reflecting reality and there are much better ways to trade on what’s occurring (see trades above), but I PROMISE, that we will not be seeing new highs at any point any time soon.

TLDR; The world is going to shit due to the dollars over-dominance of the world market, we will soon see the worst deleveraging in human history, and may very well have to come up with a new fiat money system (probably not bitcoin, but it wouldn’t hurt to have some). TLT 12/18 $205c, GLD 12/18 $240c, and UUP 12/18 $28c. If you wanna be an autist and buy weeklys, I can’t help you, but I basically just gave you the next big short, so you’re welcome.

DISCLAIMER: I didn’t say what price to buy at for a reason, timing is extremely important for trades like this, so don’t FOMO in and overpay, you will get clapped.


investmentwatchblog--2020-05-15--House Democrats unveil new $3 trillion coronavirus relief bill!

It includes , according to a summary : Nearly $ 1 trillion in relief for state and local governments A second round of direct payments of $ 1,200 per person , and up to $ 6,000 for a household About $ 200 billion for hazard pay for essential workers who face heightened health risks during the crisis $ 75 billion for coronavirus testing and contact tracing — a key effort to restart businesses An extension of the $ 600 per week federal unemployment insurance benefit through January ( the provision approved in March is set to expire after July ) @ @ @ @ @ @ @ and utility assistance Subsidies and a special Affordable Care Act enrollment period to people who lose their employer-sponsored health coverage More money for the Supplemental Nutrition Assistance Program , including a 15 % increase in the maximum benefit Measures designed to buoy small businesses and help them keep employees on payroll , such as $ 10 billion in emergency disaster assistance grants and a strengthened employee retention tax credit Money for election safety during the pandemic and provisions to make voting by mail easier Relief for the U.S .
Postal Service It used @ @ @ @ @ @ @ they are throwing trillions around… .
No worry whatsoever of bankrupting the country…

More money!!
www.cnbc.com/2020/05/12/coronavirus-updates-house-democrats-unveil-3-trillion-relief-bill.html
It includes, according to a summary:
Nearly $1 trillion in relief for state and local governments
A second round of direct payments of $1,200 per person, and up to $6,000 for a household
About $200 billion for hazard pay for essential workers who face heightened health risks during the crisis
$75 billion for coronavirus testing and contact tracing — a key effort to restart businesses
An extension of the $600 per week federal unemployment insurance benefit through January (the provision approved in March is set to expire after July)
$175 billion in rent, mortgage and utility assistance
Subsidies and a special Affordable Care Act enrollment period to people who lose their employer-sponsored health coverage
We are primarily funded by readers. Please subscribe and donate to support us!
More money for the Supplemental Nutrition Assistance Program, including a 15% increase in the maximum benefit
Measures designed to buoy small businesses and help them keep employees on payroll, such as $10 billion in emergency disaster assistance grants and a strengthened employee retention tax credit
Money for election safety during the pandemic and provisions to make voting by mail easier
Relief for the U.S. Postal Service
It used to be they threw billions around..
Now they are throwing trillions around….
No worry whatsoever of bankrupting the country…
This shit is crazy.


investmentwatchblog--2020-05-15--A Basic Introduction to Vertical Spreads – Stop Losing Money When You Predict the Correct Direction

Spreads often get a bad rap for sounding more complex than they end up being .
I ’ d wager quite a few people here don ’ t even know what the “ Select ” button is for at the top right of the options screen on Robinhood .
I see over and over people losing their money with puts or calls when a vertical spread would have accomplished the same thing but better .
To keep this basic I will stick to vertical spreads ( both credit and debit ) and a bit about Iron Condors , and once @ @ @ @ @ @ @ go into a bit of detail about when and where I use them .
A vertical option spread is purchasing two options ; one you ’ re buying and one you ’ re selling .
You ’ re literally trading based on the difference between the two option prices .
For example , if I bought a SPY 300c 6/3 and sold a SPY 305c 6/3 , I would have a SPY 6/3 305/300 Call Debit Spread .
What do we accomplish by both buying and selling the right to 100 shares of @ @ @ @ @ @ @ This defines our risk .
This can seem kind of difficult to comprehend , but it ’ s fairly simple : The value of the spread can never be more than the difference between the two strike prices .
