Economic Hell in a hand basket, and lying in the center is the savior Bitcoin.
So, Gold is on a run — the gold ETF GLD is up 17.67% since the start of the year.
Yet Bitcoin is up 305% in the same period.
Gold is the original Crisis Coin, something you buy when the world goes to hell, like when Central Banks pump more money into an already inflated system in order to re-jumpstart the economy, while simultaneously destroying your savings.
Destroying the value of your savings is not a bug, it’s a feature. This forces its citizens to get out of savings, and into stocks, businesses, anything besides the filthy lucre destruction by a Central Authority.
What they don’t want you to do is to hedge by buying gold.
Buying and storing gold does nothing for juicing the economy. They’d rather you left the gold buying for the Nation States. Meanwhile, as they are pumping more money into an already over-inflated world economy, the largest countries are also buying tonnes of gold.
The four biggest central banks (US, Japan, UK and EU) have added over 9 trillion inflated dollars into the world economy. At the same time, the World Gold Council reported that Russia bought 274 tonnes of gold last year. In the first quarter of 2019, Russia has bought 55.3 tonnes for an annualized 221.2 tonnes. China bought 33 tonnes over the same period for an annualized 132 tonnes.
The strategy is de-dollarization, or to unseat the dollar as the lingua franca of large national purchases, mainly petroleum. Gold, as the original decentralized asset, suits their plans perfectly.
Well, almost perfectly: better with Bitcoin.
What better strategy to de-dollarize the world economy than to use the fancy whizbang geek money of Bitcoin? It’s already worth 11,000 times the US Dollar, available for purchase worldwide, with no single nation controlling its supply. Uninflatable, and nigh well endangered, as its fixed supply of 21 Million is more like 17 Million once you account for lost keys, frozen funds from hacked accounts, and deaths with no estate planning.
Crisis on the horizon?
Perhaps China and Russia also see, besides the undollaring of the world, is gold as a hedge against worldwide runaway inflation.
Add more money to the system leads directly to inflation. And runaway inflation is something that is abated through higher interest rates. Yet, seemingly ALL countries are now inflating their currencies, while simultaneously reducing their interest rates into the negative, so what’s the consequence?
Well, just last week Argentina experienced an Argentinian peso collapse of 30.3%. Its stock market collapsed 37%.
Argentina even raised its interest rates to an unprecedented 60% in a desperate move to shore up the value of the Argentine Peso.
Raising interest rates to halt currency devaluation is a theory. We’ll see just how this plays out in real time.
This does not signal a corresponding plunge in the US stock market, as the ocean of inflated dollars need to go somewhere. But this does signal another round of inflation without the corresponding control of increasing interest rates. And now, negative interest rates are a thing, with Sweden, Denmark and Japan leading the charge.
In fact, Danish and Japanese banks are charging customers for the privilege of having a savings account.
This is the first time in recorded history that all nations currencies are not backed by anything other than the faith in the governments themselves.
This is the first time we have seen negative interest rates.
This is the first time a decentralized currency (Bitcoin) has been introduced, that is also programmatically limited in quantity, unconfiscatable, and sovereign by individuals rather than nation states.
This is the first time the supremacy of the US Dollar has been realistically challenged by the BRIC countries (Brazil, Russia, India and China), through divesting US treasuries , buying gold and the undollarization of crude purchases.
Undollaring the Petrodollar
Luckily the US still has allies in Europe, right? Well, with the rise of Trumpian actions of cozying up to North Korean dictators and Saudi Royals that assassinate US journalists, Europe is waking up to the stunning realization that it can no longer trust the US.
Looking at the Trump photo ops with dictators and tyrants, behind the scenes the very same dictators and tyrants are buying up gold as if it’s going out of style. And Oil trading is no longer conducted in US Dollars anymore. In March, China just introduced oil futures markets denominated in the Yuan.
Trading volumes for Shanghai’s yuan-denominated oil futures have already overtaken those of the rival Dubai Mercantile Exchange and sometimes come close to those of North Sea Brent, an international crude oil benchmark.
With US Sanctions against Iran and Russian oil, what’s a European Union country to do? With the risks of the Petrodollar hegemony, even the EU is looking at an EU denominated price for crude oil.
Reading the Tea Leaves
One: Re-inflate the slowing economy through pumping dollars into the system.
Two: Lower Interest Rates into the negative.
Three: Undollar the Petrodollar.
Four: Massive Gold buying by BRIC countries.
Five: Dump US Treasuries.
Six: Introduce a new decentralized currency with a fixed supply not controlled by any nation state.
Looming inflation and economic slowdown combined with worldwide conflict with the rise of BRIC countries and European distrust of the US as a stabilizing influence, and what do you get? Everything is still in flux with no hard conclusions reached, but Gold is rising as the trend for worldwide economic conflict unfolds.
And now there is another crisis coin with perhaps better qualities than gold as a hedge. With the price of gold rising, and Bitcoin’s price rising even faster: is this a signal of a new Crisis coin in town?
1 tonne of gold is worth $70.73 million dollars, and Russia alone bought 274 tonnes last year, and is on track to 500 tonnes for both 2018 and 2019. That’s about 1/5th of the entire market cap of Bitcoin.
With Bitcoin acting like gold on steroids, add China, India and Brazil (oh, and the rest of the world) and the narrative for a jet fueled rise in the price of BTC seems to be a fait accompli.