The Investment Asset of the Century Makes yet another Comeback
Even the most ardent cryptocurrency bulls are probably slightly slack-jawed at this juncture and can hardly believe it. To be sure, many people were undeterred by the vicious bear market that saw BTC melt down from just below $20,000 in Dec. 2017 to less than $3,300 in Dec. 2018, but we doubt that even these steadfast believers in the grand-daddy of cryptocurrencies expected to see new all time highs in less than two years. Oh well…
Look who’s back from the dead…
BTC, weekly – who says a bubble cannot be resurrected in two years time?
The Lure of Easy Money
Right now happens to be an attractive time to do something stupid. What’s more, everyone is doing it. Maybe you are too. Stock valuations and corporate earnings growth no longer appear to matter. Why not buy an S&P 500 index fund and let it ride? Or, better yet, why not buy shares of Nvidia?
NVDA, weekly, over the past 6 years. The stock really started to take off after the 2016 election surprisingly brought an administration to power that was willing to cut taxes and roll back regulations. This vastly improved the competitive position of US-based companies in the world and boosted their profit margins. Other favorable narratives accompanied the rise of NVDA and other tech stocks specifically, such as the cryptocurrency mania and the increase in demand fostered by the pandemic. Add to that the biggest driver of them all – an unprecedented exercise in money printing by the Fed and other central banks – and a bubble for the ages emerged. And that is where we now are: in the greatest stock market mania of all time. [PT]
A Curious Development in Japan
For a long time Japanese stocks have been little more than a mirror image of the yen – they would rise when the yen lost ground and fall when it strengthened. This has changed rather noticeably of late as the chart below illustrates. Incidentally, the Nikkei has broken out over a resistance level that has held it back since early 2018. Whether this breakout will hold remains to be seen, but so far it certainly looks convincing (perhaps it will require a retest).
The Nikkei and the yen (weekly candles): in the middle of the chart the 60-period correlation between the two markets is shown (it ranges from “-1” for maximum negative to “+1” for maximum positive correlation). A strong negative correlation persisted for such a long time that it almost began to feel like a law of nature. Not anymore.
Autographing Funny Money
The United States Secretary of the Treasury bears a shameful job duty. They must place their autograph on the face of the Federal Reserve’s legal tender notes. Here, for the whole world to witness, the Treasury Secretary provides signature endorsement; their personal ratification of unconstitutional money.
Janet Yellen – first she got to print a lot of funny money, now she gets to autograph it. The Titanic meanwhile finds itself in uncharted waters and rumor has it that there may be icebergs lurking not too far from here. [PT]
Full Commitment
This week provided additional confirmation that America is fully committed to a program of currency destruction. Decades of terminal intelligence have gotten us to this special place. We will have more on this in a moment. But first some words on being fully committed.
Say hello to the provider of bacon… lots of bacon, in this case. [PT]
Prophet of Doom
In 1976, economist Herbert Stein, father of Ben Stein, the economics professor in Ferris Bueller’s Day Off, observed that U.S. government debt was on an unsustainable trajectory. He, thus, established Stein’s Law:
“If something cannot go on forever, it will stop.”
Herbert Stein, looking worried about the budget deficit. [PT]
Consumption without Production
“Every man is a consumer, and ought to be a producer”, observed 19th century philosopher Ralph Waldo Emerson. “He is by constitution expensive, and needs to be rich.”
Ralph Waldo Emerson (May 25, 1803 – April 27, 1882), who inter alia opined on consumers and the need to not only consume, but also produce. The latter activity has recently become even more severely hampered than it already was. And yet, government is spending like a drunken sailor. [PT]
The Sage Does a 180
The big news in the monetary metals is that Warren Buffett — famed disliker of gold — sold bank stocks to buy gold mining shares. What is interesting to us is not that we think he has any special powers to predict the gold price. After all, he famously bet on silver, and lost.
GOLD, daily, over the past two years. The Sage is a bit late to the party, but his entry confirms that the sector is now entering the “recognition phase” – the stage at which the investoriat-at-large realizes something is afoot. [PT]
Lockdown Disaster
It has been a rough go for California Governor Gavin Newsom. Late last week it was revealed that the state Department of Public Health had tickled the poodle on its COVID-19 record keeping. Somehow the bureaucrats in Sacramento under-counted new corona-virus cases by as many as 300,000.
Governor Newsom gesticulating his way through the pandemic… [PT]
Insulting the Captive Audience
This week, while perusing the Federal Reserve’s balance sheet figures, we came across a rather curious note. We don’t know how long the Fed’s had this note posted to its website. But we can’t recall ever seeing it. The note reads as follows:
“The Federal Reserve’s balance sheet has expanded and contracted over time. During the 2007-08 financial crisis and subsequent recession, total assets increased significantly from $870 billion in August 2007 to $4.5 trillion in early 2015. Then, reflecting the FOMC’s balance sheet normalization program that took place between October 2017 and August 2019, total assets declined to under $3.8 trillion. Beginning in September 2019, total assets started to increase.”
Directly below this note is the following chart:
Total assets of the Federal Reserve since 2008 – never-ending expansion (shaded areas indicate recessions) [PT]
Explosive Days in Silver
The silver market witnessed another explosive day!
At midnight (in London), the price of the metal was $26.90. By 9pm, it had rocketed up to $28.95, a gain of 7.6%. This is not normal.
But then, we are not in a normal world.
After several years of going nowhere and a downside fake-out in March this year, silver has come to life rather dramatically… [PT]
On Monday, Silver got Scarcer – and Simpler
On 23 July, we said:
The action on 27 July was not.
Silver spot price vs. September basis
Austrian Theory and Investment
Realtime Charts
Gold in USD:
![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/charts/metals/gold/t24_au_en_usoz_2.gif)
Gold in EUR:
![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/charts/metals/gold/t24_au_en_euoz_2.gif)
Silver in USD:
![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/charts/metals/silver/t24_ag_en_usoz_2.gif)
Platinum in USD:
![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/charts/metals/platinum/t24_pt_en_usoz_2.gif)
USD - Index:
![[Most Recent USD from www.kitco.com]](http://www.weblinks247.com/indexes/idx24_usd_en_2.gif)
