So to begin, let’s go under the very silly and absurd thought that after eight years of worldwide QE (1-50), straight up financial markets, zero interest rates, central bank intervention/manipulation, currency wars/devaluations, pushing investors into riskier assets searching for yield………….well, on and on, WHAT COULD POSSIBLY GO WRONG!!!!!
“New normal” or complacency?
Now should any of these “unforeseen” developments decide to become more prevalent and market moving, where is the place to hide (safe haven) and, more importantly, make some money? Traditionally investors around the globe would, at the hint of market moving uncertainty, flock to GOLD (or silver) since there was not really an alternative. Gold, and the mining stocks, offered liquidity and was traded worldwide 24/7. Ah, but now there is an alternative, albeit a fledging one, and it is called BITCOIN (or digital currency). So far it is not quite as liquid as gold, nor is it as widely known (if you are over 30) but is available 24/7, more easily held AND it is getting a groundswell of new younger investors all over the globe. So which would be the better investment/trade/safe haven should any or all of the things in the first paragraph happen? Let’s explore.
We have just seen Japan stimulate more and the Yen did NOT go down. Hmmmm!!! Central banks lose control of their super experimental theories that have ceased working, investors decide to actually sell their bond holdings, interest rates unexpectedly jump, other investors that have crowded into the dividend stocks (and ETF’s, mutual funds, etc) start seeing their holdings GO DOWN and people start doubting their own currencies. WORLDWIDE!! Don’t forget the markets are on all time highs and the bull is eight years old. Oh my! Don’t jump off the curb.
Here is a thought & prediction:
– Gold $2,200 (up 63%) ($1350-8/17 pricing)
– Bitcoin $2,500 (up 435%) ($575-8/17 pricing)
So, which is the better “hedge”? Duh, BITCOIN. Of course based on my own proprietary gut feel.