I’ve predicted that a long period of deflation in the Western world would end with a Fed taper, rate hikes, and quantitative tightening.
That’s clearly in play now, and the deregulation of America’s thousands of small banks is perhaps the most exciting event taking place on this new “inflationary frontier”. Because of these powerful monetary trends, I’ve predicted big problems ahead for Wall Street and somewhat better times for Main Street.
Having said, that, I think investors would be making a major mistake to assume America is going to experience any kind of fabulous rebirth and relive an economic growth era like the 1950s, let alone the Golden Age of the 1880s.
The country now sports some of the worst demographics on the planet with horrific debt levels that are still growing under a president who is a spectacularly successful businessman.
What happens when President Businessman is replaced with President Socialist? Some sort of currency revaluation endgame is what happens. The problems of America and most of the Western world are not going to be solved with pump-up speeches, sporadic tax cuts, and insane “good guys versus bad guys” wars.
American GDP growth is going to continue to wallow at low levels while China and India blast into what I call the “bull era” at very high velocity.
Global investors need to make themselves great, and the blockchain/crypto asset class is one way to do it with style. I view blockchain as a sub-sector of the gold asset class. Importantly, blockchain trading is set to become more regulated very quickly.
Promoting regulation that doesn’t interfere with a market’s price discovery process appears to be a key goal of the Trump administration. It looks like new bitcoin regulation will be focused mainly on specific criminal schemes. That won’t stop the great upside price action taking place now on the legitimate exchanges. That price action is defined by great demand and rock solid fixed supply.
Institutional-grade trading of the cryptos is already beginning to happen, as demonstrated with the superb launch of fully regulated bitcoin futures on Sunday night.
The launch proved that institutional money managers view the $16,000 price area as solid.
My long-term price target is two million US dollars per bitcoin. At gublockchain.com I analyze the main cryptos that are ready for serious upside action. A week ago, I highlighted key currency litecoin at $100 for the gold community, issued a $1200 target, and showed potential subscribers a solid-looking chart.
The updated price action.
Even after this mighty blast higher, the $250 area for litecoin should probably not be viewed as anything but a minor pitstop on a rocket ride to $1200.
I’ll be highlighting what could be the “next litecoin” for profit-hungry blockchain subscribers today. It’s critical for investors and freedom fighters to understand that in the big picture, both gold and bitcoin will remain investments that only create huge fiat money profits… until they are widely used in daily life for payment of regular goods and services.
Then they can begin to compete with fiat money as the money of choice for citizens in a very serious way. I’ve predicted that this will happen because of the ability of blockchain technology to create digital gold-backed currency. That currency can be kept in a regulated and insured account, like a bank account.
Debit and credit cards based on these accounts are coming, and when that happens I’ll dare to suggest that Mr. and Mrs. Fiat are going to start feeling very uncomfortable. If these blockchain payment systems go mainstream, government could soon find itself becoming obsolete in many ways.
I predict that central banks will begin buying bitcoin as an asset to hold once it hits $2 trillion in “market cap”.
The US Treasury should have initiated a bitcoin buy program years ago to help fix the government’s balance sheet. Instead it wasted precious time playing stock market cheerleader, government bond enthusiast, and ruined the bank account income of ageing citizens. That was a truly horrific mistake, one that all the citizens of the world can only hope never happens again.
This is the superb daily gold chart. Gold has a rough general tendency to rally after the US jobs report, unless a Fed rate hike is upcoming. In that case, gold often stagnates until the rate hike is announced, and then surges higher.
The Fed is scheduled to hike rates tomorrow, and gold is now poised magnificently inside a bull wedge, ready to stage a mighty blast higher if a hike is announced tomorrow.
Also, Chinese New Year buying will begin very soon. That tends to bring enormous demand from not only Chinese citizens, but also from gold-obsessed Indians who want to get in on the action. The combined population of these two countries is about three billion people. Goldman analysts just released a key study of gold and blockchain liquidity flows. I’ll take it a step further, and state adamantly that blockchain will increase demand for gold. Indian investors will seek to put a portion of their huge blockchain profits into physical gold because they are essentially mandated to do so by their Hindu religion. Western investors will do the same thing when the stock market finally rolls over. If gold-backed blockchain currency goes mainstream, demand for gold would increase even more significantly, and do so in a sustained way. I think it will happen.
Regardless of whether it happens or not, when Chindians get serious about buying gold, the most powerful traders in the West also quickly position themselves to profit from the inevitable upside price action.
The powerful commercial traders have covered huge amounts of short positions and are eagerly racing to buy longs.
What’s particularly exciting about these two COT reports is that the reports only cover the flows through last Tuesday. It’s highly probably that the commercial traders have taken even bigger buy-side action with gold and silver since the reports came out.
This is the key VanEck Vectors Gold Miners (NYSE:GDX) chart. I’ve outlined the $23 - $18 area as a vital buy zone for gold stock enthusiasts. Within that price area, the $21 and $18 price points are most technically significant. The tiny bear flag in play suggests that investors will get a chance to buy the $21 area before an imminent major gold price rally carries GDX much higher. Investors can join me in placing some larger buy orders at both price points now, to be sure we’re all poised to participate in the ensuing rally time fun!Stewart Thomson is a retired Merrill Lynch broker. Stewart writes the Graceland Updates daily between 4am-7am. They are sent out around 8am-9am. The newsletter is attractively priced and the format is a unique numbered point form. Giving clarity of each point and saving valuable reading time.
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