For the above mentioned trade , we can currently purchase a SPY 6/3 305/300 Call Debit Spread for $ 0.65 per share ( $ 0.65*100= $ 65 ) , meaning that the difference in price between the 305c and the 300c is $ 0.65 .
If SPY finishes above $ 305 on 6/3 , @ @ @ @ @ @ @ money as does the 305c we sold , which means the spread between the two option prices has reached its maximum of $ 5.00 .
We can now purchase 100 shares of SPY at $ 300 then sell them to the holder of the option we sold for $ 305 , netting $ 5 per share for a neat $ 500 .
This means that we can make up to $ 500- $ 65 = $ 435 on the trade , a tidy 769 % profit .
If you take anything away from @ @ @ @ @ @ @ : An easy way to view a SPY 6/3 305/300 Call Debit Spread is then that you ’ re betting $ 65 to win $ 500 as long as SPY ends above $ 305 on 6/3 .
If you ’ re not starting to see why vertical spreads are more intuitive than single calls or puts then I encourage you to look back over the paragraph above .
The Greeks still matter a lot , but the trade can easily be distilled to the above sentence which is not the case with a @ @ @ @ @ @ @ buying calls and puts , correctly predicting the direction of the market , and still losing money due to IV deterioration or the price not moving enough in the right direction .
Vertical spreads simplify the trade by making it only as complicated as you want it to be .
If you simply want to bet that a stock will go up over the next month , just set the strikes up to straddle the current price , for example , a SPY 290/280 Call Debit spread .
Similarly if you wanted to @ @ @ @ @ @ @ do the same thing but by buying a 290 put and selling a 280 put making a SPY 290/280 Put Spread .
A credit spread is very similar to a debit spread but inverted .
To create a SPY 6/3 300/305 Call Credit spread , we would sell a 300c and buy a 305c , and because we ’ re selling the more valuable contract ( the lower the strike price the more valuable the call ) , we get a net credit instead of a net debit , meaning we receive money @ @ @ @ @ @ @ .
That means just like when we short a stock , to close the position we need to pay money rather than receive it .
With a call credit spread , we ’ re now betting against the market : If SPY stays below $ 300 on 6/3 , the credit we received when we sold spread stays ours forever since both the 300c we sold and the 305c we bought expired worthless .
You ’ re still betting on the spread between the two option prices , but now you ’ re @ @ @ @ @ @ @ going to 0 rather than the maximum .
Now , if the position moves against us and SPY finishes above $ 305 on 6/3 , our SPY 300c we sold will exercise and we will pay for those 100 shares with our 100 shares we receive from our 305c , meaning that we pay at maximum $ 500 .
NOTE : Robinhood will hold the maximum you can lose as collateral just in case your trade goes poorly , so if you receive a credit of $ 65 on the trade , you @ @ @ @ @ @ @ locked up until you close the trade .
Until now I have assumed that the underlying stock price will always finish outside of the range of your spread which has made things a little cleaner .
In reality , if you should choose to hold until expiration and the underlying price is between the two strikes , one of your options will exercise and the other will expire worthless .
For example , if on 6/3 SPY ended at $ 303 , for our SPY 6/3 305/300 Debit Spread our 300c would exercise @ @ @ @ @ @ @ SPY purchased at $ 300 , netting us $ 3 per share .
Considering that most people in this sub could not handle a purchase of 100 shares of SPY at $ 300 , Robinhood will exercise your spread an hour before close at market prices ( which is why I will always sell before this point since you can do a lot better than market prices most of the time ) .
Thus ends the basic portion of the write up .
The benefits of vertical spreads are : • Defined risk @ @ @ @ @ @ @ less capital than calls and puts in cases where share prices are high ( TSLA and AMZN ) .
This is due to the fact that you ’ re playing the difference between option prices and not the ability to sell 100 shares of the underlying .
Options Profit Calculator is a very useful resource for learning not only vertical spreads but any options and I highly recommend playing around with it if you ’ re new to options : www.optionsprofitcalculator.com/ • Liquidity : Spreads are inherently less liquid than single options since @ @ @ @ @ @ @ ( even if it doesn ’ t seem like it since you ’ re paying for it all at once ) .
