20200726 GSB LINK

My thesis from my last post remain unchanged. The best way to protect yourself from the coming economic storm remains Gold, Silver, Bitcoin and Chainlink (LINK).

I’ve not posted to this site in months. I’ve engaged in significant self reflection on the posts I’ve made and the opinions I’ve shared with friends and family that there was no way that the broad stock market would have a “V” shaped recovery. It did. I was undeniably wrong! What went wrong? Why was I so jacked up?

Made the third classic blundere. The first two blunders can be found here: https://www.youtube.com/watch?v=7LUUk6wVNrY

The third blunder is “Do not fight the Fed!” I think the validity of that rule will soon be suspect- but for now, it holds true.

There is a reason for the “V” shaped movement of the stock market- its false. It is based in digital dollars created out of thin air and the proclamations of the US President and the Fed Chief to do what ever it takes to prop up the stock and bond markets. The right side of the “V” that began in April is of almost the exact angle as the growth of both the US Debt and the Fed balance sheet combined. So yes! The market has scorched higher. Not due to economic activity by due to artificial and temporary intervention.

There are NO underlying fundamentals pushing the market higher- the only thing driving this nonsensical rally is the idea that somehow the US Government and the Federal Reserve have become the ‘Greater Fools.’ Why not push Tesla $1000 higher than what Elon Musk said in Feb 2020 was ‘fair value’? Why not? If the USG is going to flood the field with cash and seemingly remove risk! Tesla is not a financially viable company! But, since early April, its been a fantastic stock to own. The disconnect between reality and what has really happened dollar wise to many equity assets will soon stop diverging.

The US economy is in contraction. COVID 19 in the US has been incompetently managed. Perhaps that is too generous. The fact is that COVID was never managed as a National Response. Scientists were ignored and the entire disease somehow managed to become politicized by the Idiocracy that is modern US body politic. All the while, the Government is printing money like drunken fools. The underlying assumption is that the USG will somehow manage to get this right and the economy will resume as it usually does after recessions. That is an IF that I cannot abide.

I anticipated that between 2027-2030 there would be a shift from dollar dominance of world trade to a new global reserve currency. I suspect that shift will be much sooner- if not already starting. Why on Gods Green Earth would any nation trust the US to manage the Reserve Currency, when the vast majority of the Citizenry and the institutions of the Federal Government have quite clearly gone mental?

The polarized incompetency of the US ruling class has created the conditions for Nations that are not totally financially incompetent or as looney as the U.S.A. to seek a new form of reserve currency that is divorced from the USD and all the baggage of Washington DC. Most Americans do not understand (and will not until its lost) the significant global advantage it has enjoyed as the Reserve Currency since the end of WWII. Losing that status will impoverish most.

Not sure what that new Reserve Currency will be. I suppose nobody is. I suspect that a legitimate Free Market will decide that issue. So to hedge the bet- a little bit of old and a little bit of new… Gold, Silver, Bitcoin and Link are the best bets moving forward. The Fed and insane amounts of stimulus can only go so far- and those opiods will lose potency sooner than later. This fall is going to be ugly. Bears make money, bulls make money and pigs get slaughtered. This fall, its doomsday for the pigs. If you were smart enough to run this artificial “V” up to these levels… don’t be a pig. Take some of that and GSB-LINK that cash to an asset class that might survive the pending Reckoning.

200510 BTC Crash!

The recent run up in front of the “Halvening” has been notable. That said, I am not a big believer in these events. Bitcoin has inherent value. There are cheerleaders that over emphasize this. There are Eeyore’s that want to ignore the obvious. My take? Anyone that doesn’t own one half or more of a Bitcoin is making a major mistake! Stop looking at the news and the charts! Live life! Do your thing. Let BTC do its thing. Look at it in 2022. Don’t sell unless you are desperate and need some Fiat.

20200229 BTC Update

While Bitcoin remains in an uptrend, it is under severe pressure and has violated its trend and the expected counter trend consolidation. So, its bias is bullish, but with its well documented ability to lose huge percentages of its value very quickly, its currently a dangerous short term play to go long.

Full disclosure: I have a position in BTC in cold storage that I never consider trading. HODLers hold. Its what we do. Posts on this site are focused on shorter horizon trading aspects that may or may not get confirmed by future price action. God knows, not me. I was very surprised $9150 was violated, for example.

20200229 Fearing Fear itself

My thesis is that COVID-19 is an awful flu that is feared more for its unknown impact to the economy and everyday life than the actual disease impact itself. My approach to investing in this chaotic period is towards the bottom of post.

