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Precious Metals Disappoint As Bitcoin Explodes Higher

By Tim KnightCryptocurrencyNov 18, 2020 01:10AM ET
www.investing.com/analysis/cryptopal-200544975
Precious Metals Disappoint As Bitcoin Explodes Higher
By Tim Knight   |  Nov 18, 2020 01:10AM ET
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I’ve got to say, I am utterly annoyed with so-called “precious” metals. One would think that, at least in part, the forces behind the explosive rise in cryptocurrency values have the same effect on gold. Nope! Bitcoin, shown below, is exploding higher, whereas gold is just sitting around picking its nose. The metaphor is just as repulsive as gold’s lackadaisical behavior.

Bitcoin Chart
Bitcoin Chart

The interesting thing about Bitcoin is its Fibonacci retracement levels. I did a better job explaining myself on my tastytrade show last week than I did on the post on $BTC I did here recently, but my point about the Fibs is that, recognizing their role as support and resistance, the conquering of the 78.2% level cleared the way for an assault to the lifetime high, just below $20,000. That has taken place, so from what I can see, they have “cleared the decks” for an assault to that zone (which itself, if conquered, means the sky is the limit again).

Part of this, I’ve got to believe, can be credited to Paypal’s introduction of crypto on its own site, which obviously blows the doors wide open to any Tom, Dick, or Harry getting involved in the stuff. It has become a purely speculative vehicle. Why do they need to ever re-open Las Vegas with stuff like this available online?

Bitcoin isn’t the only game in town, of course. Ethereum ($ETH) is looking pretty spiffy too, poised as it is for a potential breakout: (Keep in mind, crypto charts are readily available in SlopeCharts with up to the second data).

ETH Chart
ETH Chart

Let me turn my sneer toward gold – – below is GLD (NYSE:GLD). Bluntly stated, its performance is poor, and that light blue support line is pretty much all that is holding it up right now. Break that level, 173.64, and GLD goes from lame to super-lame.

GLD Chart
GLD Chart

Precious metals miners are even more vulnerable. Here is the GDX (NYSE:GDX). Its corresponding support level is 36.01. Break 36, and blammo.

GDX Chart
GDX Chart

All of which explains my latest virtual position.

Virtual Positions
Virtual Positions

Precious Metals Disappoint As Bitcoin Explodes Higher
 

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Precious Metals Disappoint As Bitcoin Explodes Higher

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Brad Smith
Brad Smith Nov 18, 2020 12:07PM ET
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Even on the subject of GLD's insurance, they are not at all straightforward about it. Their representatives will not confirm nor deny the existence of GLD's insurance. I recommend anyone curious about this to confirm via calling GLD's publicly listed number for general inquiries at 866 320 4053 and ask about this clause from the GLD prospectus: "The Custodian maintains insurance with regard to its business on such terms and conditions as it considers appropriate which does not cover the full amount of gold held in custody." Exactly how much of the fund is insured? They will not give you a straight answer and might even throw in some bizarre excuse which I've experienced. Why hide this information from investors? The people behind GLD certainly do not seem like the most honest types.
Brad Smith
Brad Smith Nov 18, 2020 12:07PM ET
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"below is GLD (NYSE:GLD)" Tim Knight, you seem to have some familiarity with this gold fund. I've spent quite a bit of time doing my due diligence into GLD. Would you happen to know why there is a clause in the GLD prospectus that states GLD has no right to audit subcustodial gold holdings? The GLD managing organizations sure went out of their way to create this glaring audit loophole. What is the purpose of this loophole? Additionally, the GLD organizations promise that this fund is 100% backed by actual physical gold but yet they staunchly deny retail investors the right to any of their listed physical gold. I remember there was a highly publicized visit by CNBC's Bob Pisani to GLD's gold vault. This visit was organized by GLD's management to prove the existence of GLD's gold but the gold bar held up by Mr. Pisani had the serial number ZJ6752 which did not appear on the most recent bar list at that time. It was later discovered that this "GLD" bar was actually owned by ETF Securities.
 
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