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Discussion in 'The Kruse Longevity Center' started by Jack Kruse, Feb 25, 2021.

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  1. Jack Kruse

    Jack Kruse Administrator

    I own Bitcoin because it's the one thing they (bankers/government) can't manipulate or control.



    If you still think currency is not going to be devalued you just are not paying attention to what your government is really up to in 2021!!!!

    Roughly 30% of ALL of the debt accumulated by the United States of America since 1776 was incurred in the last 12 months. This is NOT sustainable.
    DebraGM and JanSz like this.
  2. Jack Kruse

    Jack Kruse Administrator

    In a normal market environment, P/E declines bigtime when 10 year yield rises. Over the last 60 years, there were only three occasions when we had rising P/E with rising 10y yields at the peak of a 12year bull market. In 1987, before the Black Monday, in 2000 Dot com crash, and today.

    The price action on the Vix is very suggestive something nasty is coming to the market. Caveat emptor.
    JanSz likes this.
  3. Jack Kruse

    Jack Kruse Administrator

    VVIX vs VIX vs S&P 500 The VVIX is a measure of the change of volatility in the VIX, and is calculated from VIX options. A high VVIX suggests VIX might be more volatile in the future, which means that SPX might also be. The gap has closed slightly today, but it's still wide.
    Johan Lindstrøm likes this.
  4. Jack Kruse

    Jack Kruse Administrator

    The VIX curve is very steep, a lot of demand for hedging in coming months when base effects could drive inflation higher . The second VIX future contract is about six points higher than the spot VIX, which is high by historical standards.

    My tarot reading..........2022 is going to get nasty for the S&P 500 soon.
    JanSz likes this.
  5. Jack Kruse

    Jack Kruse Administrator

    Today copper moved higher than gold. This makes no sense unless you see what is coming.

    How does contango influence the value of the $VIX futures? First, it is important to understand that each $VIX future is just one point on the $VIX futures term structure and that the whole curve represents how investors price volatility, not any single point.

    The $VIX term structure tells you how much investors are willing to pay for a $VIX future as a function of time to expiration (the date when the $VIX future is settled based on the $VIX spot). Say a day passes and investors' expectations about volatility have not changed.
    Does that mean that $VIX futures will not change in value? No, they will not change only in the singular case when the term structure is flat.
    If the term structure is upward sloping (in contango), that means that investors are willing to pay more for $VIX futures that are farther away from expiration.
    But when a day has passed, each $VIX future is one day closer to expiration so investors would be willing to pay LESS for that future today relative to yesterday. Colloquially, the $VIX futures are "sliding down the curve". This is not a process that happens once a day.
    It happens continuously, every minute that passes, the futures slide by a small amount. Of course, this only applies when investors' expectations have not changed about volatility (roughly meaning that the $VIX spot has not changed).
    The effect of contango on each future each day is usually much smaller than swings in the $VIX spot. But when large contango persists for a long time, these small daily changes add up.
    While volatility expectations go up and down, contango works in one direction only: It drags each future down. $VXX and $UVXY hold the two nearest $VIX futures which suffer the same fate.
    These instruments rebalance their holdings each day, but the rebalancing has no effect on the value. What does, is that they hold the same mix of $VIX futures for a 24-hour period during which the futures are continuously sliding down the curve.
    Since most of the time the two front months are in contango, $VXX and $UVXY accumulate contango losses. To make money going long in these instruments, you need to time the market accurately.

    • Contango is a situation where the futures price of a commodity is higher than the spot price.
    • In all futures market scenarios, the futures prices will usually converge toward the spot prices as the contracts approach expiration.
    • Advanced traders can use arbitrage and other strategies to profit from contango.
    • Contango tends to cause losses for investors in commodity ETFs that use futures contracts, but these losses can be avoided by buying ETFs that hold actual commodities.
    GavinH, John Schumacher and JanSz like this.
  6. Jack Kruse

    Jack Kruse Administrator

    Twitter just announced a $1.25 billion convertible note offering. Given the recent treasury strategy of Microstrategy, could
    be planning to put bitcoin on Twitter's balance sheet? Time will tell, but there are few people who understand the power of bitcoin like Jack.
    JanSz likes this.
  7. Jack Kruse

    Jack Kruse Administrator

    I suggest you read the book the Prize by Daniel Yergin to get the historical perspective of where we are today with oil, ESG, climate change, and alternative fuels.

    WW1 and WW2 were largely won because of who controlled the Prize of what Oil was to the world powers.

    Today the WEF has created the ESG narrative to regain control of oil. Many people do not realize the British Royal family lost control of oil in 1938 when the remnants of Standard oil got oil concessions from the Arabs of Saudi Arabia to search for oil. The Brits had controlled security in the middle east. They had the political power to get the oil due to their relationships.

    The British had never asked for this concession in the early 1930s because they thought the middle east was a sandpit and this is when the American oil companies got their geologist into the country and they knew from the jump that vast oil was below the sandpit.

    With a global depression on the one part of the American economy that was booming was the East Texas oil fields. From this boom, there was no depression for the people who owned the hardest version of money in the 1930s. OIL.

    Saudi Aramco is the world's largest oil producer and the world's profitable company. The company was established in 1933 and began drilling in 1938. It is primarily state-owned but raised $29.4 billion in a 2019 IPO and a greenshoe option in 2020.

    These Texans became the self-made tycoons who dominated world economics. They helped take the power of the British Royal Family in the middle east away when they formed Aramco.

    Right before Henry Wallace was replaced in 1944: The California Arabian Standard Oil Company was renamed the Arabian American Oil Company, or as we now know it, by its acronym Aramco. It was run by a consortium of U.S. oil companies — including the predecessors of Chevron, Texaco, and Exxon Mobil.

    Aramco oil is what fueled the Marshall Plan to rebuild Western Europe and Japan. The industrial-military complex made sure that American big oil controlled the Saudia Arabian reserves. This all went on as Isreal was becoming a country in the middle of Oil fields America was tapping.

    1954 the US government wanted to control Iranian oil. They got rid of Mosaddegh in 1953 to secure Iran and keep them away from Stalin. Oil, the hardest form of money, became political. The 1953 Iranian coup d'état, known in Iran as the 28 Mordad coup d'état was the overthrow of the democratically elected Prime Minister Mohammad Mosaddegh in favor of strengthening the monarchical rule of the Shah on 19 August 1953. The shah ruled as a constitutional monarch with authoritarian control. This mimicked how politics in Europe went before WW1. This was something the British wanted. A way to regain control of a new order to control people.

    Oil was the hardest form of money at the end of the last debt cycle. Today Bitcoin is the hardest form of money at the end of this debt cycle.

    Oil in the 1930s is like Bitcoin is today. 1930s Saudi Arabia is 2021 El Salvador. Most people are blind to what really is happening macroeconomically today.
    JanSz likes this.
  8. Jack Kruse

    Jack Kruse Administrator

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  9. Jack Kruse

    Jack Kruse Administrator

    Inflation is time theft. Deflation is time theft on steroids that last longer than you might imagine.

    It is coming to your life soon.
    caroline and JanSz like this.
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