Wednesday, 21 August 2019

A Analysis

 If you haven't heard, we're giving out free, fully smart contracts as a 5% rebate to anyone who purchases any of our research packages above the introductory novice $50 level. This is not your Daddy's rebate! The rebate actually gets larger as DB goes down in price. For those who may be coming late to the party, we can offer a 5x long gold (or even a long gold, short DB) smart contract rebate as well. Of course, the bulk of our research targets banks and entities other than DB, but I thought we'd make DB the subject of the rebate to drive the point home. Below is an actual contract crafted off of the price of a single share of DB for about 2 weeks.

Veritaseum 5x Short DB Smart Contract

Click here to explore and subscribe to our research. You will have to be willing to fully identify yourself and comply to the terms or our program (in essence, promise not to use the package for anything other than our rebate) in order to qualify for the rebate. Once the subsciption is paid for, email us to get started.

Oh yeah, if you haven't heard...

An Analysis of Deutsche Bank's Likely Recapitalization - German Tax Payer Bailout or German Bank Depositor Bail-in?

Deutsche Bank is going to need some money, and it's going to need some quite soon. The next two or three articles that I write will focus on why there is such a need. In a concerted effort to reduce or potentially eliminated the risk of taxpayer-funded bail-outs of European banks, the EU implemented a new “bail-in” regime beginning on January 1, 2016. As such, rules which require banks and certain systemically significant market participants in EU member states will have to write-down, cancel, convert into equity or otherwise modify certain unsecured liabilities if such steps are required to recapitalize the institution. What is the most bountiful unsecured liabilities of a bank? Read more...

 

Our next article will continue to hammer home the liklhood that DB will have to recapitalize, and where they probably WONT'T be getting the money from, as well as the likelihood it will come from someone who really didn't plan on giving it up (Ahem, depositors/savers/checking account holders). For those who are not yet convinced, peruse these related items...

The research and knowledge subscription module "European Bank Contagion Assessment, Forensic Analysis & Valuation" contains a full report of a very large European Deutsche Bank counterparty that faces a full 27% downside from current levels. It appears as if no one suspects a clue. It also contains much, much more (including at least 3 to 5 suspect banks). We can break this apart a la carte, if requested.

As excerpted:

Susceptible Bank 1: Financial Modeling

 

This is the 4th installment of our public service announcements on Deutsche Bank subsidiary, Xetra-Gold's gold note offerings. Since a lot has been covered already, it's advisable that you read the first 3 articles to catch up:

  1. Veritaseum Knowledge Exposes Frightening Counterparty Risk At Deutsche Bank for "Gold Investors"
  2. Is Deutsche Bank Prepping for Fraud Charges Against It's Gold Derivative Products?
  3. The Debate on the Potential of Fraudulent Actions At Deutsche Bank Subsidiary, Xetra-Gold

Now, that we have determined that Deutsche Bank subsidiary Xetra-Gold "may" not have been fraudulent, mainly because they stated in their prospectus things that contradict and befuddle the misleading things they stated in their marketing material, we are left to ponder, "Well, we know the offering was unethical, but was it illegal?" Unfortunately, I'm not a lawyer thus cannot accurately opine on such. Alas, I can speculate as a laymen. The Xetra-Gold derivatives were offered in the UK, as well as several other jurisdictions. Let's peruse the UK perspective via the FCA in the difference between clear and misleading financial advertising:

"Financial adverts and promotions can be misleading for many reasons, but there are some questions you can consider to help you spot and avoid misleading financial adverts, such as: ... Are there important points that are only shown in the small print?"

Hmm... Let's take a look at the Xetra-Gold advertisement, and cross reference it to it's prospectus:

DB Xetra-Gold false advertising test

You guys tell me, is this a blatant case of false advertising, or is it not? Let me know in the comment section below. It's not as if DB is totally innocent in these matters, for they just signed a consent order admitting the manipulation of gold prices. This goes deeper than many may care to admit. Deutsche bank seems to be dumping its gold exposure, and what better way to dump it than to sell it unsuspecting gold derivative note buyers. This is how it could be going down...

Deutsche Bank, through it's Xetra-Gold subsidiary, has a guaranteed, zero premium call option.

  1. DB/Xetra-Gold accepts money from investors who are told they are buying gold, from “an economic perspective”.
  2. DB/Xetra-Gold takes money that was supposed to buy gold (at least in the eyes of many investors) and does whatever they want with it (which could include buying gold) because gold delivery on demand is not guaranteed and the investors have been disclaimed against ownership of, and rights to, the gold underlying as well as price correlation, and failure to deliver.
  3. If the price of gold goes up, DB/Xetra-Gold can fail to deliver (as disclaimed) and keep the capital gains profits. They don't even have to match the price of the gold underlying. or return the initial investment.
  4. If the price of gold goes down, DB can deliver gold on demand and keep the spread from gold spot and the price originally charged for the gold notes.