Markets hate uncertainty, and there is no historical model available to attempt to model the potential impact of this form of Coronavirus. Latest data suggests that container ships arriving in China was down 30% compared to same month last year. China is the worlds builder of “stuff”, and the US its best customer. The movement of that ‘stuff’ is clearly dwindling rapidly- which portends a significant global slowdown.

Lets look at rough numbers:

MarketChange from latest high:Why?
Dow Jones Industrial Average-13.80%Fear of unknown
Nasdaq Composite-12.50%Fear of unknown
Asia DOW Index-10%Fear of unknown
Nasdaq Europe-12.80%Fear of unknown
   
Gold-5.30%I don’t know
Silver-12.20%Fear of industrial demand drop
   
Bitcoin-19%Declines started before COVID Panic hit full force. Unknown why it hasn’t reversed. Seems to be a “sell anything with a Ask/Bid mentality”
Ethereum-23%
XRP-36%
LINK-15%

In theory, as the global markets turned south, Precious Metals and ‘Digital Gold’ should have appreciated in value. What we are seeing in all markets currently is a flight to liquid fiat. Concurrently, markets are expecting a Central Bank global intervention reducing interest rates. The world is already awash in paper money and its derivatives! No form of currency has ever cured a disease! This is a nonsensical, “lets do something to look like we are doing something” self distructive trap.

As indicated in Para 2, the world might be facing a Supply Shock of goods. Last one I remember was the 1973 Oil Embargo, the 1979 Oil Crisis and then the impacts of the Hunt Brothers trying to corner the Silver market in the late 1970s. Supply shock brings panic and reckless behaviors out in the most rationale of people. A supply shock in tandem with a flood of paper money is a recipe for an inflationary spiral. If inflation gets out of hand, most of the governments of the world to include the US will face an existential crisis. A huge portion of the US debt is in short term notes, so inflation will significantly alter its ‘refinancing rates’. A spike in inflation may become an existential crisis to fiat currencies on a global basis.

My ST investment Equity Market Strategy is to maintain my SQQQ and TECS (inverse ETF) positions. The market should bounce up before falling further and setting a bottom. This is not a time to be hoping for a “V” shaped bottom. It won’t happen. If you are not currently Inverse, its prudent to wait for a move up before betting on further drops. Assume that this weekend that all the global financiers and bankers are trying to plan a market intervention intent on pushing indexes up in order to soothe fears. I expect a move higher in equities starting Monday. Due to the never ending stream of bad news / COVID-19 Panic, that may not work.

My ST Precious Metals Strategy: (not physical here- market related assets like SLV, GLD, PAAS, JNUG, NUGT). I was stopped out of all of my PM positions in last 2 trading days. Gold: Anticipate continued weakness. Silver: Expect heavy short selling. Remember that in 2008, $SILVER futures were pushed down to $8. If silver gets anywhere near that level, I am backing up the truck & going all in.

Crypto: Wait and see from the sidelines. Will do a BTC, ETH and LINK update this weekend. Crypto is a hopeful asset, in that these assets are not fully established as legit and for the average Joe to put hard earned money in this seems a gamble. Since average Joe is getting more fearful by the day- lets assume that new money will be unlikely to enter this space in the short term and what we will be seeing is mostly current participants trading in and out of fiat in a zero sum game against each other.

BTC price projection 2/10-2/16

Bitcoin is executing an orderly uptrend. In the near term there are few red flags indicating a downtrend might emerge. Also, there is no evidence that a “moonshot” or parabolic spike is in the making anytime soon. That is good news. There are an increasing number of BTC bulls that are convinced that the next spike is imminent- at least according to a scan of YouTube click-bait.

The case for it not spiking and continuing to stair-step is that this is sustainable. The longer it is sustained, the better a launch pad it is for the next spike. In the last few weeks of the 2019 rally, BTC shot up 65% from $8k to over $13k. Not a parabolic spike, but a huge move. Problem was, it started from $8k and ran out of steam. If BTC had a 65% move from its current price ($9857 (02/10/20 UTC:1700)) it would reach $16k, which is a major resistance zone. Again, it would probably run out of steam and fall. Ideally it climbs past $13k before having a large gap- up. That would likely be sustainable rally to a new ATH.

I suspect BTC will again suffer a parabolic spike, probably in the next 12 months. It will happen probably like the last time- driven by FOMO once it rises significantly above its last ATH. Be aware- based on historical pattern its likely to hit a new ATH at least 20% above previous and then trend sideways / sightly lower for 3-9 weeks while it consolidates gains.