Breaking News! A possible Large Scale US Military Intervention in Mexico Brewing

Alicia Badilla By Alicia Badilla, 11th Oct 2011 | Follow this author | RSS Feed
Posted in Wikinut>Business>Investment

What if you wake up tomorrow and see that the US Military has initiated a large scale intervention in the growing conflict with the Mexican Zeta Cartel? This is what my source has guaranteed will happen within 6 months unless another bigger event happens that could take the attention away from the joblessness in America.

My Source and how to make a cool hundred million dollars in 4 months.

By A. Badilla October 11, 2011

I have just gotten of the phone with my source who has worked on projects that require a TS-SCI US government clearance and I was informed moments ago that the likelihood of a war type event involving the US Military has an almost eminent chance of happening within months. Mexico's Zeta group being the most likely target. I have received information from this individual on three other occasions and so far with a 100% track record. He thinks the story about the Iranian plot to kill a Saudi ambassador was fabricated by the CIA to draw attention towards Iran and give the US an excuse for military intervention in Mexico. So I ask could this make an investor a cool hundred million?

My initial thoughts on that question lead me to one commodity: Gold

The March 1900 American Call Options were listed today at just under 5,000 each on the CME Groups website. The CME Group owns the New York Mercantile Exchange where these options are traded.

If someone wanted to make one hundred million dollars he or she would need to invest in 4,000 of the above contracts which are attached to a standard 100 ounces of gold each. The $1,900 March Gold Call Options I would have bought today have an expiration date the 3rd week of March 2012.

There are 2 ways of making money here. One you sell before the value of gold hits your $1,900 strike price and second being you sell after the market hits your strike price. The first has several possible outcomes and is called making money in premium which would mean the 4,000 contracts you reserved at the push of a button today could be worth more tomorrow if gold moves rapidly up in value. Good thing about options are you can always get a quote from the exchange to get out at anytime. I see the prior days open interest on this particular contract were just 9 contracts! Just nine. Pushing that up to 4,000 would probably make the news as did a 50 million dollar purchase earlier in 2011 which was spread between different strikes ranging from $1,800 to $1,950. You don't have to reach your strike price to sell. Most out of the money option contracts are sold by traders well before underlying asset reaches the strike price.

Options are extremely complicated and are thus not an exact science but as a rule of thumb and taking into account how the premiums for this type of gold option contract have been behaving over the last month or so, if gold were to jump up a hundred dollars within the span of just a day or two within the first week of purchase, that could push the cost of each of those contracts up to 7 to 8,000 dollars each which may allow you to sell out at a 6,000 to 7,000 range accounting for the spread if you decided to hop out that early pocketing a profit calculated at 4,000contracts multiplied by 1,000 to 2,000 each or about 4 to 8 million dollars or 20% to 40% profit respectively. That would put the price of gold at about $1760 with still four months of time value remaining and about 140 dollars out of the money. Here is another scenario, lets say gold gets a slow start out of the gate and makes steady progress towards $1,900. If we see gold jump up to lets say the $1,885 level before the end of November that could put the price of those options up to let's say the $10,000 or more more mark taking into account time decay and my judgement on how these type of premiums have been behaving under present market conditions. The ideal scenario is a very likely one in the opinion of many analyst who are predicting new highs in gold over the next couple quarters. If gold hits 2,200 before your expiration date you've made a cool hundred million. Take the 400,000 ounces you have reserved at $1,900 and multiply the $300 value gold reached above it and you get $120,000,000.

The key to doing this right would be to move in on a day like today where the implied volatility (a measure of the traders expectations for there to be volatility) has taken a chill pill and the premiums are not as expensive thus your trader can get a closer strike. You also want to take a look at the prices from a fundamental stand point to make sure your not paying for froth. Europe just came out again yesterday and made promises to make promises to delay the debt problems. It is the second day of green for both US and European markets. Gold moved up in tandem with the markets yesterday the 10th of October 2011 and is slightly down today. Look at where gold has been over the last month and $1,900 just seams like a hop step and a jump away.

Lower your risk? The details of delivery are remarkably simple. You would need to meet the requirements declaring your intention to take delivery at the appropriate times and have on standby 400,000 multiplied by $1,900 or 760 million dollars to take delivery of the gold. Lets say this happens. It would be taking a step back but not off a cliff. Just hold on to your John S Mini Cooper trunk full of gold until your break even point and sell at $1,950. After fees; penalties, delivery, transportation, insurance, storage, brokerage, currency fluctuations, opportunity cost, you could look at the $1,950 - $2,000 as your saving grace. The idea that gold could at some point in the not so distant future trade around the $1,950 level seams to be a probabilistic event. Or alternatively you could sink a couple million into Price Waterhouse Coopers and have your own personal ETF licensed ready to go public right about the time your taking ownership of the gold and then it is just a matter of changing the ownership of the gold one investor at a time while your storage costs and exposure get smaller and smaller proportionately to your ETF getting bigger.

To qualify for a trade of this magnitude with someone like HB Group Panama an investor would need a liquid net worth of around 4 Billion of which he or she would be willing to tie up for a couple quarters and put at risk $780 million, $20 million of which would be in very high risk.

Timing is crucial but having a 4 billion dollar liquid net worth and a big pair of brass ones are the only necessary ingredients to make a cool hundred million over the next couple quarters.

Click Here to Read More Of Alicia Badillas Wiki Pages:
Don't Fight The Fed
The Buffet Rule Is Not Unfair

Outside Links: About CME Group


100 Million, Cia, Invade Mexico, Mexico, Plot Saudi Ambassador, Us Military Mexico Partnership

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author avatar Alicia Badilla
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I'm a Traveler/Writer/Investor At times I interview interesting professionals. Thank you for reading.

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author avatar Buzz
12th Oct 2011 (#)

Hmm...very interesting, Alicia.

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