This is good work, if you can get it, no? 

This is how a company like DB can have over 90% in profitable trading days, because they never had a chance of losing in the first place. The losses belong to their clients! This is speculation, of course (wink, wink). Now, legal eagles say that we can't scream fraud, because Deutsche clearly says they have the motivation to, and the ability to, rip you off in their prospectus (but not in their marketing materials).

DB

Which leads us to the end of "The Debate on the Potential of Fraudulent Actions At Deutsche Bank Subsidiary, Xetra-Gold", where John Titus (see his videos at the end of this article at the bottom) explained to me after I queried about misleading and contradictory marketing materials:

I asked, "If marketing materials are negatively contradicted by the prospectus then the marketing materials are fraudulent and misrepresentative, no?" He replied...

Misrepresentative, yes (accepting your definition of economic), and the marketing materials probably do in fact flout any number of laws against false advertising.
 
But fraudulent, no. The essence of fraud is to falsely induce someone by words or acts into doing something against his interests that he wouldn't have done but for the dishonesty. Courts consider the totality of the circumstances. So while you would undoubtedly tear the economic investment statement to shreds, you'd still be left with the many other statements from the prospectus that are true, and herein lies the problem.
 
The UK Fraud Act of 2006 is a criminal statute. So each element of the crime has to be proved beyond a reasonable doubt (or whatever the English equivalent burden of proof is). The first element of fraud by false representation under the Act is "dishonestly makes a false representation." The problem posed by the prospectus is that it would preclude a finding that DB acted dishonestly beyond a reasonable doubt. I mean, you've got one false (but arguably vague) statement vs. several clear-cut disclaimers that are accurate. The totality of the statements are perhaps half false and half true, but dishonest beyond a reasonable doubt? Fuhgetaboutit. DB played the game with all of its cards face up. Yeah, they contradicted each other, but they were damn sure visible to investors, who can claim they were misled only in a subjective (personal) sense, not in an objective way (which is how a judge would look at it).
 
Now, if--in addition to the mktg mat's and the prospectus--you've got some Goldman-like behavior where DB took out massive insurance policies on the investments it sold and concealed them from the buyer, it's a totally different story."

Hmmm... On that note, let's take a look at whether DB has been a net buyer or net seller of gold exposure. Remember, Goldman, sold MBS structures to clients and then took big short positions betting against their own clients, reference "Goldman 'bet against securities it sold to clients'.

The subcommittee also released four internal Goldman Sachs emails. In one, says a subcommittee statement: "Goldman employees discussed the ups and downs of securities that were underwritten and sold by Goldman and tied to mortgages issued by Washington Mutual Bank's sub-prime lender, Long Beach Mortgage Company. Reporting the 'wipe-out' of one Long Beach security and the 'imminent' collapse of another as 'bad news' that would cost the firm $2.5m, a Goldman Sachs employee then reported the 'good news' – that the failure would bring the firm $5m from a bet it had placed against the very securities it had assembled and sold."

Goldman is fighting to clear its name after the $1bn fraud charges brought by the US Securities and Exchange Commission last week, and wants the case settled in court.

The movie, "The Big Short" dramatized this rather well.

Well, guess what it looks like Deustche has been doing...

DB gold exposure expressed as VaRDeustche has been a net seller of foreign exchange risk, which includes (wait for it now, and guess....) gold! They probably were not cash sellers, but purchased swaps to reduce exposure, possibly along the parameters I mentioned above with the guaranteed, zero premium call option.

If you enjoy this free analysis, there's much more where this came from as we pick apart many other banks in our paid research and knowledge modules. WE just finished a true forensic valuation (very extensive, and detailed analysis) of a very large European bank that led to a huge short recommendation. Subscribe here and pass the word. Our bank analyses have performed very well in 2016, with Banco Popular and Banco Popular Milano doing roughly 40% to 80% in theoretical returns (contingent on how the positions were taken). We have done an excellent job historically as well, calling the fall of Bear Stearns, Lehman, Countrywide, GGP, etc. If you think the free stuff is intense, you should see the stuff that we sell!

A summary and critique of the Veritaseum Wallet after one month of use. I'd like to note that in regard to the expiry portion of the comment, you can type in any expiry you wish, or use the advanced granular method. The dropdowns are just suggestions.