You ’ ll find that until single options , it is more difficult to get prices that are in the midpoint of the bid-ask spread , meaning you ’ ll have to pay more for debit spreads and get less credit in credit spreads when opening the positions and vice versa when closing the position .
What this means is that it is important to trade options that have high volume @ @ @ @ @ @ @ bid-ask spreads .
I ’ ve been burned in the past by purchasing PLNT spreads and losing $ 100 when purchasing and selling , so I stick to highly traded securities such as SPY , DIS , AAPL , BA , etc .
I also always trade on $ 5 increments when I can help it , since $ 5 increments are nearly always more liquid than any other strike .
• Risk and Reward : There are a lot of knobs to play with if you want more or less risky spreads @ @ @ @ @ @ @ is the less you ’ re paying for that spread and the higher the reward is , which also goes for ITM being more costly as less reward .
Wider spreads between the two strikes gives you a larger zone of “ medium ” rewards whereas tighter spreads create a more all-or-nothing reward structure .
I don ’ t have too much more to say here , if you want to know more about this , play with Options Profit Calculator linked above .
• Impact of Implied Volatility : One of the @ @ @ @ @ @ @ we ’ re avoiding the largest effects of changes in IV since it hits both the leg that we are long as well as the leg we are short .
IV still impacts spreads though , since increases in IV cause spreads to increase due to larger expected moves , and contractions in IV cause decreases in IV for opposite reasons .
All this means is that we want to use Debit Spreads when we expect IV to increase and Credit Spreads when we expect it to decrease .
• Theta : You @ @ @ @ @ @ @ saying that theta works for you in a credit spread and against you in a debit spread .
This is technically true , since as theta causes option values to tick down , spreads tighten by nature .
In reality though , theta only really hurts your debit spreads when they are OTM .
Believe me , you ’ ll still be feeling the theta burn if your credit spread is OTM as you watch your 5/15 SPY 300/305 Put Credit Spread become less and less likely to be ITM .
It ’ @ @ @ @ @ @ @ Condors are set up with two credit spreads , one capping the range and one creating a floor : You want theta to be working for you in both cases ( since both are ITM ) .
• Uneven Payouts : I couldn ’ t find a better term to use for this , but you ’ ll find that especially for underlyings that have significant upward expectations , you ’ ll get “ more value ” out of betting on a downward move .
For example , for a SPY 290/280 Call @ @ @ @ @ @ @ $ 6.24 even though SPY nearly right in the middle after closing at $ 284.97 .
If there was no expectation of upward movement we would find that a $ 10 strike debit spread perfectly centered on the current price would cost $ 5.00 , but that is not the case .
This spread functions as an interesting indicator of current market sentiment , but it functions more as a lagging indicator than a leading one , which means that betting on upward moves is much more cost effective after a large drop @ @ @ @ @ @ @ made bullish bets during the drop over the past few days ) .
• Entering a Position : I ’ ve found that two things hurt me when I ’ m entering a position : Giving up too much value when picking a bid , and being too patient in filling my bid .
Robinhood is pretty shit at showing you the actual bid-ask spread for a vertical spread , so I like to start bidding at slightly lower than the midpoint of the bid-ask and slowly canceling and reordering the position , @ @ @ @ @ @ @ do .
This way I don ’ t accidentally lose $ 20 of value by accepting a worse ask than I needed to while also not giving my position time to move while I ’ m not in it yet .
Spreads are surprisingly frustrating to enter when you ’ re inexperienced , and I ’ ve certainly given up a thousand or two in fucked up entrances over the past few months .
My advice would be to not skimp on planning your entrance .
• When to Close Position : I @ @ @ @ @ @ @ for multiple reasons .
When the underlying finishes between the strikes of your spread , you end up exposed to pin risk as you can ’ t sell out of your long/short position until the market opens .
I personally also don ’ t like having the risk that a sudden change in the underlying can cause a winning position to suddenly shift into a losing one , so I usually don ’ t look for more than 95 % gains on a single position and exit out once that has been achieved @ @ @ @ @ @ @ strategy I ’ ll talk about other than vertical spreads in this writeup since they ’ re also fairly basic in execution .
Iron Condors involve two credit spreads : A call credit spread which forms a cap and a put credit spread which forms a floor .
With an Iron Condor you ’ re betting that the underlying will expire between the two spreads .
