Approximate spot prices
Gold: $1,350 per paper ounce
Silver: $18.00 per paper ounce
Bitcoin: $4,200 per BTC
Ethereum: $300 per ETH
August has been a busy month of travel, celebration, and relaxation. Geopolitical and financial events have continued to swirl. The tempest continues to stir. I’ll be commenting more on these topics in upcoming episodes of The Amateur Society and On the Objective, so make sure to check in with the YouTube channel to stay up to date (https://www.youtube.com/channel/UCYWArNcoTCBRxeoTJWvcc9Q).
I was on The Hagmann Report last month and mentioned that the atmosphere following Charlottesville could have lead to a toxic situation where the debt ceiling and government funding discussions created serious financial friction coming into the fall. Needless to say, that didn’t turn out to be accurate. President Trump crossed the aisle, brought on some Democrats, and got a deal done. Whether you think Trump truly is the master of negotiation, the king of debt, or the head of a captured operation, this move caught many off guard. We’ll see more of its significance as events unfold, but there is certainly more pressure on Congressional Republicans than there has been before. 2018 midterms seem to be the target of this action and others.
Another major item that shouldn’t go unnoticed is the announced and now impending resignation of Stanley Fischer prior to the end of his term as Vice Chair of the Fed. The explanation was vague – “personal reasons” – and many see the timing as indicative since he was due to complete his tenure in that position next summer. This leaves a quadrillion dollar question: why now? Because many have identified Fischer as a crucial decision maker at the Fed, there is now intense speculation as to what his resignation portends. It is a significant event any way you slice it, but whether it implies an imminent shake up still remains to be seen.
There will be time for a more detailed breakdown of the latest outrages, hypocrisies, and blowups, but for now let’s try to avoid some of the distractions and check in with some of our preferred assets.
After several months of boring, range bound action gold was finally allowed to break out above the $1,300 level and gained some steam above that level. To see a $1,400 price would be interesting in part because in the few years I’ve been following gold seriously it’s never traded up that far. Accumulating during the dips has been a solid strategy. Despite strong technical action I wouldn’t be surprised at all to see gold get back down to the $1,300 level in the near future to set support for the next leg up. The headlines out of North Korea and Washington have been moving the needle, and there are many stealthier developments happening around the world to consider. Potential deals between Saudi Arabia and China could hold massive significance as we near the inevitable end of the petrodollar regime. When will the last nail in the coffin be struck? My advice is to avoid trying to time everything perfectly – a fool’s errand – as you will be consistently disappointed. The safe play is always to accumulate sound money and real assets on a consistent basis.
Silver spent a lot of time at the $17.00 level before scratching above $18.00 recently. Anything below $20.00 is an absolute screaming buy, and you’ll notice that the trend has been up ever since the weak hand flush down to the low $14.00 range. What lovely “markets” we have here. This is yet another reason why accumulating physical is the best and safest way to deal with the precious metals. If you’re trading or holding paper contracts and behave responsibly with stop loss orders, you can get absolutely hosed. Having the stomach or the speed to buy back in is a rare merit indeed, and occasionally it will simply put you on tilt. I’m frankly amazed that we still have buying opportunities at these prices. Take advantage of them and continue to accumulate and rebalance as your income and savings allow.
Bitcoin almost tagged $5,000 recently. This spectacular price action led to calls for everything from a further runaway moonshot to a massive bubble ready to cave in. Then China came in and stepped on the brakes twice, putting the ICO market under scrutiny and cracking down further on exchanges. A couple sharper selloffs occurred, but in my view it was about time for another 20-30% correction anyway. People who haven’t spent much time looking into blockchain technology and the cryptocurrency space – and even many who have – continue to point to the actions of the PBOC as risky for cryptocurrency holders. They are accurate to some extent. If you are one of the many ICO scammers, pot shot speculators, or dubious exchanges, then your business and investment models are under pressure. If you are a passive holder of the major cryptocurrencies, then you want honest exchanges and a better noise to signal ratio in terms of the ICO market. Most of the coins and tokens that are currently available won’t (and shouldn’t) be around five or ten years from now. Cryptocurrencies are going to continue their barrage into public awareness regardless, and enthusiasts should welcome both a pullback in price and better-regulated and structured markets. Note that this has happened many times in just the past year. It typically turns out that the best time to buy is whenever there is a loud cry that bitcoin is dead.
Well folks, it looks like the double top is in and now that ethereum failed to get back above $400 it’s going to $0. Right? Not so fast to the chartists and technicians out there. We are in an atypical time of transition, and technical analysis is largely subjective and somewhat dubious at best even in normal times of steady price action. Watch for continued wild swings. I have some alerts set and would appreciate another chance to scoop up some more ethereum closer to $200. We could see those prices, but perhaps not for too long. A crackdown on the current ICO landscape is likely warranted and necessary, but it should pave the way for stronger and better innovation in the space. There has been a great deal of effort and energy expended into scamming people out of their ethereum in wacky ICOs in the past few months. We’re still in the wild west phase, so the safe play continues to be accumulating on the big dips while waiting for the continued adoption of the new technologies enabled by this architecture. Play the game at your own risk, and always do as much homework as possible before committing capital to any venture.
Now is an excellent time to take an inventory and assess what you need to do in the face of uncertainty and potential turmoil. There is a path through these times, but it won’t be for the faint of heart. Get your house in order at all levels.
Disclaimer: These are one amateur’s fallible opinions. Holding any asset is risky, so do your own research and make your own investment decisions.