One Month Review of Veritaseum 1.2.0 Beta

Written by:  This email address is being protected from spambots. You need JavaScript enabled to view it.

I have tried out the Demo and Live Modes of Veritaseum 1.2.0 Beta.  I am satisfied with this derivative trading platform and look forward to seeing future Beta versions.

The platform fairly & accurately updates your P&L until contract expiration, and trades are updated periodically in real time to reflect market conditions. 

The platform currently gives you four order parameters to choose from -- "Principal", "Receive", "Pay", and "Expiry."  Other variables that can be modified are "Deviation" from Principal and two advanced variables -- "Collateral" as a percentage of Principal, and "Leverage" as a percentage of Principal.  

"Principal" refers to principal at risk.  "Receive" is what you buy.  "Pay" is what you sell.  "Expiry" refers to the terms of the contract, which currently is one of six time periods between one minute and five weeks.  The Receive and Pay inputs are keyword sensitive;  so for example, inputting the letter "F" gives you a drop down list of eight possible visible ticker's.  Additionally, there is a scrolling list of tickers which match your keyword phrase.

Yesterday I penned "The Pop Media Is In Love With Goldman Again, Probably Because They Don't Read The Fine Print", illustrating how quickly the media swallows what a big name brand company throws at them. If you do a Google search in Goldman's latest quarterly earnings, it looks something like this:

Goldman earnings google search Q1 2015 -1

I pointed out what was really pertinent in the last quarter's report... Goldman had to ratchet up risk in order to hit $200 per share again):

Goldman earnings google search Q1 2015

... and recommended a very unique macro trade on Veritaseum to monetize the situation...

GS vs euro volatility chart

I offered Goldman to defend their quarter's reporting, good name and share price by taking the GS long side of this swap. It's good thing they didn't, because this is what it looks like 24 hours later with the recommended GS bear leg up nearly 50% - in JUST ONE DAY!

GS vs euro volatility trade - Day 1 

I invite one and all to try what I consider to be a revolutionary method of trading value that sidesteps all of the banks, brokers and exchanges, offers you near unlimited leverage and is dramatically safer - all at once. Goldman, you're invited too :-) 

  1. Take your own high leverage positions on every soveriegn, currency, and bank mentioned in this article with Veritaseum. Learn more or download from here.
  2. Purchase our tradeable intellectual property token, Veritas - the intellectual capital commodity - and design your own high end trades and value trading/exchange platforms with our assistance.
  3. Contact Veritaseum here.

 

With nearly a billion USD invested in blockchain related startups over the last two years, even the true luddites are starting to take notice. Most still have no idea what this tech is capable of, so my job is to show all the light. On that note, I present a step-by-step guide to Collateralizing and Ensuring Physical Delivery of Gold Through the Blockchain - Faster, Cheaper, Safer!

What many may not realize is that Veritaseum, when used with our commoditized intellectual capital (Veritas), can actually move the value of, and secure, physical assets through the blockchain. This is the trade architecture from a high level.

Veritaseum Pitch Deck

If one where to speculate or hedge the value of gold, you can receive the price value of gold in exchange for USD (or EUR, or even forex pairs such as EURUSD, or even other assets such as copper). The Veritaseum contract would look like this...

Recieve

This is a speculative/hedging contract receiving the derivative gold price and paying the derivative USD price over the weekend to NYSE market close on Monday. Yes! This is cool, but suppose you actually wanted to take physical delivery of said gold rather than take cash settled exposure? Well, to do that you still enter into this contract with the seller of said gold, but set the expiry date at time certain in the future for physical delivery of said gold (to be provided and guaranteed by the transportation service). Let's assume that time and date is as stated above. Said transportation service feeds into the Veritaseum system (via a custom implementation created through a Veritas purchase) and upon delivery confirmation of the physical gold the contract unwinds and the seller gets the buyer's funds plus a refund of their deposit which is put up as BTC collateral linked to the USD price - essentially paying him in USD up front - but locked into the blockchain. The buyer of the physical gold has been hedged into the GLD price this entire time and exchanges his gold-linked BTC for actual physical gold upon arrival as this BTC is released to the physical gold seller along with his USD-linked deposit. With such an arrangement, the gold purchase transaction can literally happen immediately, with all parties hedged into their respected requested exposures as they await physical delivery of the underlying.

If the physical gold does not arrive for whatever reason, the buyer still has his direct gold price exposure - basically a win-win situation. If the seller did not deliver the physical gold, then he/she will be forced to pay as if they sold and delivered the gold anyway by being exposed to USD price exposure relative gold and not receiving that deposit back until the end of the contract - whose expiry was defined as provable physical delivery of the gold.