For example , I currently hold a 6/19 275-300 Iron Condor that consists of a 270/275 Put Credit Spread and a 300/305 Call Credit Spread .
While @ @ @ @ @ @ @ you ’ re not holding an Iron Condor to expiration every time , so it ’ s important to experiment with how the value of an Iron Condor valuation changes as it matures .
Taking a look at a theta decay curve will show you where you should expect most of the value to come from .
The another big Greek to consider for an Iron Condor is Delta .
The delta of an Iron Condor is determined by simply adding the delta of each position within the Iron Condor ( short positions @ @ @ @ @ @ @ expectation for SPY is that the underlying will go up over time , a zero delta Iron Condor ( hedged against price movements at time of purchase ) will be significantly lower than the midpoint between the two spreads of the IC .
I personally like a bit of negative delta in this environment since you end up making money when the underlying decreases and IV increases due to delta , and you also make money when the underlying increases and IV decreases .
One last thing to consider when opening and closing @ @ @ @ @ @ @ purchasing two spreads at once , which means that it requires even more liquidity than spreads do to trade profitably .
Since you have to buy these so close to the ask and sell so close to the bid , Iron Condors work much better as trades to hold over a period of at least a week .
This isn ’ t to say I haven ’ t bought and sold an Iron Condor over a one day stretch , but its certainly not optimal .
Alright this got a bit long , @ @ @ @ @ @ @ about , but I ’ ll stop here .
DISCLAIMER : Now that you ’ ve read this post , I ’ ll admit I ’ ve only been actively trading for about three months .
I just finished a Finance undergrad and I ’ ve been investing unsuccessfully for five years until this point where I ’ m finally up about 100 % from when I started over something silly like 100 trades .
I ’ m not gon na post all of my past positions , but my current positions can @ @ @ @ @ @ @ that I made a ton off bearish spreads and it was a rude reeducation that made me learn it was necessary to play both sides of the market .
TL ; DR : Spreads are easier to conceptualize , don ’ t worry as much about IV and theta , have defined risk , and require less capital than puts/calls .
An easy way to view a SPY 6/3 305/300 Call Debit Spread is then that you ’ re betting $ 65 to win $ 500 as long as SPY ends above $ @ @ @ @ @ @ @ information is only for educational purposes .
Do not make any investment decisions based on the information in this article .
Do you own due diligence .

by DropItShock
Vertical Spread Basics
Spreads often get a bad rap for sounding more complex than they end up being. I’d wager quite a few people here don’t even know what the “Select” button is for at the top right of the options screen on Robinhood. I see over and over people losing their money with puts or calls when a vertical spread would have accomplished the same thing but better. To keep this basic I will stick to vertical spreads (both credit and debit) and a bit about Iron Condors, and once that’s done I’ll go into a bit of detail about when and where I use them.
A vertical option spread is purchasing two options; one you’re buying and one you’re selling. You’re literally trading based on the difference between the two option prices. For example, if I bought a SPY 300c 6/3 and sold a SPY 305c 6/3, I would have a SPY 6/3 305/300 Call Debit Spread. What do we accomplish by both buying and selling the right to 100 shares of SPY though? The short answer: This defines our risk. This can seem kind of difficult to comprehend, but it’s fairly simple: The value of the spread can never be more than the difference between the two strike prices.
For the above mentioned trade, we can currently purchase a SPY 6/3 305/300 Call Debit Spread for $0.65 per share ($0.65*100=$65), meaning that the difference in price between the 305c and the 300c is $0.65. If SPY finishes above $305 on 6/3, our 300c we bought finishes in the money as does the 305c we sold, which means the spread between the two option prices has reached its maximum of $5.00. We can now purchase 100 shares of SPY at $300 then sell them to the holder of the option we sold for $305, netting $5 per share for a neat $500. This means that we can make up to $500-$65 = $435 on the trade, a tidy 769% profit.
If you take anything away from this write up, please take this:
An easy way to view a SPY 6/3 305/300 Call Debit Spread is then that you’re betting $65 to win $500 as long as SPY ends above $305 on 6/3.
