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Precious Metals
Precious Metals
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There was another post on RVE talking about the Dragon which I have also been interested in after reading Cole's paper. I went looking around to understand the long vol slice and stumbled on some videos that Patrick Ceresna did with George Gammon on youtube specifically about constructing the dragon. The two videos were about the commodities trend following and long vol. If you sign up for a free trial at big picture trading Patrick has a 2+ hour long video of him building a dragon portfolio step by step on his (I believe) brokerage account. I've been wanting to check out Big Picture Trading for a while as a fan of Macro Voices and this was finally my excuse for jumping in. 

Commodities trend following: 

https://www.youtube.com/watch?v=tac8sWPZW0w

Long Vol:

https://www.youtube.com/watch?v=pvX5_rkm5x0

Fed Balance Sheet/Pair Trades/Gold

So I was just randomly scrolling through some charts and thinking when I came across this. 

The blue is long Industrials (XLI) / short financials (XLF). Both of those seem like they are a part of the whole reflation thesis. Financials are connected to interest rates and XLI is connected with manufacturing and commodity prices. But then I thought about how the whole FED balance sheet expansion is going to hurt financials. If that happens then they will be a great short in a pair trade. Then I overlayed the price of gold and it tracks it almost perfectly. I was really surprised at the pattern. 

I have been thinking about trades that will do well regardless of the reflation thesis breaking down or not. Perhaps this was one of them. But as you think about the whole expansion of the FED balance sheet and different trades, maybe overlay gold here and there to see if there is a similar pattern. 

Be curious and ask questions!

Would love any thoughts or feedback!

The Sp500 and Gold had their own little drama, and here comes Bitcoin.

The Macro Cafe. Episode #9

An updated overall technical view of the major asset classes Bitcoin, Oil, Gold, Sp500, Yields, Dollar Index, Asset Rotations .

https://youtu.be/v60rLDyKvvw