I've always seen Bitcoin as Gold 2.0. Or Super Silver.
I wonder how gold bugs reconcile that everything has been going up while gold declined? How does that make sense if it's supposed to be an inflation hedge? Do they just resort to "manipulation" in the paper markets?
I wonder how gold bugs reconcile that everything has been going up while gold declined? How does that make sense if it's supposed to be an inflation hedge? Do they just resort to "manipulation" in the paper markets?
IMO, from a fundamental viewpoint, the U.S. dollar recently became positively correlated with the U.S. stock market - a relationship that hasn't existed in length since the 1990s. A higher dollar naturally pushes commodities (e.g. gold) lower. In regards to stocks, there are essentially two types of gold investors - inflationists and doomsdayers - who have arguably pushed gold past a sustainable trajectory in the last few years. Inflationists believe that stocks are heading higher alongside gold. Doomsdayers believe that stocks are going to crash as gold soars because of a lack of trust in the financial system. At the moment, the doomsdayer crowd is getting slaughtered and many are probably panic selling gold as stocks hit all-time highs as many are not only becoming optimistic but euphoric about the future. Many inflationists are also probably selling because inflation is still contained and shows no signs of increasing as Ben Bernanke shows more signs of tapering QE than expanding it. Apart from fundamentals, selling naturally begets selling when a market goes against one's viewpoint and position, and many have been caught on the wrong side of this trade. However, the extreme sentiment shift is pointing to, at least, a minor bullish reversal sooner rather than later. Once this dual supply is absorbed into the market (alongside speculative short-sellers), gold will probably begin following stocks and fading the dollar as usual. But, because of this recent rout of doomsdayers and inflationists, the gold market has probably regained some of its past safe haven status if stocks take a dive because everyone will once more expect Ben to continue QE instead of taper, and previous inflationists and doomsdayers will panic buy what they previously panic sold. It's typical for markets to reverse when everyone is on the same side, and today's market has definitely become a one-sided affair for stock market bulls. Furthermore, reversals typically occur when divergences begin to appear, and the dollar/stocks divergence definitely counts as a warning sign to stock market bulls more so than a new norm. I would keep a close eye on the NIKKEI, the yen, and popular carry trades in the coming weeks because they have led global stocks higher, and a reversal here would likely spill over into other markets.
From a technical perspective, well, you know where I stand, and it's a lot less complicated
Hope that helps,
