An Economic Worst Case Scenario

Last week this "worst case scenario" was posted on Twitter. Since then, the forces at work have pushed the world ever so slightly in the direction outlined below. It is worth considering the consequences of this playing out as described, and what your personal trading might look like absent being frozen like a deer in headlights. There will be ways to trade such a scenario, in fact we have already laid out some initial trades in our two trading services, Blue Line Premium and Blue Line PRO. As next week unfolds, more will be forthcoming. 

An Economic Worst Case Scenario 

1. Conflict escalates into a regional war with the U.S. becoming directly involved.
2. OPEC responds with an oil embargo.
3. Iran halts passage of tankers through the strait of Hormuz disrupting global oil and LNG supplies.
4. Price of oil reaches $300/barrel.
5. Europe succumbs into a full-blown energy crisis (LNG shortage).
6. Spike in energy prices reinvigorates inflation with central banks responding accordingly.
7. Financial markets and the banking sector collapse.
8. Debt crisis engulfs the U.S. capital market forcing the Fed to enact yet another bailout.
9. Petrodollar trade collapses.
10. Hyperinflation emerges.
We sent out some GLD charts to all Blue Line subscribers this weekend. Our PRO members were warned on Friday, our Premium members today, Sunday in their Weekend Update. Gold wasn't mentioned in the linked article, but this was:

"From financial chaos to hyperinflation

"Naturally, reinvigorated inflation pressures would force central banks to enact another round of interest rate rises. This would wreak havoc among consumers and corporations, but also in the capital markets. Yields of sovereign debt would likely explode. This would be followed by an utter collapse of asset and credit markets, á la spring of 2020."


Gold (GLD) - Intermediate Term Trading Chart
Bottom Line
We are no longer in a bull market, but that doesn't mean there aren't trading opportunities that offer outsized returns. We have to live through this mayhem, no matter what, so we may as well try to make a buck here and there when conditions allow.  Our PRO members are up close to 400% on IWM puts this weekend, while Premium members are knocking on 200% gains in TLT puts. And those trades got put on well before Oct 7th. 
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