But what about being exposed to BTC price volatility?

For those who do not want to be exposed to BTC volatility, simply open the advanced tab on the markets tab/interface and lever the contract to "outrun" your perceived exposure to BTC volatility. If you feel bitcoin will have an 4% standard deviation and you lever 5x, you will significantly mute said price delta in your trade results (the actual amount of leverage to use can be calculated using our trade modeling spreadsheet - in this case, 5x is rather excessive for an expected 4% STD).

Recieve GLD lto USD evered 5x

This what that "smart contract" would look like...

Recieve GLD lto USD evered 5x contract

This is what the entire trade would look like, levered 5x with BTC featuring 4% volatility.

Recieve GLD lto USD evered 5x contract trade results chart

Recieve GLD lto USD evered 5x contract trade results descriptionRecieve GLD lto USD evered 5x contract unbounded PL 

Download the Veritaseum wallet and all tools needed to conduct this transaction (sans the physical gold and BTC, of course) here. Purchase Veritas (our tradeable Intellectual Commodity token) here.

Feel free to contact me directly here - I love to chat.

From the CATO institute:

Since the New Year, Ukraine’s currency – the hryvnia – has collapsed, losing 51 percent of its value against the U.S. dollar. To put this rout into perspective, consider that the Russian ruble has only lost 8 percent against the greenback during the same period.

Like night follows day, the hryvnia’s meltdown has resulted in a surge of inflation. The last official Ukrainian year-over-year inflation rate is 28.5 percent. This rate was reported for January and is out of date. That said, the official inflation rate has consistently and massively understated Ukraine’s brutal inflation. At present, Ukraine’s implied annual inflation rate is 272 percent. This is the world’s highest inflation rate, well above Venezuela’s 127 percent rate (see the accompanying chart).

...  estimate[d] Ukraine’s current annual inflation rate to be 272 percent – and its monthly inflation rate to be 64.5 percent. This rate exceeds the 50 percent per month threshold required to qualify for hyperinflation. So, if Ukraine sustains its current monthly rate of inflation for several more months, it will enter the record books as the world’s 57th hyperinflation episode. 

There are two ways to approach this through UltraCoin - one as an individual or corporation looking to hedge against the economically destructive forces of hyperinflaton, the second as a speculator looking to profit.

Thei individual looking to protect themeselves from hyperinflation can swap their Hyrvna holdings exposure for GLD - the gold tracking ETF. This would be an expensive hedge that costs less then 3 cents per every $10, and will drop down to less than half of that in volume. Of course, all that glitters is sometimes not always golden. Gold hasn't held its value as well as the inflated USD (relative to most world debased currencies) YTD, but still has done a hell of a lot better then the UAH.

Ukranian Hyperinflation hedge for individuals

For the speculatory who wishes to go balls to the wall, you can use UltraCoin to actual go long/short to distinct and separate currency pairs. The rather strong USDUAH pair would be your long exposure and you would short the UAHUSD pair. To put some spice in the mix (as if this wasn't enough) dial in 80x digital leverage. One can consider using another strengthening (or percieved to be strengthening, which is the dangerous part) curreny such as the Swiss franc on the pay (short) leg, although that would have weakened this return over the last few weeks as the CHF is weakening again. Alas, you are free to put whatever ticker in their you want and dial in whatever leverage you want. I suggest you design the trade in our UltraCoin trade modeler, first, (Excel required). 

Ukranian Hyperinflation Speculative homerun for traders   funds

As you can see, the leverage is dailed up to 80x, but P&L is capped the principal amount put at risk. What this means is you will only get (or lose) up to what you put in as a maximum (these are not binary options and do have a continuous payout that exactly mimics that of the underlying asset(s)), but you will get (or lose) it very, very quickly! This is perfect for you action junkies!

Download the tutorial.

Download the UltraCoin client for PC or Max/Linux.

Download the our UltraCoin trade modeler, first, (Excel required)

 

An employee at Veritaseum asked me a very simple, but initially perplexing question last night. He said, "All other parameters being equal, what's the difference between an order with 10 BTC principal at 1x leverage and 0% collateral, and an order with 1 BTC principal at 10x leverage at 900% collateral?"

Well, to answer that question, I want to direct everyone to our trade modeling spreadsheet (which definitely comes in handy when designing more complex trade setups and fleshing out less than obvious ideas). What I did to answer his question was to create the two trades independently using a forex setup. The first trade setup looked like this:

1BTC levered 9x thin forex profit

The trade looked like this at expiration (remember these are illustrative results, not necessarily or accurately indicative of actual trade results for a whole lot of mumbo jumbo legal reasons):

10BTC thin forex profit

This what the trade would have resulted in if we used 1BTC as the principal, 9 BTC as collateral and 10x leverage, which would have effectively given you the same amount of purchasing power with the same amount of capital committed.