If you’re not starting to see why vertical spreads are more intuitive than single calls or puts then I encourage you to look back over the paragraph above. The Greeks still matter a lot, but the trade can easily be distilled to the above sentence which is not the case with a single option. I continually see people buying calls and puts, correctly predicting the direction of the market, and still losing money due to IV deterioration or the price not moving enough in the right direction. Vertical spreads simplify the trade by making it only as complicated as you want it to be. If you simply want to bet that a stock will go up over the next month, just set the strikes up to straddle the current price, for example, a SPY 290/280 Call Debit spread. Similarly if you wanted to be against the market, you would do the same thing but by buying a 290 put and selling a 280 put making a SPY 290/280 Put Spread.
A credit spread is very similar to a debit spread but inverted. To create a SPY 6/3 300/305 Call Credit spread, we would sell a 300c and buy a 305c, and because we’re selling the more valuable contract (the lower the strike price the more valuable the call), we get a net credit instead of a net debit, meaning we receive money in our account rather than pay it. That means just like when we short a stock, to close the position we need to pay money rather than receive it. With a call credit spread, we’re now betting against the market: If SPY stays below $300 on 6/3, the credit we received when we sold spread stays ours forever since both the 300c we sold and the 305c we bought expired worthless. You’re still betting on the spread between the two option prices, but now you’re betting on the differences between the two going to 0 rather than the maximum. Now, if the position moves against us and SPY finishes above $305 on 6/3, our SPY 300c we sold will exercise and we will pay for those 100 shares with our 100 shares we receive from our 305c, meaning that we pay at maximum $500. NOTE: Robinhood will hold the maximum you can lose as collateral just in case your trade goes poorly, so if you receive a credit of $65 on the trade, you’ll effectively have another $435 locked up until you close the trade.
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Until now I have assumed that the underlying stock price will always finish outside of the range of your spread which has made things a little cleaner. In reality, if you should choose to hold until expiration and the underlying price is between the two strikes, one of your options will exercise and the other will expire worthless. For example, if on 6/3 SPY ended at $303, for our SPY 6/3 305/300 Debit Spread our 300c would exercise and we would have 100 shares of SPY purchased at $300, netting us $3 per share. Considering that most people in this sub could not handle a purchase of 100 shares of SPY at $300, Robinhood will exercise your spread an hour before close at market prices (which is why I will always sell before this point since you can do a lot better than market prices most of the time).
Basics Summary
Thus ends the basic portion of the write up. The benefits of vertical spreads are:
Defined risk just like calls and puts
Much simpler to conceptualize profitable scenarios
Requires less capital than calls and puts in cases where share prices are high (TSLA and AMZN). This is due to the fact that you’re playing the difference between option prices and not the ability to sell 100 shares of the underlying.
Options Profit Calculator is a very useful resource for learning not only vertical spreads but any options and I highly recommend playing around with it if you’re new to options: www.optionsprofitcalculator.com/
Details and Tips
Liquidity : Spreads are inherently less liquid than single options since it’s twice as many transactions (even if it doesn’t seem like it since you’re paying for it all at once). You’ll find that until single options, it is more difficult to get prices that are in the midpoint of the bid-ask spread, meaning you’ll have to pay more for debit spreads and get less credit in credit spreads when opening the positions and vice versa when closing the position. What this means is that it is important to trade options that have high volume, and as a result, low bid-ask spreads. I’ve been burned in the past by purchasing PLNT spreads and losing $100 when purchasing and selling, so I stick to highly traded securities such as SPY, DIS, AAPL, BA, etc. I also always trade on $5 increments when I can help it, since $5 increments are nearly always more liquid than any other strike.
: Spreads are inherently less liquid than single options since it’s twice as many transactions (even if it doesn’t seem like it since you’re paying for it all at once). You’ll find that until single options, it is more difficult to get prices that are in the midpoint of the bid-ask spread, meaning you’ll have to pay more for debit spreads and get less credit in credit spreads when opening the positions and vice versa when closing the position. What this means is that it is important to trade options that have high volume, and as a result, low bid-ask spreads. I’ve been burned in the past by purchasing PLNT spreads and losing $100 when purchasing and selling, so I stick to highly traded securities such as SPY, DIS, AAPL, BA, etc. I also always trade on $5 increments when I can help it, since $5 increments are nearly always more liquid than any other strike. Risk and Reward : There are a lot of knobs to play with if you want more or less risky spreads. Clearly the further OTM your spread is the less you’re paying for that spread and the higher the reward is, which also goes for ITM being more costly as less reward. Wider spreads between the two strikes gives you a larger zone of “medium” rewards whereas tighter spreads create a more all-or-nothing reward structure. I don’t have too much more to say here, if you want to know more about this, play with Options Profit Calculator linked above.
