Please note the political opinions expressed below are those of the author himself, and do not necessarily reflect the opinions of JP Fund Services AS.
Various markets have been very bloody strong this week, and whilst commentators obsessed over interest rates and employment figures and the government shut-down, investor sentiment remained defiantly positive.
Personally, I’m thoroughly enjoying watching gold rally, with my buried stash now worth over double what I paid for it. But there were plenty of other reasons to be happy, or at least happier than I’ve been for much of this year.
The natural pessimist in me says I shouldn’t be surprised if we see some corrections to the recent strength over the coming week or so. But my main cause for happiness? Trump economics appears to be working, despite all the negativity the mainstream media continues to shove down our throats. This week’s announcements on cutting the price on prescription drugs for all Americans is massive, with the Pfizer agreement being seen as positive for European drug manufacturers.
I also agree with Trump’s criticism of the Fed.
With the US economy doing so well, why shouldn’t they lower interest rates? The world needs American consumerism, especially when European consumption is stagnant. So, let’s lower interest rates and encourage a bit more spending. And damn it, when WTI Oil trades under 60 bucks, all of us will be better off.
Let’s face it: outside of those who’ve benefited from the increasingly bloated stock markets, few people have much to cheer about in recent years. Lower interest rates, lower drug costs and a bit of cheap oil might be just what the doctor ordered – at least for Americans.
Sadly, the same cannot be said for Europe, where there’s little growth, and citizens are being forced to fund obviously ludicrous socialist ideologies.
European bureaucrats in their Brussels bubble – or ivory towers – have enjoyed their unchallenged power far too long. But as we saw at the UN Summit, changes are well underway, and what that means is many are embracing common-sense economics rather than the unaffordable wastage of citizens’ money on wild dreams.
The Margin Call Reality
It doesn’t matter how “nice” your broker is, or indeed what your broker’s view is on your position – he’s not going to allow you to trade with his money, or on a promise you’ll pay him tomorrow.
Unfortunately, our governments have been trading with our money and promising us cream tomorrow for far too long – and have taken away our freedoms in exchange for these promises. But those days of trading with our money are numbered.
Something has to give, and I’d rather it be the money spent on failing government ideologies than our children’s wealth and opportunities.
The Gold Story Nobody Talks About
Gold is up because individuals as well as institutions realized long ago that the way the western world – indeed much of the world – was going meant the paper in which we were all told to trust had little value. It’s been almost 30 years since our banks emptied our gold vaults, and since then, everyone with the capacity to think for themselves realizes what a disgraceful, treasonous act this was.
And let’s not forget: whilst we sold our precious gold at dirt prices, since 2010 the Chinese have not only been buying gold for their own treasury, but they’ve consistently encouraged their citizens to amass gold to improve their personal longer-term financial situation.
It’s strange, but in this regard, it looks like the communists know more about investing than western bureaucrats and central bankers.
The Bitcoin Question
I’m sure the Bitcoin devotees will respond by pointing out the meteoric rise in crypto, and smugly tell you that BTC is vastly superior to owning physical gold. And to some extent, they have a point. I own both.
However, even though institutional holding has taken away some of the crazy volatility we saw a few years ago, public acceptance and usage of BTC has failed to reach the levels many prophesied back then.
I’m not suggesting that a renewed interest in cryptocurrencies won’t happen, nor am I suggesting cryptocurrency prices will collapse – I hold mine because of my fear about the introduction of CBDCs. But the outlook isn’t as certain as many suggest.
For example, this week’s comments from the BOE on Stablecoins, were more confusing than informative.
The HODL Hustle
I’ve poured scorn on those who continue to promote the concept of HODL, and although many have benefited by doing so, the higher the value of BTC goes, the more dangerous it appears – to me at least – that HODLing becomes.
Sure, I might be right or wrong about this. But I’ve noted too often recently that it’s the guys who own the most BTC – the whales – who are now the only ones promoting HODLing and warning smaller holders not to sell.
They may be right. But this isn’t my first rodeo. If I had billions invested in a speculative product, I’d be the last person to suggest people take profits at the higher levels. It wouldn’t suit my book.
The Week Ahead
Now, I like a bull market as much as the next guy, and there should be more to these rallies. But I’m mindful that European indices appear not as strong as those in the US, and as for gold and BTC, if we see some strength returning to the dollar, then both could see their values ease.
I like what we’re seeing, and I’m enjoying watching the markets go the right way. Let’s take full advantage of the current volatility and trends, but remember: the trend is your friend… until it isn’t!
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