Here are the latest items and commentary on current economics news, market trends, stocks, investing opportunities, and the precious metals markets. We also cover hedges, derivatives, and obscura. And it bears mention that most of these items are from the “tangibles heavy” contrarian perspective of JWR. (SurvivalBlog’s Founder and Senior Editor.) Today’s focus is on Bitcoin, and its alternatives.
The proverbial Elephant in the Room is the silver-to-gold price ratio. When I last checked, it was an insane 81-to-1. That doesn’t match market fundamentals, industrial usage and recovery fundamentals, and certainly not Earth’s crust scarcity fundamentals. To me, this seriously out-of-whack ratio can only indicate a major economic recession or depression is ahead. This is because silver is more of an industrial metal, while gold is still seen as an inflation hedge.
If we start to see the silver-to-gold price ratio narrow before a recession then that is a huge red flashing light that says: World War III. And if we see the silver-to-gold price ratio narrow in the midst of a recession then that would signal either war or an incipient economic recovery. OBTW, speaking of price ratios, seeing spot platinum priced far below the spot price of gold is another indicator of a recession in the near future. “Good Times” economically are indicated by platinum selling about 20% over the price of gold.
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Take a look at this piece by Jeff Clark at GoldSilver.com: The Potential Big Surprise for 2018, and What It Means for Gold
Stocks tumble in biggest weekly decline since 2016 (“Dow Jones Industrials lost more than 1,400 points in the week…”) JWR’s Comment: Is this just another dip triggered by rising interest rates, or is this the beginning of a bear market? That is the $6 Billion question. All I know is that I now have zero stock or mutual fund exposure, so I can sleep well at night.
Cryptos (Bitcoin Alternatives):
To begin this section, I’d like to reiterate and clarify my position on investing in cryptocurrencies. I have an inherent mistrust of any investments that are intangible. I feel much better investing in something like a $20 gold piece or a Colt M1911 that I can hold in my hand. They provide an intrinsic sense of permanence. So all in all, I have about the same level of trust in cryptos as I do fiat currency. Deep down, I know that they both have a chance of reaching a big fat zero value.
With that said, I should also mention that Cryptos still make up about 5% of my liquid net worth. Since February, 2018, I’ve gifted to my children, tithed, and spent on tangibles about half of my Bitcoin. And I acquired nearly all of that Bitcoin before 1 BTC hit $50 USD. I’m also in the process of diversifying about 12% of my remaining Bitcoin holdings into other “long haul” cryptos, whenever their relative value ratios are favorable. (I’m a “buy low, sell high” guy in nearly every facet of my investments.)
Bottom line: It would be foolish for anyone to keep more than 20% net worth in cryptos, even during a secular bull market. And the market is still far from yet being in a perma-bull. It is more like an exuberant bull and a terrified bear both strapped into a roller coaster.
One concern the I have presently is that a lot of Bitcoin millionaires and billionaires have been hedging into stocks for the past couple of years. But being High Rollers at heart, a lot of them are doing so on margin. This means that if and when the stock markets tank, a lot of these contrapreneuers will have to meet margin calls. So that in turn means that they will be selling lots of Bitcoin, to raise cash, to cover their positions. Yikes. This could cause a brief collapse in the USD value of BTC.
Now, on to a few headlines:
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From the fine folks at Alt-Market.com: NSA Has Been Tracking Bitcoin Users Since 2013, New Snowden Documents Reveal
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Next, at CoinDesk: Bitcoin Will Be World’s ‘Single Currency’ Says Twitter CEO
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An academic study from John Hopkins, published by The Economist: Bitcoin or Ethereum? The Million Dollar Question. This article is dated, but the fundamentals haven’t changed. Be sure to take a look at Table 9 in this report.
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Nick Cunningham: North Sea Oil Has Escaped Its Death Spiral
Economy & Finance:
Stock market news from Zack’s. JWR’s Comment: Keep in mind that we are long overdue for a recession. (We are presently in the second-longest economic expansion in U.S. history.)
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Jim Rickards: Rate Hikes Will Kill Economy, Then Rate Cuts to Kill USD
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Why am I not surprised? Clinton Foundation Open Records Tax Return. 6% went to charity. Hillary kept 94%.
Do you want a tangible way to safely hold an intangible? Then buy one or two Trezor hardware wallets for your cryptocurrencies. These are very durable and cleverly designed. Because they use a proprietary positional mouse or touchscreen keypad mapping for keying in passcodes, they are just about invulnerable to most hacking, including keystroke logging! But of course only plug a wallet in to your Internet connect computer briefly, to conduct transactions. Otherwise, keep it disconnected! And of course store it in an EMP-proof Faraday Cage container of some sort. I use an old steel Band-Aids box, which is stored in my steel gun vault–for two layers of Faraday shielding.
SurvivalBlog and its Editors are not paid investment counselors or advisers. So please see our Provisos page for our detailed disclaimers.
Please send your economics and investing news tips to JWR. (Either via e-mail of via our Contact form.) These are often especially relevant, because they come from folks who particularly watch individual markets. And due to their diligence and focus, we benefit from fresh “on target” investing news. We often “get the scoop” on economic and investing news that is probably ignored (or reported late) by mainstream American news outlets. Thanks!