: There are a lot of knobs to play with if you want more or less risky spreads. Clearly the further OTM your spread is the less you’re paying for that spread and the higher the reward is, which also goes for ITM being more costly as less reward. Wider spreads between the two strikes gives you a larger zone of “medium” rewards whereas tighter spreads create a more all-or-nothing reward structure. I don’t have too much more to say here, if you want to know more about this, play with Options Profit Calculator linked above. Impact of Implied Volatility : One of the chief benefits of vertical spreads is that we’re avoiding the largest effects of changes in IV since it hits both the leg that we are long as well as the leg we are short. IV still impacts spreads though, since increases in IV cause spreads to increase due to larger expected moves, and contractions in IV cause decreases in IV for opposite reasons. All this means is that we want to use Debit Spreads when we expect IV to increase and Credit Spreads when we expect it to decrease.
: One of the chief benefits of vertical spreads is that we’re avoiding the largest effects of changes in IV since it hits both the leg that we are long as well as the leg we are short. IV still impacts spreads though, since increases in IV cause spreads to increase due to larger expected moves, and contractions in IV cause decreases in IV for opposite reasons. All this means is that we want to use Debit Spreads when we expect IV to increase and Credit Spreads when we expect it to decrease. Theta : You’ll hear a lot about people saying that theta works for you in a credit spread and against you in a debit spread. This is technically true, since as theta causes option values to tick down, spreads tighten by nature. In reality though, theta only really hurts your debit spreads when they are OTM. Believe me, you’ll still be feeling the theta burn if your credit spread is OTM as you watch your 5/15 SPY 300/305 Put Credit Spread become less and less likely to be ITM. It’s one of the reasons why Iron Condors are set up with two credit spreads, one capping the range and one creating a floor: You want theta to be working for you in both cases (since both are ITM).
: You’ll hear a lot about people saying that theta works for you in a credit spread and against you in a debit spread. This is technically true, since as theta causes option values to tick down, spreads tighten by nature. In reality though, theta only really hurts your debit spreads when they are OTM. Believe me, you’ll still be feeling the theta burn if your credit spread is OTM as you watch your 5/15 SPY 300/305 Put Credit Spread become less and less likely to be ITM. It’s one of the reasons why Iron Condors are set up with two credit spreads, one capping the range and one creating a floor: You want theta to be working for you in both cases (since both are ITM). Uneven Payouts : I couldn’t find a better term to use for this, but you’ll find that especially for underlyings that have significant upward expectations, you’ll get “more value” out of betting on a downward move. For example, for a SPY 290/280 Call Debit Spread, you’ll pay $6.24 even though SPY nearly right in the middle after closing at $284.97. If there was no expectation of upward movement we would find that a $10 strike debit spread perfectly centered on the current price would cost $5.00, but that is not the case. This spread functions as an interesting indicator of current market sentiment, but it functions more as a lagging indicator than a leading one, which means that betting on upward moves is much more cost effective after a large drop (such as if you’d made bullish bets during the drop over the past few days).
: I couldn’t find a better term to use for this, but you’ll find that especially for underlyings that have significant upward expectations, you’ll get “more value” out of betting on a downward move. For example, for a SPY 290/280 Call Debit Spread, you’ll pay $6.24 even though SPY nearly right in the middle after closing at $284.97. If there was no expectation of upward movement we would find that a $10 strike debit spread perfectly centered on the current price would cost $5.00, but that is not the case. This spread functions as an interesting indicator of current market sentiment, but it functions more as a lagging indicator than a leading one, which means that betting on upward moves is much more cost effective after a large drop (such as if you’d made bullish bets during the drop over the past few days). Entering a Position : I’ve found that two things hurt me when I’m entering a position: Giving up too much value when picking a bid, and being too patient in filling my bid. Robinhood is pretty shit at showing you the actual bid-ask spread for a vertical spread, so I like to start bidding at slightly lower than the midpoint of the bid-ask and slowly canceling and reordering the position, upping the purchasing point each time I do. This way I don’t accidentally lose $20 of value by accepting a worse ask than I needed to while also not giving my position time to move while I’m not in it yet. Spreads are surprisingly frustrating to enter when you’re inexperienced, and I’ve certainly given up a thousand or two in fucked up entrances over the past few months. My advice would be to not skimp on planning your entrance.
