The World’s Most Pointless Investment

  • Options on Bitcoin: What’s the point?
  • Copper leads the way in a commodity resurgence
  • Why silver is destined to outperform gold
  • Recession indicator sinks near danger zone
  • Good progress on “pluripotent” stem cells
  • Horrible idea of the day: “Taco Mode”
  • “Terminally stupid or blowing smoke?”

Some of America’s wealthiest individuals and institutions are champing at the bit, eager to pile into… the world’s most pointless investment.

On Monday the Commodity Futures Trading Commission gave its approval to the first Bitcoin options exchange — the brainchild of a couple of ex-Goldman Sachs traders.

Called LedgerX, the exchange plans to launch this fall. According to The Wall Street Journal, “Wealth managers, family offices and hedge funds have expressed interest in trading on LedgerX, and it has market makers — trading firms that provide continuous options quotes — signed on, the company said.”

On the surface, the idea makes sense. At a time of record-low volatility in stocks and other conventional asset classes, Bitcoin’s big price swings give options traders an opportunity for enormous, lightning-fast gains.

“We’re at an inflection point for digital currencies,” says LedgerX co-founder Paul Chou. “There’s no action anywhere else. Bitcoin is the only thing moving quite a bit.”

What, you mean gains of 12,000% or even 56,000% aren’t good enough?

Because as Louis Basenese explained here yesterday, those are the moves made by some lesser-known cryptocurrencies in recent weeks.

In other words, you don’t need access to a hedge fund to collect option-like gains from plain ol’ cryptocurrencies. And you sure as heck don’t need to wait till the fall for LedgerX to get up and running.

By the way, we’re lowballing some of the numbers. In late June our research team spotted one cryptocurrency that jumped 105,744% in 24 hours… and another that leaped 1,176,640% in seven days. That is, a $20 investment became $235,328 in the space of a week.

So when we talk about 12,000%, we’re trying to be “reasonable!”

And there’s no better time to act. “The ultimate catalyst is brewing right now,” Louis says.

“Over a quarter million new retail outlets are gearing up to begin accepting dozens upon dozens of alternative currencies from all around the globe.” We’re talking by this Friday, as a matter of fact.

“And in a recent seven-day span, over 159 separate cryptocurrencies more than doubled in value! So if you take action right now, you can easily turn a tiny grubstake of $20 into an absolute windfall fortune.”

No need to do the homework to find the right ones: Of the 831 cryptocurrencies in existence, Louis has screened every one of them… put them through a stringent five-part filtering system… and narrowed the list down to just five cryptocurrencies to own right now.

As we’ve been saying for the better part of a month, all you need is $20 a just a little sense of adventure to get started. But don’t dawdle — this is the week you want to move, for reasons Louis explains right here.

The Dow industrials are reaching higher into record territory this morning as earnings season rolls on.

As we write, the Big Board has crossed the 21,700 mark. Coca-Cola, Boeing and Ford all posted “beats.” The other major U.S. stock indexes are also in the green, but not as strongly.

Gold is backsliding a bit, now $1,248. But that’s just a mirror image of an oversold dollar getting a bit of a bounce this week. The dollar index was due to recover a bit after touching 14-month lows last Friday.

The Federal Reserve will issue one of its every-six-weeks policy statements this afternoon; we’d be surprised to see anything come out of it to rock the boat.

Copper, meanwhile, is touching a two-year high of $2.85 a pound. It’s up 28% compared with this time last year.

Mine supply is tight; demand from China isn’t slumping as badly as many people thought. It’s another sign of something our Zach Scheidt has had on his radar this year — a bull market for stocks that’s getting long in the tooth, contrasted with a commodity recovery just getting started. “The ending of the bull market for stocks signals the beginning of the bull market for commodities. I recommend getting in sooner rather than later.”

As it happens, Zach is checking out best-of-breed commodity possibilities this week at the Sprott Natural Resource Symposium in Vancouver. He’s found one he particularly likes…

“An ounce of silver currently costs only 1.3% of an ounce of gold,” says Zach. “In other words, one ounce of gold is roughly 75 times more valuable than silver.”

He says that makes no sense. “Think about it,” he writes in today’s Daily Edge. “We currently only mine about 9 ounces of silver for every 1 ounce of gold — not 75. So silver is more rare than the price gives it credit for.

“Plus, silver is actually consumed for many purposes (versus gold which is mostly stored) — so there is natural demand for silver built in.

“Bottom line: When the tide for commodities starts to turn, I expect silver to rebound like a slingshot, much higher (percentagewise) than gold.”

Our recession alert status: Still slightly elevated.

Last month an obscure indicator called the Philadelphia Fed state coincident index registered its weakest reading since early 2010. The Federal Reserve Bank of Philadelphia comes up with this indicator by crunching four job figures from each of the 50 states and then putting it all on a scale running from minus 100 to plus 100.

Readings of plus 50 and below have called the onset of every recession going back nearly 40 years. The May number was 58 — down from 88 only two months earlier.

The June number is out today. It’s 54.

If it’s any consolation, May’s number has been revised up to 66…

Time for a progress report on “regenerative” medicine — “the ability to create healthy and functioning human cells to replace ones lost in the body to injury and disease,” Ray Blanco reminds us. It’s a story we’ve been following at Agora Financial for more than eight years.

“Stem cells have the ability to reproduce and change into functional cells and tissues,” says Ray. “Pluripotent stem cells are the most potent. They can turn into any cell type in the human body. Furthermore, they can divide and reproduce without end.”

