Hey There Income Hunters
For weeks, gold has underperformed relative to its historical indicators.
Gold is down 8% year-to-date, while CPI is up 200%
In the industry we have a term for this …
WTF?
Meanwhile, Bitcoin is up +43%.
Could it be that the Bitcoin market is now big enough to steal market share from gold?
It may very well be.
Bitcoin Bigly
Bitcoin now has a combined $2 trillion in crypto market cap and it’s open-source Lightning network continues to grow rapidly. The platform offers payments and data sharing, but the cool thing is it does not offer a separate token, which means it is not for speculation.
Nigeria, Guatemala, and El Salvador are all integrating the Lightning network into their local Bitcoin App. This solution has proved to be an upgrade from receiving payments from Western Union, and it comes without the fees.
Twitter (Ticker: TWTR) is considering integrating Lightning, as well. Square (Ticker: SQ), another company owned by Twitter CEO Jack Dorsey, has already integrated Lightning into its cash app.
Bitcoin Technicals
Bitcoin (Ticker: BTC) futures traded on the Chicago Mercantile Exchange (CME) held the 50-day weighted moving average and are trending higher once again.
Any pullback to the $40,000 area would be a great buying opportunity …
Without more serious regulations, BTC will make new highs before the end of the year.
Where Does This Leave Gold
I have said many times that Gold’s true value is as an alternative currency to the dollar, and other major currencies, more than as a hedge to inflation. In fact, I believe this now more than ever
The dollar is the tell when money will flood into Gold. Notice the Dollar Index (Ticker: DXY) and how closely gold has tracked DXY after Covid hit in March of 2020 …
The bottom line is, gold will ultimately soar when our global trading partners begin selling dollars and bonds because they realize the dollar is losing its reserve currency status.
Bring It Home
Gold and Bitcoin will coexist as two safe havens for a failing dollar and other weakening global currencies.
Once the meltdown occurs — though there’s no surefire way to say when that will happen — there will be massive flows out of financial assets into gold and bitcoin.
Gold will play a role in the transition to a new monetary system and when that notion becomes widely accepted (and it will) gold will do some catching up …
True #IncomeHunters are diversifying into BTC, GLD and miners because they, like me, believe there is a good chance the big rally in both could happen before the end of 2021.
Until then …
Live and Trade With passion My Friends,
Griff