No, I am Not Dead

by JDH on January 13, 2018

There was no post here last week because, well, there just wasn’t.

Also, for some reason the Buy High Sell Higher Forum is broken; not sure what the issue is, I’ll attempt to fix it at some point.  Now, down to business.

Gold was up in 2017, and is up so far in 2018, but until it gets above $1,400, it ain’t up.

As you can see from the chart, at the start of 2014 gold was just under $1,400, and in the summer of 2016 it got close to $1,400, and yesterday it clawed it’s way back to $1,335, but that’s over four years where $1,400 has been the stopping point.

So, the last year has been a nice interlude, but until we get decisively through $1,400, gold is stuck in a trading range, and therefore the miners are also stuck.

Will this be the break out year?

I have no idea; the signs are encouraging, but this may simply be a range bound trade that will get close to $1,400 and then retreat back.

So Why Hasn’t Gold Blasted to the Moon?

Gold is a store of value in uncertain times.  Are there any times more uncertain than now?  The President of the United States tweets something crazy every day, and apparently we are on the verge of war, and other bad stuff, so why isn’t gold at $5,000 per ounce?

I have two theories:

First theory: everything is great, so there is no need to rush to the safe haven of gold.  The stock market is at record highs, so obviously that implies that the economy is doing great.  The President may be crazy, but it’s not hurting the economy.  In fact, it may be helping.  His tax reform legislation has not hurt.  Unemployment is at the lowest level in almost two decades (if you believe government statistics, which I don’t, but presumably the market believes them).

But what about war?  Isn’t North Korea going to bomb us?

Gold says no, or else it would be at $10,000 per ounce.

Presumably because Trump and Little Rocket Man are engaging in friendly Twitter banter, they are not on the verge of war.  Trump is the deal guy.  It would not be a stretch to assume that he is already doing back channel negotiations with both North and South Korea, and there will be no war.  Is it not strange that North Korea announced that they will be sending athletes to the Olympics in South Korea next month?  Isn’t that strange if a war is about to start?  It would appear that peace is about to break out.

Look at Iran: a relatively peaceful regime change is underway.  The security forces are burning their ID cards and joining the people.  It is very likely that a secular government will be in place by the end of the year.

Look at the Middle East: ever since Trump announced that the embassy would move to Jerusalem, eventually, tensions appear to have de-escalated.  Peace is breaking out everywhere, and that’s why gold is not at $10,000.

Alternate Theory: The world is ending, but the scared money is all flowing to Bitcoin and other crypto-currencies.

That’s a definite possibility.  If I’m scared, do I want big blocks of gold that are not easy to move across borders, or do I want digital wealth that can be transferred instantly anywhere in the world, and can be stored in the cloud?

Perhaps the rise of the cryptos indicates that the world is ending.

My theory?  Crytpos are in a speculative bubble now, and the bubble will probably continue for a while longer yet, so throw some fun money at it, and enjoy the ride!

Gold will probably have a year like 2017, where it will rise moderately for the year, so have some exposure there too.

And, with the stock market in a speculative bubble, ride that wave as well!

This will all come crashing down eventually, but for now, enjoy the ride.

See you next week, probably.