Ray is following the fortunes of a tiny company working on pluripotent stem cells to help heal spinal cord injuries and paralysis.

Phase 1 data look promising so far: “Last month, the firm announced nine-month follow-up data for patients that were given a 10 million cell dose to their injury. Even though this half of what researchers believe will be a full dose, half the patients have shown signs of recovery.

“This includes two levels of improvement in motor function, as well as improvements in arm, hand and finger function.

“The nine-month data confirm what the company reported at three and six months, and show that therapy has durability. The introduced cells help heal the injury, and the result is more than temporary.”

It’s still early days. We’ll keep you posted…

From the “Who on earth thought this was a good idea?” file… we have the ride-sharing firm Lyft pairing up with Taco Bell to enable drunken hipsters’ most obnoxious habits.

Starting tomorrow, the two companies are launching a pilot program in Newport Beach, California, called “Taco Mode.”

“Taco Mode,” according to a Lyft press release, “is an in-app option for Lyft passengers seeking the ultimate Taco Bell experience — including a free Doritos Locos Taco when you ride-thru Taco Bell on the way to their next destination.”

The service will be available on certain nights from 9:00 p.m–2:00 a.m.

You can see where this is going.

Lyft drivers on Twitter are not amused. Here’s a sampling of reactions as gathered by Splinter News…

Tweet reply to Lyft, Taco Bell

Tweet reply to Lyft, Taco Bell

Tweet reply to Lyft, Taco Bell

If people use this service as it’s obviously intended… uh, let’s just say trash and stray taco fixings might be the least of the drivers’ cleanup worries.

Lyft says it’s hoping for a nationwide rollout next year. We’ll see…

The health care debate in our virtual mailbag is reaching new levels of snark — directed at other readers, that is.

First entry: “Maybe the genius (meant sincerely to describe someone who is so smart he actually trained the ‘leftist Supreme Court’ to use computers!) could explain why Canadian health in general surpasses that of the U.S. in nearly every respect, from infant mortality to life expectancy.

“The Canadian health care system is miles from perfection, but the very least to be said about it is that it is exponentially less bad than the American system. I am not holding this up as an endorsement, as I don’t hold the Canadian system as a model for anyone. But for what it’s worth, I have never personally experienced the catastrophic waits people often talk about (nor, tellingly, have I ever personally heard of them from others, and I don’t live in a cocoon), and that includes treatment for a very serious illness many years ago.

“The problem with the health care discussion is that it is mainly carried on by absolutists in a world that will never likely be perfect.”

“I am sick of people who say health care is a right. It is NOT.

“A right, as used in the sense of the Constitution, is something you possess as a result of your existence, e.g., freedom of speech, right to bear arms. It does not require anyone else to DO anything in order for you to exercise that right.

“Health care, a commodity, requires that someone else take some action on your behalf, i.e., a doctor, a nurse, etc. If someone else must do something for you, then either they must be compensated or not. If they are not compensated, that is known as slavery. If they are compensated, then the money to do so must come from somewhere. If health care is a right, then that service must be performed regardless of whether you, the recipient of said service, can pay or not.

“However, if they are paid for by the government, the ultimate payer if it is a right, the government must get the money from taxation, either now or in the future. The taxpayers from whom they take the money — yes, the government TAKES taxes — did not receive the said services and hence are not compensated for their money. The taking of value without compensation is again slavery.

“Thus, those that claim health care is a right are calling for slavery either of the medical professionals or the taxpayers. The only way the provision of a service is not slavery is if the individuals who receive the service compensate the provider of said service themselves, i.e., a ‘market’ economy. And no, I do not accept the shared-obligation theory of government.

“Closely related is the idea that the Constitution grants rights. IT DOES NOT. It prevents the government from infringing on your rights. If only the people that spout such nonsense would bother to read and understand the document…

“Or maybe I’m just getting grumpy in my old age.

“Always interested to read The 5.”

The 5: We can’t resist resorting to a meme…

Matrix Meme

On the subject of yesterday’s latest lemonade stand outrage, a reader repeats the words of the apologetic officials who fined a 5-year-old girl $200: “We expect our enforcement officers to show common sense and to use their powers sensibly.”

The reader’s take: “I cannot tell you how often I heard variations on this quote when, as president of a better-government group in California, I would warn city and county officials of the probable unintended consequences of their actions.

“‘Enforcement officers’ are employed to enforce laws and ordinances. They are not judges or jurors. Their job is to enforce. If they don’t enforce, a citizen can file a complaint against them for dereliction of duty.

“So the Tower Hamlets Council in London is either terminally stupid or blowing smoke. Sadly, based on experience, I suspect it is the former.”

The 5: Good intentions are all that matters, right?

Best regards,

Dave Gonigam
The 5 Min. Forecast

P.S. “This Is What It Will Take for Bitcoin to Become a Legit Currency,” says a headline at MarketWatch.

You don’t have to look hard to find tiresome articles like these. And they’re utterly irrelevant if all you want to know is, “Can I make money off it?”

Yes. You can. Lots of money.

You just have to do it the right way. Here’s how.

P.P.S. For best results using our team’s “Secret $20 Bitcoin Blueprint,” it pays to act before Friday.

Dave Gonigam

Dave Gonigam

Dave Gonigam has been managing editor of The 5 Min. Forecast since September 2010. Before joining the research and writing team at Agora Financial in 2007, he worked for 20 years as an Emmy award-winning television news producer.

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