1BTC levered 9x thin forex profit chart

This is what would have happened to both trades above if BTC prices were to drop by a whopping 40% before the trade ended, but after the trade began...

1BTC levered 9x thin forex profit chart with 40 drop in BTC prices

Yes, that would hurt, and it would hurt a lot! That chart was one of the biggest objections given to me about the new UltraCoin trading system, the need to be exposed to bitcoin volatility in order to trade. But, there's gold at the end of this rainbow. Check out what happens when we drastically ratchet up the leverage to levels insane! At 1,100x leverage, look at what happens to that same 1BTC trade with 9BTC collateral when winning a thin forex profit...

1BTC levered 1100x thin forex profit chart with 40 drop in BTC prices

That's correct! Even with the price of the underlying BTC dropping almost in half... Net of all transaction, transmission and leverage fees... Even with not the fattest in profits (well, maybe fat for a forex trader)... This trader was able to eek out a 8.1% profit exiting the trade. The ability to leverage "insane" can insulate the winning trade from normally deadly levels of BTC volatility and price fluctuation.

If you don't believe me, look at the same trade setup, except in all cash with 1,100BTC and not leverage or collateral...

1100BTC levered 1x thin forex profit chart with 40 drop in BTC prices

I don't want anyone to think that insane leverage is a panacea, or even safe, for novice traders - but as you can see it does have its uses. I want to remind everybody that the leverage used is bounded (both on the profit and the loss side) by the principal+collateral posted. These next 4 charts tell the story. Look at the trade setup up wtih a 20% gross gain - levered 1,100% and unlevered (this is explicitly unlevered to illustrate a point, not the same purchasing power being put upfront in cash as modeled in the other examples above).

1100BTC levered 1x with 20 forex profit chart with no drop in BTC prices

As you can see, we profits are bounded by the capital sent to the blochchain as escrow (you get a maximum of what you and your counterparty have agreed to commit to the transaction - and not necessarily 20% of the face price of the profit x 1,100%). Similarly, your losses are capped in the same fashion.

Just for education's sake, this is the same trade with the entire amount put up as principal and no leverage or collateral.

1100BTC levered 1x with 20 forex profit chart with no drop in BTC prices real

Basically, after fees, you get a little less than 1/4th the return, while having to commit a lot more capital.  

These trading concepts should come in handy this year when we tackle things such as the Danish National Bank (their central bank) telling us things that Reggie just doesn't believe are sustainable. Feel free to reach to me personally if you have any questions. 

Those who follow me know that I don't agree with many of Goldman Sachs recommendations, primarily because I know that Goldman considers their clients to be "muppets" and use said muppets as profit springboards for trade setups. Of course, I can be wrong, but remember that we have ex-Goldman partners who support this thesis with personal experience, reference "Goldman Sachs Executive Director Corroborates Reggie Middleton's Stance: Business Model Designed To Walk Over Clients":

An executive director at Goldman Sachs has explicitly corroborated what I and many in the blogosphere have been crowing for some time now, and that is... 

 

The whole video can be seen here on the Max Keiser show, starting from about 19:00 minutes in where I discuss risk vs reward in GS and how they outperform eventhough risk outweighs reward. Those who like numbers and charts can see where I actually demonstrated in For Those Who Chose Not To Heed My Warning About Buying Products From Name Brand Wall Street Banks:

As in “When the Patina Fades… The Rise and Fall of Goldman Sachs???“, we can reminisce over the fact that Goldman BARELY earns its cost of capital on an economic basis, and that’s before considering the potential horrors which may (and probably do) lay on the balance sheet (for more on BS horror, reference Reggie Middleton vs Goldman Sachs, Round 2.

gs roe

And now we have supporting evidence from the inside... From the NYT:

"TODAY is my last day at Goldman Sachs. After almost 12 years at the firm — first as a summer intern while at Stanford, then in New York for 10 years, and now in London — I believe I have worked here long enough to understand the trajectory of its culture, its people and its identity. I can honestly say that the environment now is as toxic and destructive as I have ever seen it."

"To put the problem in the simplest terms, the interests of the client continue to be sidelined in the way the firm operates and thinks about making money."

"I knew it was time to leave when I realized I could no longer look students in the eye and tell them what a great place this was to work."

" I have always taken a lot of pride in advising my clients to do what I believe is right for them, even if it means less money for the firm. This view is becoming increasingly unpopular at Goldman Sachs. Another sign that it was time to leave."

