It’s All About Perspective

Considering what it has taken to get BTC back up here, the move is very impressive. However, there has undoubtedly been a lot of effort put in by a multitude of investment companies and private individuals who see a great future for these coins.

But is BTC the golden ticket to prosperity that we all want it to be? Well, if you compare it to gold, which many disciples of cryptocurrencies like to do, BTC, for all its strength, has greatly underperformed gold, which is currently around 25-30% higher than it was at the same time in 2021.

I must admit, no one knows where BTC will go this year, but commentators are going to talk it up, come hell or high water. But if you are looking for something that is “real” money, a holder of value, and a real hedge against inflation, it can only be Gold… and it has only ever been Gold.

As I see it, we have seen massive amounts of positive news hitting the BTC arena, and I am sure we will see more, but it’s a speculative asset bolstered by those involved; it is not an asset we can justifiably claim is a hedge against inflation. Not yet anyway.

As I learned to my cost recently, throwing money into the rampant Cocoa Market, it would be foolish to go against a market with such strong underlying fundamentals. But there is a real shortage in that tangible commodity, and its rise has come because there is a shortage of a consumable product. How long that rally can last is beyond me, but higher prices are here to stay for a long time. Perhaps not the current high prices, which are seemingly being fueled by massive amounts of speculative interest, but any chance of seeing values return to where they were before Cocoa prices took off is zero.

Even if they start planting more trees now, it will take 5-8 years before any meaningful new production comes online.

But it’s not only Cocoa and Gold; Oil is also reaching unwanted high levels. And we could see this persist for a while, or until Trump gets back in the White House and goes on his “Drill, Baby Drill” drive, which would seem the only tool he has to get the US economy moving again.

As I have mentioned a few times over recent months, commodity prices look like they are firming up, and this is not good for consumers, and its effect on inflation will probably be exactly what we do not want or need. That means equity traders need to be very cautious, even if they have been successfully “cherry-picking” AI stocks.

For what it’s worth, I have been relatively positive towards the dollar when it comes to EURUSD for the past 6 months, and I am expecting a breakout from the recent range to be towards the downside. Being based in Euroland, this doesn’t exactly please me, and I hope I am wrong. But God only knows what the ECB will do if or when inflation returns.

If you want a guarantee, then I guarantee, whatever the ECB does, the people of Europe are going to suffer more than their American counterparts.