Gold and silver rose today as the US Dollar weakened on the US Presidential inauguration day.
S&P 500 index (white) gains as the Russell 2000 (yellow) explodes at opening and then pffft.
Meanwhile, the 10Y Treasury yield sank as the prospect of Janet “Go Big” Yellen sank in.
Yellen: “Who me?”
President-elect Joe Biden is scaring the world to death with his $11 trillion spending fantasy coupled with his $2 trillion Covid stimulus package. And The Federal Reserve has a lot of printing to do to pay for Biden’s spending fantasies (that Speaker Pelosi will undoubtedly approve). All has led to US inflation expectations to rise to 2.11%.
Bitcoin has finally backed-off its meteoric rise just as gold has backed-off its meteoric rise back in July.
Bitcoin rose with Fed money printing but backed-off as money printing slowed. Note: The rapid rise in money printing was pre-Biden and largely due to Covid and government shutdowns.
Bloomberg Galaxy was down 7.5% on Friday while Bitcoin is down slightly today. ZCash is the big loser today with Monero as the only gainer.
But with Biden’s prodigious appetite for spending other people’s money, we can see fear in the eyes of taxpayers.
Cryptocurrencies are suffering a gut-punch. Bitcoin’s crash exceeded 20% since January 10th.
Today, the leading losers in the crypto world as Bitcoin Cash and Ethereum Classic.
but commodities are doing poorly as well. The biggest loser amongst metals are … Steel Rebar and Nickel.
Venezuela currently has an inflation rate of almost 2,500 percent, according to Steve Hanke. This corresponds to Bloomberg’s Cafe con Leche index of the cost of a cup of coffee with milk (or espresso with scalding milk) which is now 1.767 MILLION Bolivars in Caracas Venezuela (or 5,790% for the last 12 months).
In 2017, with the bolivar in freefall, Maduro vowed that the nation would create a cryptocurrency called the Petro, backed by reserves of oil, gas, gold and diamonds. The Petro launched in 2018.
The Washington Post economic reporter Matt O’Brien said that “The petro might be the most obviously horrible investment ever… The petro is about creating something useless – that’s why only foreigners can buy them, but only Venezuelans can spend them“.
Which brings me to non-Venezuelan cryptocurrencies or “electronic tulip bulbs.” Like the tulip bulb craze that swept Holland in the 1600s, cryptocurrencies are a highly speculative investment. Take a look at Bitwise, a cryptocurrency fund that trades at 197.392% Fund Percent Premium. Sounds more like Pennywise, the clown from Stephen King’s “It” franchise. It fell from $139 on 12/16/2020 to $60.39 on 12/31/2020. That is a quite a loss.
Bitcoin, for example, experienced a flash crash, but has rebounded.
But while Bitcoin is down, Ethereum is way up.
Cryptocurrencies have a place for processing, for example, financial transactions. Or oil transactions like Venezuela is trying to do. And if you want to play the volatility game, cryptos may be your cup of tea … or oil.
Call it The Fed’s Covid Blitz. The Federal Reserve expanded its balance sheet (red line) as a result of the Covid epidemic.
The US Dollar (green) has declined from 102.817 on March 20, 2020 to 89.937 today.
Since the end of November (pink box), Gold and Bitcoin (particularly Bitcoin) have surged.
Silver? Like Gold, it has rallied since the end of November. But Silver was beaten out by Bitcoin as well.
The big winner today? XRP! US regulator has charged Ripple over its XRP asset, saying it’s a $1.3 billion unregistered offering, not a cryptocurrency. And Ethereum is down slightly.
Speaking of Ripple …
