The Week That Will Change The World

by JDH on January 16, 2021

Wednesday, January 20, 2021, is Presidential Inauguration Day in the United States.  It appears that tens of thousands of National Guard troops and other military are already in Washington D.C., preparing for the Big Day.  It also appears that the public is not invited.  Large gatherings are not permitted during the COVID-19 pandemic, so the inauguration will be a virtual event.

So, if the military is blocking access to D.C., and not letting members of the general public in, why do you need tens of thousands of troops to protect the festivities?  Interesting question.

I have no idea what will happen on Wednesday, but if the events of 2020 were any indication, whatever happens on Wednesday will be totally unexpected.  A big surprise.  A day that will change history.

So how then does one speculate on the uncertainty?

VIX

You could buy the VIX, the CBOE Volatility Index, a measure of volatility.  Prior to the election, the VIX spiked, hitting over 40, before spending most of December and January in the 20 to 24 range, where it closed on Friday.  The RSI is now at 53, typically a very good buy level.

Of course, you can’t actually buy the VIX, just like you can’t buy the DOW; it’s an index.  There are various ETFs and Exchange Traded Notes you can buy, like XVZ –  iPath S&P 500 Dynamic VIX ETN.  Its performance is similar to the VIX, but not identical.  It’s a gamble, so you should not play with big money, and you should treat it as a short-term hold.  Buy on Monday, sell on Wednesday or Thursday, and hope you don’t lose all of your money in the process.

Gold

A more obvious way to play uncertainty is the traditional safe haven, gold.  The seasonality of gold price movements generally leads to a strong up move in January, and over the first few months of the year.  That has not happened, yet, in 2021.  Gold started the year around $1,900, and closed on Friday at $1,829.

The uptrend line is broken if gold falls much below $1,800, but the downtrend line needs a close above $1,950 to assert a return to higher prices.  Hard to see a $2,000 gold price in the cards, imminently.  Gold last traded at $2,000 on August 11, 2020.

However, if you are looking for a way to hedge against whatever may happen this week, holding some blue chip gold shares is an obvious choice.

Can’t hurt.

Bitcoin

This brings us to the biggest Ponzi Scheme since the Tulip Mania, Bitcoin.  I won’t bother telling you the price or showing you a chart, because whatever I show you will have changed in the last five minutes, making the history out of date.

I will say that on January 14 Bitcoin did touch $40,000, again, so it ain’t dead yet.

Yes, Bitcoin is air.  You can’t touch it or hold it like gold, and you can make anything with it.

But, if others believe it has value, it does, and it seems prudent to me to have 1% to 5% of your portfolio parked in this speculation.  See my comments from two weeks ago on QBTC, QETH, and how to invest in crypto.

My final advice: sit back and watch the show.  It should be a good one.   See you next week (if the world is still here).