Bitcoin 2018, BEWARE the following Months… Let’s Not Forget SILVER!
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The broad equity market continued upward in January. Our gold miner related portfolio was up inline with that group. We describe below two particularly positive recent developments. The US dollar has recently been dramatically lower, in particular against the Euro, which represents the second largest collective economy in the world. We have written in the past that gold does not necessarily move inversely to the dollar, as many observers believe, since it depends on the time period one uses.
However, all other things being equal, a weak dollar helps rather than harms the price of gold. The question then becomes: They backed off that stance recently as they were attacked bitcoin beware of the following months lets not forget silver video certain pundits. Check it out on Youtube, minute in the presentation. Obviously, he is pretty directly saying that the US can no longer afford to support the worldwide economy at our own expense, implicitly blessing a lower dollar.
Also announcing similar plans are the Perth Mint in Australia, and the Sprott organization of Canada. We have written skeptically about Bitcoin over the last few months, which readers can access through our Search function on the home page. It seems more than reasonable to think that speculators and investors would rather own a cryptocurrency backed by gold than backed by NOTHING. Economics seems like such a complex subject, as represented by PHDs and pundits.
Some of you may remember Martin Zweig, a very successful money manager who made his name by predicting the crash. This has, as designed, inflated the bond and stock markets, keeping interest rates very low still negative on trillions of fixed income securities and elevated the stock markets to record highs.
Janet Yellen and other economists are mystified as to why all this newly created capital has not stimulated inflation in wages and groceries, ignoring the fact that inflation has been huge in the capital markets, real estate, art and other asset classes with the notable exception of gold so far.
Do not despair, however. Within a matter of months, the sale of securities by our Fed, and the reduction of purchases in Europe, Japan, China, and Switzerland, will create a year to year reversal of something bitcoin beware of the following months lets not forget silver video a trillion dollars, annualized, of buying power, and that will weaken the worldwide economy.
Of course the long term downside consequences will be even more dramatic but that is a story for another day. The bond market, with the ten year note still at a historically low 2. The youtube link below humorously summarizes the situation. Watch this video, more truth than fiction.
On Bitcoin beware of the following months lets not forget silver video 5th of this year I wrote an article about Bitcoin, which you can access below: After you have read the previous article, you can return here for my new conclusion. The price of bitcoin is several times higher now, but I stand by this article. While the number of bitcoins that can be created is presumably limited, which would therefore provide the long term value as a currency just as with gold over the last four thousand years the number of competing cryptocurrencies is not limited.
The general equity market was lackluster in August. The price of gold bullion firmed steadily through the month, endng up 4. Our gold related portfolio, largely driven by the performance of the mining stocks, outperformed on the upside. A weak dollar bitcoin beware of the following months lets not forget silver video not a necessity for gold and the mining stocks to go up in price but, all other factors being equal, should prove to be a positive for us. Please bear with our, longer than normal, discussion which provides a background on Bitcoin, then finally its relevance to gold related investments.
Currency is most often defined as a form of money, circulated through the economy and bitcoin beware of the following months lets not forget silver video as a medium of exchange for goods and services. The universal acceptance of gold, for literally thousands of years, provided credibility for the currencies that were backed by gold. It is just a question of time until the politicians of the day dilute the currency into oblivion as they try to satisfy their constituents.
The best known cryptocurrencies currently are Bitcoin and Ethereum. Look at it simplistically. Dollars, in the US, these days will have been severely depreciated. It is just a question of degree, and time before the newly issued currency circulates within the society. The proliferation of individual competing cryptocurrencies, as well as the enormous volatility in price of such currencies, by their very nature, invalidate these cryptocurrencies as predictable stores of value or units of exchange.
Nobody can know from one day to the next, let alone over months or years, what the purchasing power of Bitcoins or the others will be.
While the amount of governmental Central Bank digitally created currencies also have no limitation, at least the taxing capability allows the government to provide some sort of value to the currency after the ……… hits the fan. This discussion very much also relates to my conviction regarding the long term ownership of gold related assets as a store of wealth and potential medium of exchange. So one night in orhe was doing a segment on Bitcoin beware of the following months lets not forget silver video, which had just started to emerge, and he said: Just in the last few days it is becoming apparent, that, as crypto-currencies trade at new highs, governments, including China, are cracking down on their usage.
On the other hand, gold is being continuously accumulated by Central Banks including China, Russia, and many others, to the tune of hundreds of tons annually. Something is clearly going on here, so the question naturally becomes what to do about it.
Should you buy it and, if you buy it, how long should you hold it? A Currency is most often defined as a form of money, circulated through the economy and used as a medium of exchange for goods and services. The amount of notes currency that was issued by a government could grow as the economy grew, and the amount of gold mined, and then owned by the government, could grow proportionately. The fixed weight of gold exchangeable into the U.
The chartists could say that a base has been formed to support a major move upward. The gold mining stocks were up somewhat more, reflecting the operating leverage from the change in price of their end product. We talked last month about the steady increase in the monetary base that has been created by Central Banks worldwide, and that this financial experiment will undoubtedly end badly.
An increasingly dangerous corollary of Central Bank currency creation is the purpose to which those funds are put to work.
What is not well known is that Central Banks have been buying hundreds of billions of dollars of equities. The European Central Bank has been buying 60 billion euros worth of bonds monthly, and Mario Draghi recently announced a continuation A hesitancy to back off? These are serious amounts of capital being put to work in an increasingly dangerous way.
Stay tuned on this subject and, in the meantime, be careful out there. To access this content, you must purchase Website Subscription. You no longer have to be the last to know.
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