: I’ve found that two things hurt me when I’m entering a position: Giving up too much value when picking a bid, and being too patient in filling my bid. Robinhood is pretty shit at showing you the actual bid-ask spread for a vertical spread, so I like to start bidding at slightly lower than the midpoint of the bid-ask and slowly canceling and reordering the position, upping the purchasing point each time I do. This way I don’t accidentally lose $20 of value by accepting a worse ask than I needed to while also not giving my position time to move while I’m not in it yet. Spreads are surprisingly frustrating to enter when you’re inexperienced, and I’ve certainly given up a thousand or two in fucked up entrances over the past few months. My advice would be to not skimp on planning your entrance. When to Close Position : I dislike holding my winning plays until expiration for multiple reasons. When the underlying finishes between the strikes of your spread, you end up exposed to pin risk as you can’t sell out of your long/short position until the market opens. I personally also don’t like having the risk that a sudden change in the underlying can cause a winning position to suddenly shift into a losing one, so I usually don’t look for more than 95% gains on a single position and exit out once that has been achieved.
: I dislike holding my winning plays until expiration for multiple reasons. When the underlying finishes between the strikes of your spread, you end up exposed to pin risk as you can’t sell out of your long/short position until the market opens. I personally also don’t like having the risk that a sudden change in the underlying can cause a winning position to suddenly shift into a losing one, so I usually don’t look for more than 95% gains on a single position and exit out once that has been achieved. Iron Condors: The only strategy I’ll talk about other than vertical spreads in this writeup since they’re also fairly basic in execution. Iron Condors involve two credit spreads: A call credit spread which forms a cap and a put credit spread which forms a floor. With an Iron Condor you’re betting that the underlying will expire between the two spreads. For example, I currently hold a 6/19 275-300 Iron Condor that consists of a 270/275 Put Credit Spread and a 300/305 Call Credit Spread. While the idea here is basic, realistically you’re not holding an Iron Condor to expiration every time, so it’s important to experiment with how the value of an Iron Condor valuation changes as it matures. Taking a look at a theta decay curve will show you where you should expect most of the value to come from. The another big Greek to consider for an Iron Condor is Delta. The delta of an Iron Condor is determined by simply adding the delta of each position within the Iron Condor (short positions are negative delta). Since the expectation for SPY is that the underlying will go up over time, a zero delta Iron Condor (hedged against price movements at time of purchase) will be significantly lower than the midpoint between the two spreads of the IC. I personally like a bit of negative delta in this environment since you end up making money when the underlying decreases and IV increases due to delta, and you also make money when the underlying increases and IV decreases. One last thing to consider when opening and closing an Iron Condor is that it is purchasing two spreads at once, which means that it requires even more liquidity than spreads do to trade profitably. Since you have to buy these so close to the ask and sell so close to the bid, Iron Condors work much better as trades to hold over a period of at least a week. This isn’t to say I haven’t bought and sold an Iron Condor over a one day stretch, but its certainly not optimal.
Alright this got a bit long, and there’s more to talk about, but I’ll stop here. DISCLAIMER: Now that you’ve read this post, I’ll admit I’ve only been actively trading for about three months. I just finished a Finance undergrad and I’ve been investing unsuccessfully for five years until this point where I’m finally up about 100% from when I started over something silly like 100 trades. I’m not gonna post all of my past positions, but my current positions can be found here. Suffice to say that I made a ton off bearish spreads and it was a rude reeducation that made me learn it was necessary to play both sides of the market.
TL;DR: Spreads are easier to conceptualize, don’t worry as much about IV and theta, have defined risk, and require less capital than puts/calls. An easy way to view a SPY 6/3 305/300 Call Debit Spread is then that you’re betting $65 to win $500 as long as SPY ends above $305 on 6/3.
Disclaimer: This information is only for educational purposes. Do not make any investment decisions based on the information in this article. Do you own due diligence.