 "How did we get here? The firm changed the way it thought about leadership. Leadership used to be about ideas, setting an example and doing the right thing. Today, if you make enough money for the firm (and are not currently an ax murderer) you will be promoted into a position of influence. What are three quick ways to become a leader? a) Execute on the firm’s “axes,” which is Goldman-speak for persuading your clients to invest in the stocks or other products that we are trying to get rid of because they are not seen as having a lot of potential profit. b) “Hunt Elephants.” In English: get your clients — some of whom are sophisticated, and some of whom aren’t — to trade whatever will bring the biggest profit to Goldman. Call me old-fashioned, but I don’t like selling my clients a product that is wrong for them. c) Find yourself sitting in a seat where your job is to trade any illiquid, opaque product with a three-letter acronym."

"I attend derivatives sales meetings where not one single minute is spent asking questions about how we can help clients. It’s purely about how we can make the most possible money off of them. If you were an alien from Mars and sat in on one of these meetings, you would believe that a client’s success or progress was not part of the thought process at all."

"It makes me ill how callously people talk about ripping their clients off. Over the last 12 months I have seen five different managing directors refer to their own clients as “muppets,” sometimes over internal e-mail. Even after the S.E.C., Fabulous Fab, Abacus, God’s work, Carl Levin, Vampire Squids? No humility? I mean, come on. Integrity? It is eroding. I don’t know of any illegal behavior, but will people push the envelope and pitch lucrative and complicated products to clients even if they are not the simplest investments or the ones most directly aligned with the client’s goals? Absolutely. Every day, in fact.

It astounds me how little senior management gets a basic truth: If clients don’t trust you they will eventually stop doing business with you. It doesn’t matter how smart you are.

These days, the most common question I get from junior analysts about derivatives is, “How much money did we make off the client?” It bothers me every time I hear it, because it is a clear reflection of what they are observing from their leaders about the way they should behave. Now project 10 years into the future: You don’t have to be a rocket scientist to figure out that the junior analyst sitting quietly in the corner of the room hearing about “muppets,” “ripping eyeballs out” and “getting paid” doesn’t exactly turn into a model citizen."

Well, anyway.... This piece was not intended to reveal the inner workings of Goldman Sach's business model. It was intended to illustrate how our UltraCoin system can be used to monetize global macro trade ideas, even if they are from the vampire squid! According to Forbes:

Goldman’s first non-U.S. trade recommendation revolves around an expectation European stock markets rise in 2015 as the impact of ECB money-printing makes its way into the real economy. Goldman recommends investors go long a December 2015 Eurostoxx 50 call spread, buying a Dec. 2015 strike call at 3,150, and selling a Dec. 2015 strike call at 3,450. “The (nearly) at-the-money 3150 call costs 170.6, while selling the 3450 call costs 69.10 (both priced as of the close on November 19), giving this position a maximum potential 2-to-1 payout,” notes Goldman. The firm sees two reasons European stocks will move higher: regional growth simply accelerates, or disappointing inflation readings force the ECB into added action. Both scenarios, Goldman believes, augur well for European asset prices.

First, let's put this in a form that can be traded via UltraCoin. To go long the Eurostoxx 50, we'll receive exposure to the SPDR Eurostoxx 50 long ETF (speculating that the top 50 EZ equities will rise from currency wars & QE)  and we will pay exposure to the ProShares Ultra Euro ETF (ULE) seeking to provide twice the exposure to the performance of euro versus the U.S. dollar on a daily basis (speculating the euro will fall relative to the US dollar as a result of currency wars & QE by going short). It should also be noted that leveraged ETF products usually seek to match the return of the euro against the dollar over a single day. Due to this and the compounding of daily returns, the returns of the product may deviate from long term return rates, suggesting that investors need to monitor their holdings closely if they are going to be in for a long time period. It should also be noted that this is a materially more advanced trade setup than that recommended by Goldman, for it captures potential euro downside movement relative to the dollar AND potential european equity market upside -which, according to the Goldman hypothesis, are tightly linked. One would think that Goldman should start recommending trading with UltraCoin, no? 

