Those following me know that before crypto, I spent 15 years commentating on the Precious Metal markets – particularly, the macroeconomic factors influencing them (and legacy financial markets); and the increasingly blatant interventions of Central banks…via the “evil tripod” of money printing, market manipulation, and propaganda.
The problem is, that fiat currency is by definition a Ponzi scheme that MUST grow larger to survive – and do so, at parabolically increasing risk, without spooking the financial markets. In other words, Central banks MUST print more money to monetize bad debt and support increasingly overvalued stocks, bonds, and real estate – without catalyzing a return of the dreaded “bond vigilantes.” In other words, they must create more inflation – in turn, creating more debt and wealth inequality – whilst preventing markets from “discounting” it via lower stock and bond prices. I.e., the ultimate Catch-22.
It all started when the gold standard was abandoned in 1971 - enabling global governments to “run up their credit card bills” until the Ponzi PEAKED in 2000 and BROKE during the 2008 financial crisis - after which, financial intervention has become an increasing way of life, leading up to today’s ubiquitous, 24/7 presence. In other words, the ONLY reason financial markets haven’t crashed – and indeed, trade at record valuations – is due to Central bank money printing, interest rate suppression, and PPT intervention…in ALL major nations.
As I have written ad nauseum for years, Central banks’ Achilles Heel is rising rates, which is why they do everything in their power to prevent it - like the ECB and BOJ STILL maintaining interest rates and QE; and the Fed, for all its “hawkish” bluster, STILL holding rates near historic lows.
Well, the game is finally starting to fall apart – as fiat currencies the world round have been collapsing; while interest rates are rising; economic data plunging; and even the PPT having trouble supporting stocks - and in turn, housing, which is in the process of materially rolling over. Not to mention, burgeoning currency and trade wars – like the one between China and U.S. that threatens to topple the long-standing status quo.
If indeed a financial crisis is brewing; let alone, the inevitable “big one,” that causes fiat currencies to be DRAMATICALLY revalued, and debt DRAMATICALLY written down; where do you think investors’ capital will be drawn – particularly if SAFE HAVEN investing comes in vogue again, for the first time in a decade? In my view, the obvious answer is Bitcoin.
Sure, Central banks will ultimately step up their money printing – including the Fed, which WILL re-join the rate cutting and overt QE party. However, with rates already near all-time lows – having been held there for a decade, to no avail; it’s unlikely historically overvalued bonds will remain the “go to” investment – particularly when the aforementioned inflation fears are becoming an increasingly prevalent market risk.
As for Precious Metals, demand is at multi-year lows – and prices, all-time inflation adjusted lows…as aside from the for all intents and purposes irreversible dilution from “paper” gold and silver derivatives, Bitcoin is increasingly highlighting how superior it is to ALL existing financial assets – including fiat currencies and gold.
We’ll see shortly what happens…but from my perspective, holding Bitcoin in offline hardware wallets (like Trezors) is the best safe haven strategy imaginable. And if, by chance, the SEC approves one or more Bitcoin ETFs in the coming weeks – which may well happen – Bitcoin will likely, in short order, REDEFINE safe haven investing!
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When stocks crash, do you expect gold & BTC to dip initially?