The Bitcoin Barons, Silver Bullets, And Gold Moguls

By Dr. Chris Kacher of Hanse Digital Access on Altcoin Academy

Awestruck Ag Au

It should come as no surprise that after nearly a decade of noisy non-action in both gold and silver, we found ourselves issuing reports to members as both staged strong pocket pivot buy points earlier this year.

There Are No Coincidences

One might ask why after all this time both precious metals find themselves in legitimate uptrends. Both metals hold their value in times of crisis so are considered fear trades. Bitcoin too as the correlation between its rise in price and various global crises can be seen in this report. Of course, there are other major tailwinds that have propelled the price in bitcoin from an average price of $0.001 back in 2009 to more than $10,000 today. Said another way, if you invested $1 in bitcoin in 2009, your investment would be worth more than $10 million today. Nothing in the history of speculation even comes close over its decade-long lifespan.


But perhaps the mother of all global crises is one that has been brewing since late 2008. While profits leading up to the great crash of 2008 were privatized, losses were socialized among all the taxpayers. Then to add insult to injury, the greatest legalized Ponzi scheme was launched. No, not bitcoin. XD

Yield Curve Inversion

The recent inversion of the yield curve (not shown in the graph below) does not guarantee recession as, since 1955, it has inverted twice without being followed by a recession as shown in the chart below. In other words, it has predicted 9 out of the last 7 recessions.

1930s = 2010s ?

All of the following happened in the 1930s and in today’s world:

  1. Government tax revenues are insufficient to cover the major debt and non-debt obligations such as healthcare and pensions.
  2. Record levels of populism where large wealth and political gaps are producing political conflicts around the planet between the rich and the poor, between capitalists and socialists.
  3. The rise of an emerging power, China, is challenging the existing world power, the U.S., which based on growth trends could lead to a change in the world order.
  4. The expected returns of more than $17 trillion in bonds are below that of cash.

Why QE May Fail

We are in the late stages of the long term debt cycle which typically runs roughly for 70–80 years.

  1. Buying assets with printed money eventually fails to produce any real productivity as the capital stays in the hands of investors rather than benefit the economy. Real profits are thus diminished. Meanwhile…
  2. …debt keeps piling up. Without adequate profits and tax revenues, governments may default on their debt obligations such as with the massive healthcare and pension platforms.

Long Term Favorites

While markets can change on a dime as many variables play a role, the equivalences between the 1930s and today’s world show some of these trends can continue. QE has a limited lifespan but could continue for yet at least another couple of years if not longer. Meanwhile, rates go lower. Stanley Druckenmiller among other notables has placed big bets that the Fed will have no choice but to lower rates all the way down to 0%. That is only eight 25-basis point rate reductions away as the current target rate stands at 200–225 bps.

Precious Metals

As for precious metals, the uptrend in gold that began on October 2018 is likely to persist given QE, recession fears, Brexit, and the trade war. This means silver should continue to play catch up as we have discussed in prior webinars. 3x ETFs will disproportionately benefit. Even when gold went sideways for 4 months in 2016 in the middle of its uptrend as shown in the charts below, JNUG and USLV still outperformed on a greater than 3:1 basis compared to their 1x equivalents. Of course, the 1x junior gold miners ETF GDXJ may be the safer choice in the event gold trades sideways for more than a few months as GDXJ being 1x would not degrade in such an environment.



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Hanse Digital Access, KJA Digital Asset Inv. & VSI

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