My take on this? Well, it's obvious that the euro will see some pressure from central bank machinations, but its not so obvious... or maybe its too obvious that that is an automatic plus for the eurozone economies in general. Remember, what's good for stocks short term is not necessarily what's good for the economy medium term. The eurozone is a confederate of 27 (or so) countries with widely disparate economies, equity markets, macro situations, fundamentals and financial situations. This is far from a one size fits all situation. This should be obvious to all (and is how I called the Pan-European Sovereign Debt Crisis 5 years ago). In Lies, Damn Lies, and Sovereign Truths: Why the Euro is Destined to Collapse! I illustrated how inaccurate the many calls for European growth actually were, to wit:

Let's take a visual perusal of what I am talking about, focusing on those sovereign nations that I have covered thus far.

image005.png

Notice how dramatically off the market the IMF has been, skewered HEAVILY to the optimistic side. Now, notice how aggressively the IMF has downwardly revsied their forecasts to still end up widlly optimistic.

 image018.png

Ever since the beginning of this crisis, IMF estimates of government balance have been just as bad...

image013.png

The EU/EC has proven to be no better, and if anything is arguably worse!

image031.png

Revisions-R-US!

image044.png

and the EU on goverment balance??? Way, way, way off.

image040.png
It's not just Greece either...

And what about Italy???

This is Italy's presumption of economic growth used in their fiscal projections:

italian_real_gdp_growth.png
 

image006.png

image042.png

 

If the IMF was wrong, what in the world does that make the EC/EU?

Now, for sure, there are some eurozone nations that will benefit mightily from the debasement boost, but those countries are not representative of the entire eurozone. The reason why debasement and QE are almost a forgone conclusion is that Japan has thrown the gauntlet down and the ECB feels it has little choice. You see, there is a stark difference between how the Japanese economy (despite 34 years of a lost decade) and the EZ economies are put together, and a currency war will bring those differences starkly to the forefront. I posted series of tweets on this topic a few days ago...

Of course, if one wanted to take the opposite side of Goldman's views, simply click the switch button in the trade setup screen of UltraCoin to reverse the exposures. Download the UltraCoin client for free, and start trading for free without banks, brokers or exchanges.

Correction: the improper ticker was initially used in the trade setup. We intended to communicate going short the euro, which is what the words said, but the original ticker and desciption was for the Proshares ultra short euro ETF, which would have had a net long effect (shorting the short). The ticker has been corrected to reflect the Proshares long euro ETF, which one would be shorting through the UltraCoin client.

Management apologizes for the editing error. 

Monday, 18 August 2014 00:00

The Easiest, Fastest Way To Short Bitcoin

Bitcoin's price has been dropping steadily over the past week, and has been on a downward trend for most of the month.   

BTC 30 days till 8-17-14      

Since there is no shortage of naysayers predicting the doom of bitcoin, nor is there a shortage of traders who prize the volatility of this asset, the ability to short should be quite sought after.  Even after years of development, the opportunity to short is still not straightforward. In a nutshell, you have to open an account at a cryptocurrency exchange, and if you're a US citizen, you have to do it at a firm that would have you. 

With the advent of the Mt. Gox debacle, you should also be aware of custody and risk management issues as well. To open account and fund it takes a minimum of 2 to 3 days, and to get funds out is a minimum of 24 hours, up to weeks. A more straight forward method is through Veritaseum's UltraCoin peer to peer trading system. Download what we consider to be the most powerful bitcoin wallet in existence here, and you can fund it immediately with bitcoin and start trading as soon as the transfer confirms (within minutes). No account openings, no waiting, just trading. 

Once set up, you can do a straight sell BTC buy (your asset of choice, ex. the USD) or lever up and sell and receive a forex pair. See below...

2x levered BTC short through Veritaseums UltraCoin clientBTC short in USD through Veritaseums UltraCoin client UltraCoin allows you to short bitcoin faster and cheaper than any other system. Simply observe the fees. These trades were performed this morning. Below are three trades as they were filled...

BTC short in USD trades filled through Veritaseums UltraCoin client

And these are the results of the trades as they were completed (P&L).BTC short in USD trades completed through Veritaseums UltraCoin client Download your copy of the UltraCoin Bitcoin Value Trading Wallet along with a quick start guide here. There are a plethora of trading examples in the guide, from a simple long/short Apple stock trade to extravagant energy hedging and speculation and everything in between. UltraCoin is capable of trading the value of over 75,000 global tickers in every major and many minor asset classes and markets.

Last week, we reviewed a methodology on speculating on the pop of a perceived oil price bubble, reference If You Believe The Oil Bull Market Is Over, This Is How To Monetize It Through Ultra-Coin.com.

With all of the brouhaha over Bitcoin and the downright irresponsible reporting by the mass media, I've decided to reveal the progress of my "UltraCoin: The Future of Money!!!" venture. What you see in the next few paragraphs should elucidate even the most blinded to the prospects and potential of the Bitcoin protocol and why I've always said that the price of the actual cryptocurrency is absolutely irrelevant (much as the price of AOL was highly irrelevant to the prospects of the Internet in 1993).

