Gold and Bitcoin

by JDH on May 16, 2020

It’s the long weekend here in Ontario, and today, Saturday, we will have our first decent weekend weather day in a long time, and the next few days will be rainy, so everyone will be outside today, lock down or not.  That’s good.  Let’s be safe, but let’s get on with it.

Two charts for your perusal.  First, gold:

As you can see, gold has had a remarkable recovery from the low just about $1,000 in 2016, but can it push through the old high over $1,900?  Of course it can, but my gut feel is that the choppy action we saw on the way down after it peaked in 2011 will be choppy action on the way back to the top.  I don’t expect $1,900 this week.  We are in the congestion area, so a fall to $1,600, or even $1,500, would not surprise me at all.

I have lightened my positions, and I am holding substantial cash at the moment.

Sell in May and Go Away is an old adage, and since I can’t watch the markets every second of the day, I’m comfortable holding cash, for now, to see what happens next.

Another interest chart is Bitcoin.

I don’t consider Bitcoin to be an investment, or even a currency; I consider it to be a speculation.

As the chart shows, an inflection point is approaching.

Will the downtrend that started last summer continue, or is the dominant trend the recovery since the crash in March?

I don’t know, but given the strength in gold, I suspect Bitcoin is moving higher, but like gold, it will be choppy.

I’m not buying it at these levels, but if you want to play it, play the volatility.  It’s choppy, so put in a bid at $8,000, or $7,000, or whatever number suits your fancy, and roll the dice.

Okay, enough, let’s get outside and enjoy the decent weather.

See you next week.