Gold and Crypto-currencies

by JDH on June 3, 2017

The weather is gorgeous this weekend, so I’ll keep this short and sweet:

Gold

As me in a week or two and I’ll tell you what’s happening.

For now, I don’t know.  The chart of NUGT shows that we are nearing an inflection point.

The longer term uptrend line is about to intersect with the shorter-time-frame down trend line, so one of them has to break.

I have no idea which one it will be.

Over the last few weeks I have dramatically scaled back my holdings, so I am now sitting close to 50% in cash.  I have sell orders placed on many of my other holdings (at above current market prices), so I further pop will put me in an even greater cash position.

Why?  Because last year I made great profits in the first half of the year and gave it all back in the second half of the year.  I won’t be making that mistake this year.  I have locked in my profits, and will only deploy significant cash if we have a melt-down that leads to great prices.

Bitcoin

Over on the Buy High Sell Higher Forum, whipstock asked for my thoughts on crypto-currencies.  I happen to have a son who is an avid trader, so I will share my limited thoughts on the matter.

My first thought: I have limited knowledge of crypto-currencies, and therefore I don’t invest in, or trade them.  I have no holdings.

My son believes they are the wave of the future.  Apparently they are very secure, and have many other advantages, including the ability to easily make micro payments.  So, in the future, I could charge you a fraction of a bitcoin to read this blog, perhaps one cent per article.  That would be cumbersome today, but would be much easier with something like bitcoin.

However, the problem I see is that there are multiple competing crypto-currencies.  Bitcoin is the biggest, but there are many others, many of which can be easily traded on exchanges, and in most cases traded easily for fiat currency.

There is a limited supply of bitcoin, which leads to its significant price volatility.  Do you want a currency that is highly volatile?  Probably not.

As a capitalist, you may welcome competing currencies.  That fosters innovation, brings down costs, and increases features, so long term it may be a great concept.

However, again, I don’t fully understand them, and until one or two of these currencies become dominant, I worry about liquidity and volatility, so I won’t be investing in them any time soon.

That’s my report.  See you next week.