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 I know I said the MSM has simply butchered accurate coverage of Bitcoin, but this piece in Fortune Magazine was right on the money: 

 "[UltraCoin] is a shot directly across the bow of the financial industry. Still in early development, BTC Swap is planned to facilitate a variety of what Middleton calls "Zero-Trust Digital Contracts," which recreate financial functions in software code by matching offered and desired transactions between parties without the need for intermediary institutions. Because these contracts are automated, instantaneous, and executed with assets already represented in the Bitcoin blockchain, Middleton says they eliminate counterparty risk while also subtracting conventional banking and brokerage fees.

The most immediate function Middleton envisions for his system is for hedging bitcoin against existing national currencies. With bitcoin's valuation still showing huge volatility, Middleton claims the availability of distributed hedging will both ensure the value of bitcoin for individuals holding the asset and provide systemic stability. (Given persistent skepticism, there should be plenty of takers to short bitcoin against the dollar.) And the entire system relies on decentralization for its security and integrity: "My contracts are peer-to-peer," says Middleton. "If you hack my servers, there's nothing to get."

Find it hard to believe? Even children can do it...

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So, how does this work? Well, let's start from the beginning.

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The vast majority of the world does their spending out of a wallet like this, or using currency-like instruments such as these (both physical and digital) contained in the wallet. The problem is all of these devices are "dumb" and rely on central authority figures (government, servers, banks, etc.). So...

Along comes Bitcoin with its decentralized currency that solves many of these issues. Bitcoin is also kept in wallets, like these...

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These Bitcoin wallets give you considerably more freedom with your money, sending it faster, cheaper and with more privacy than the conventional wallet above. Of course, the typical Bitcoin wallet hasn't even scratched the surface of what's possible with this new technology. As a matter of fact, the tech is so over-encompassing and transformative that the mass media and even much of the specialized media simply CANNOT wrap their minds around what's about to happen to the worlds of money, finance and investment!

I've taken a radical step with this tech that makes even the newest Bitcoin wallets look old hat in comparison. What makes UltraCoin different from everything else?

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So, what is UltraCoin?

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Unlike Bitcoin wallets, it allows you to literally take control of both your money and gain exposure to financial assets such as stocks, bonds, forex, options, futures, oil, gas, commodities and precious metals. 

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You can even design your own "smart contracts" directly within the wallet itself.

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This stuff above is a pretty big difference from... this, eh?

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And that's how we come round robin back to that first graphic with my kids trading currency exposures.

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Of course, Wall Street is fearful. Why shouldn't they be? If the public realized the extent of the middleman markup they pack into otherwise low value-add services and product margin, there would be a mass revolt. When you create these products and services on a peer to peer basis, it's extremely hard to overcharge to the extent a recent MBA recipient with little to no real world experience can recieve 7 or 8 digit compensation. Don't believe me and my proclamations of fear? Witness the drivel that comes out of the the analyst's reports:

Theres' Something Fishy In The House Of Morgan, Pt. 2: Bitcoin Fear, Envy & Loathing

Does the Mainstream Media Assist Wall Street In Hypocritical Hypothesis For Fear Of The Next Paradigm Shift?

I'm looking for:

  1. Financial Capital
  2. Intellectual Capital
  3. Active and prolific traders to help beta test my wallets. 

If you are or know of any of the above, hit me up with a link to your LinkedIn and/or Wikipedia profile via reggie AT ultra-coin.com. You can also join me to trade live Bitcoin and currency exposures at 40 Broad Street, Friday at 6 pm if you wish. Equities, Silver and Gold exposures will be available next week and possibly by Friday as well. 

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My Twitter Updates

ReggieMiddleton Our response to SEC allegations has been filed and is now public. While it may appear voluminous, it should be cons… https://t.co/f3SH6jTNpo
About 15 hours ago
ReggieMiddleton Asia Surprises With Cuts in Global Race to Monetary Bottom: New Zealand, India, Thailand cut rates today, which cau… https://t.co/bdY8cZqYqZ
Wednesday, 07 August 2019 11:05
From TweetDeck
ReggieMiddleton @fortunekr75 @venmo We have our own internal USD token. We actually use our metal tokens as private currency for transactions.
Tuesday, 06 August 2019 14:41
ReggieMiddleton @realDonaldTrump labeled china a currencymanipulator, but if one observes objectively, $CNY has held up to… https://t.co/c1XKE0s8ya
Tuesday, 06 August 2019 13:54
From TweetDeck
ReggieMiddleton @venmo Forgot to add this graphic https://t.co/vwb4pZlDmF
Tuesday, 06 August 2019 13:24

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