Well don’t ask me, I don’t know! 😂
On the plus side, neither does anyone else, but I probably know at least as much as they do. Let me share my best guesses with you:
Two weeks ago I told you (rather dramatically) that: ” WHAT IS HAPPENING NOW IS NOTHING SHORT OF THE COLLAPSE OF MAJOR ECONOMIC MARKETS! ” (in this post: “Bitcoin and Major Markets – The post you MUST read!”).
I stand by that. I explained that the significance of Bitcoin breaching its oldest support of all (my frequently charted long-term base trendline) could signify nothing short of the breakdown of the financial markets of the world. I think that by now most of you are aware that I was correct. But much has happened since then, enough to write a post about anyway.
Gold
Gold is the canary in the coal mine, at least it is now. When stores of value toppled one by one, Gold was the last to fall (about two days after Bitcoin). It stands to reason that Gold would be the first to rise from the ashes (based on what I just said as well as it’s historical performance and status as a store of value), and rise it has!
In fact, Gold is right back to where it should be. From Gold’s perspective, it’s as if nothing’s happened! I’ll show you visually:
This is Gold now. See that channel that I’ve constructed around the price movements from 24 March to today? Well that channel was constructed well BEFORE the Gold crash!
If you look at the medium-term Gold chart, you will see where the channel comes from and see why I say that Gold is back to normal:
And for those who are interested in long-term trends, here you go:
Being the “canary” I expect that where Gold has led, others will soon follow. Now we’ll take a look at those others:
Silver metals
Silver is EXTREMELY interesting! The price of Silver futures may have tanked, but demand for physical Silver grew so fast that it sold out across the entire world! Have you tried to buy a Silver coin in the last two or so weeks? They’re almost impossible to find! The most common coins are those in greatest demand, just as I predicted would happen in a cataclysmic event! I wrote these posts in January.
People want something that won’t lose value and that can easily be traded. I told you so!
Note that the dropping price of Silver futures has not negatively affected the price of physical Silver. Physical Silver (when it was still available) climbed rapidly in price. I saw coins gain 50% in value within a week, before disappearing from the market altogether. You will pay quite the premium for any bullion Silver which you are lucky enough to find now!
I watched my local Silver dealer first run out of coins (and bars), then run out of inbound coins which he offered on pre-sale (i.e. they sold out before they even arrived at his premises) and then even run out of silver granules which he somehow procured for sale – them being the only form of non-numismatic Silver which he was able to get his hands on!
I believe this is very bullish for Silver. These lessons will not be soon forgotten, and Silver has taken a major step towards legitimising itself as a rival store of value and an alternative to Gold. Besides that, the Gold/Silver (futures) price ratio, already at record levels of around 1:100 before the crash, leapt up to 1:120 – surely an unsustainable situation, especially when considering the relative rarities of the metals in the Earth’s crust. The bullish divergence between the prices of physical Silver and Silver futures is sure to drag the price of Silver futures to higher levels. I don’t see the prices of those unavailable coins and bars dropping any time soon!
Like Silver, Platinum took a huge hit. Like Silver, it has been slow to recover. The Platinum story is a complex one and contains several interdependencies. For many Moons I have been saying that I expect a Palladium/ Platinum flip. Palladium rose to ridiculous prices, especially in 2020. The crash stripped Palladium of very nearly half its value, though it has bounced back significantly since then. To me it seems inevitable that industry will soon make the switch to much cheaper Platinum ($740/ounce) rather than to continue buying $2270/ounce Palladium.
Platinum is normally more expensive than Palladium. I regard the current price situation as a temporary inversion.
Just to make things trickier to predict: demand for these metals is closely linked to industrial activity – obviously suffering at this time. For those who may not be aware: China (the be all and end all of global manufacturing these days) greatly reduced manufacturing during the initial stages of its Covid-19 outbreak, then bounced back and reopened its industries once it got the virus under control, only to now be experiencing a second demand-driven downturn as it major customers (the EU and USA) get hit by the virus.
It gets more complex still: PGM mines have smelters which need to be shut down if mines become unprofitable. These smelters take a significant time to put back into operation once shut down. Mines are currently making difficult decisions whether to shut down or not. Of course tunnelling underground in close confines with a Covid-19 sufferer is probably not a good idea… Thus the demand-sided issues of China help to create or at least exacerbate supply-sided complications elsewhere.
And the cherry on the cake: is that some mines have significant stocks of Platinum. But Platinum isn’t mined in isolation, to get the other PGM metals which may be in higher demand (like Rhodium or Palladium), you have to mine Platinum too. Either you get all, or you get nothing.
To me this all points to a very limited supply of PGM metals, albeit with reduced demand. With Platinum being relatively “cheap” thanks to existing stockpiles and the fact that any mine which does keep its smelters running will produce Platinum as well as the other PGM metals, I see manufactures being forced to convert from Palladium to Platinum as a method of economic survival. In the long-run, I therefore remain very bullish on Platinum, even if it could take several years to reap the rewards.
