Financial Analyst Doug Churchill Notes Correlation Between Kentucky Derby Purse and American Money Supply and Economy

Palm Beach, FL, May 6, 2016 (Newswire.com) - Doug Churchill is an equities trader and former IBM systems analyst with a love for numbers. With a background in financial analysis, he has spent the last 40 years parsing little-known patterns in the financial markets. During a trip to E.R. Bradley’s Saloon in Palm Beach, the owner of which had four Kentucky Derby winners himself, Churchill noticed a 1988 Kentucky Derby poster and realized the correlation of the data with the timing of the foundation of the Federal Reserve.

The Kentucky Derby, which runs this year on May 7, is the longest-running continuous sporting event in the United States, and with more than 150,000 attendance in 2015, also one of the most popular. The race is a 1¼ mile race between three-year-old thoroughbred horses with the top four finishers claiming a money prize. The prize structure is top-heavy, with the #1 finisher claiming almost 62 percent of the total purse. Churchill believes the Kentucky Derby has been one of the best indicators of economic booms and busts in history.

The story, Churchill notes, started in 1910 the year some of the biggest names in finance, from JP Morgan to Paul Warburg, met in secret at Jekyll Island to discuss the formation of the Federal Reserve. The meeting was held in secret for good reason. Most of the public at the time hated the idea of central banking in lieu of gold. But regardless of public sentiment, by 1913, the Federal Reserve was established. This lead to an increase in the money supply and paved the way for the unstable growth of the 1920s that would eventually lead to the great crash of 1929.

The year the Federal Reserve was established, the Derby prize purse sat at $5,850, where it had remained since 1898, having risen from the original prize of $3,050 at the inaugural Derby of 1875. Thanks to the creation of new Federal Reserve notes there was an apparent economic boom, and as Churchill notes, right in lockstep the Derby prize pool shot through the roof. In just nine years following until 1922, the Derby’s prize pool went up from $5,850 to $63,775. Then, after about seven years of staying relatively flat, the Derby prize purse collapsed along with the rest of the economy in the early 1930s. By 1933, the purse shrank to just $36,675, an almost perfect parallel to the losses seen in the stock market.

Currently, the Derby purse sits at around $2 million and similar to 1929, the prize pool has been flat for many years following a huge surge in the early 2000s. And, just like in 1929, the U.S economy, according to Churchill, has been witnessing a period of unsound economic growth brought by Federal Reserve actions of quantitative easing (printing money).

“From the Wall Street trading floor to the Kentucky Derby, every single institution in our society is effected by the reckless actions of the Federal Reserve and our country’s leaders,” says Churchill. “This year, most Kentucky Derby-goers will have nothing on their mind but fun, sun and maybe a chance to gamble. It’s too early to say now, but maybe this year, before they head out to the races, it might be a good idea to stock up on some gold.”

For more information about Churchill and his Federal Reserve and Kentucky Derby correlation, visit LongShortFlat.com/Derby.

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Source: LongShortFlat