Bitcoin
Ah yes: finally we get to the good stuff!
In the simplest terms: Bitcoin and Silver are pretty much in the same boat. While vastly different by nature, both are vying to become the next de facto store of value alongside Gold. I think that both will succeed.
Both enjoy limited supply, are undervalued, are universally accepted etc etc. Of course Bitcoin also enjoys many other advantages such as rapid international transfer, cheap “transport”, difficulty to fake, fully verifiable transactions, decentralisation etc. In time that will assure Bitcoin’s continued quantum leap in value.
For now it is enough to know that (despite some baseless contradictions from naysayers), the value of Bitcoin is secure and it will continue to grow in value on the long-term charts.
While I was first dismayed when BTC broke my long-term base trendline, I’m not as concerned as I initially was. The trendline seems magnetic: pulling an obviously undervalued BTC back up to where it should be (much like the price of Silver).
While I stress that my confidence remains relatively low and confirmations are still in their infancy, I believe that BTC is up to one of two things at the moment – at least from a technical perspective:
Scenario 1: It’s in a rising channel
No explanation required here: BTC is in a channel, and it is rising.
OR
Scenario 2: BTC is riding a new structure of positive diagonal Fib levels
Again, not much explanation required, the information is in the title.
I have also considered the situation whereby both Scenario 1 and 2 may be true (perfectly possible in theory), but the reality is that, for now at least, the charts don’t allow it. The Fib levels simply won’t align with the angle of the channel. Any attempt to force that would result in highly inaccurate curve-fitting, which is something I try to actively guard against. Perhaps in time, the charts will change the two may align, or perhaps other options will present themselves as new price actions occur.
But the good news is that if either of these scenarios are correct, that long-term base trendline will continue to pull the price of BTC higher at a rapid rate:
No, the halving does not matter! See my previous posts on that topic if you don’t know why.
Future events and Conclusion:
These are volatile times and halving hype is only going to make them worse. As bad as you may think things are now, the reality of Covid-19 has not yet even begun to hit home for most people. From both a medical and economic perspective, things are going to get MUCH worse! I do not see how we can possibly avoid tens of millions dying, perhaps even hundreds of millions. The economic effects may be even worse, because being dirt poor is just as hazardous as being very sick, if not more so! In my best case scenario: the world “leaders” (maniacal thieving clowns that they are) may cave under public pressure (sure to come – very probably in the form of not-so-calm protests and rebellions) and waiver the safety margin time delays on vaccine testing. Volunteers could then vaccinate against the virus, and hopefully the vaccine would not have nasty side effects!
That’s the best case scenario.
Other scenarios include no vaccine for well over a year still, a vaccine that does not work or that harms many people, having to wait for herd immunity to be achieved (which is the best non-vaccine method of fighting the virus and a very strong case for allowing the virus to spread unchecked as fast as possible) as well as others. The common public belief seems to be that the end of lockdowns will somehow magically result in the end of the pandemic. No comment… The worst case scenario is one in which a vaccine is delayed and immunity proves impossible to obtain or is only very short-lived. Let’s not dwell on that one too much, shall we?
But whatever happens, I believe that BTC (and other cryptos) is a very good place to be. I have been buying. It’s the kind of buying I don’t like and don’t endorse: raiding long-term fiat savings and putting them into crypto to prevent future devaluation. Remember that my circumstances are probably very different to your own and don’t apply to you, so Do Your Own Research if you are tempted to try something similar, AND DO NOT PANIC BUY OR SELL!
Let’s end on a happy note: Despite the nasty reality of today, and the even nastier reality of tomorrow, GREAT GOOD may emerge from this dread scenario. In fact: there is so much good that it wouldn’t possibly all fit in at the end of a post like this. This virus is a major upheaval: socially, politically, financially, economically etc and we have a chance to change many things for the better. Believe it or not, I am actually very positive that we will emerge from this far stronger and better than before – and remember – that’s coming from a realist who despises baseless optimism!
I can think of so many great potential changes that I will have to compile them into some sort of article of their own someday. Stay tuned.
I apologise that I have remained quiet lately, that’s because BTC has been so unpredictably haphazard and also because I’m putting a lot more effort into ensuring that my home continues to run as it should under the circumstances. I continue to do short updates on Twitter when I notice important things – ensure you follow me there to remain updated.
Take care out there, rather be too careful than not careful enough. My heartfelt prayers go out to all who are suffering both from health and/or from economic woes. As always, if you want to chat and blow off some steam, I have two ears available. please don’t hesitate to use them if you need to.
Yours in crypto
Bit Brain
All charts made by Bit Brain with TradingView
“The secret to success: find out where people are going and get there first”
~ Mark Twain
“Crypto does not require institutional investment to succeed; institutions require crypto investments to remain successful”
~ Bit Brain
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