Gold’s surprise rebound…

Monday, 15 January 2018
Melbourne, Australia
By Kris Sayce

  • Buy gold?
  • Every Aussie investor joins the blockchain revolution

Today, we have another special guest essayist.

One of our newer recruits, and a cryptocurrency expert, Ryan Dinse.

You’ll find Ryan’s essay below.

As Ryan explains, while there has been a surge in excitement and enthusiasm for cryptos, it’s not just about speculation.

There’s genuine substance to what many consider a dangerous bubble.

More details below after the Markets…

Market

Over the weekend, the Dow Jones Industrial Average closed up 228.46 points, or 0.89%.

The S&P 500 gained 18.68 points, or 0.67%.

In Europe, the Euro Stoxx 50 index added 17.37 points, for a 0.48% gain. Meanwhile, the FTSE 100 gained 0.2%, and Germany’s DAX index closed up 0.32%.

In Asian markets, Japan’s Nikkei 225 index is currently up 64.15 points, or 0.27%. China’s CSI 300 is up 0.39%.

In Australia, the S&P/ASX 200 is up 6.45 points, or 0.11%.

On the commodities markets, West Texas Intermediate crude oil is US$64.36 per barrel. Brent crude is US$69.86 per barrel.

Gold is trading for US$1,340.90 (AU$1,689.99) per troy ounce. Silver is US$17.30 (AU$21.80) per troy ounce.

The Aussie dollar is worth 79.34 US cents.

Bitcoin is US$13,555.94.

Buy gold?

The theory was that 2018 would be a terrible year for gold.

(That’s right, reader, gold…we’re writing — albeit briefly — about gold.)

Why would it be a bad year for gold? That’s because US interest rates would continue to rise. And if interest rates were going up, investors would sell gold (which doesn’t pay a yield) and instead put their money in cash.

Well, interest rates have gone up. As we showed you last week, in the short-term at least, the trend is upwards.

Longer term, the jury is still undecided on whether this is the end of the 36-year bull market for bond prices — or bear market for interest rates.

Markets move up and down, as do prices. What appears to be the end of a long-term trend is often just a short term rally or fall.

Regardless, far from falling, the gold price has staged a remarkable recovery.

You may know that it fell as low as US$1,051 in December 2015. At the time, some thought it may fall below US$1,000. If it had, so the theory went, the gold price could collapse.

But it didn’t. Instead, the gold price has moved higher. It’s up nearly US$300 since then. Although, like other markets and prices, it hasn’t been a straight line.

Despite a brief rally after Donald Trump’s election win in November 2016, the price fell. Again, some thought a price collapse was on the cards.

But since then, with a few ups and downs, the trend has been up. It means that now it’s trading at US$1,344 per ounce. And it has climbed especially hard since the apparent end of the 36-year bull market in bond prices.

The explanation?

Simple. Weakness in the US dollar…or is it a stronger euro…or stronger Aussie dollar?

To be honest, no one really knows the reason why markets move one way or the other.

One reason offered by The Wall Street Journal suggests:

The U.S. dollar fell Thursday after minutes from the European Central Bank’s December meeting signaled the central bank may phase out its bond-buying program sooner than investors had expected.

If the knee bone is connected to the leg bone, then the value of the euro is connected to the US dollar (and vice versa).

If the European Central Bank (ECB) plans to cut back on its bond-buying program, that could cause investors and speculators to buy euros…which means selling US dollars. Even if US interest rates rise.

In fact, the way these things work, it’s hard to know which is the chicken and which is the egg. Interest rates may go even higher. Until they reach a level at which investors are willing to accept.

It’s hard to know where that will be.

But the knock-on effect is that as the US dollar weakens, commodities priced in US dollars should rise. Hence, higher oil prices, higher iron ore prices…and higher gold prices.



chart image

Source: Bloomberg
Click to enlarge


Gold is still a long way short of the 2011 all-time high, when it traded above US$1,900 per ounce.

Yet even folks have told us that gold’s days are numbered, and that bitcoin is the ‘new gold’, we’ve watched with interest as the bitcoin price has fallen amid gold’s rise.

In fact, looking at the one-month chart for bitcoin, we almost have to wonder if gold and bitcoin have begun to develop and inverse relationship:



chart image

Source: Bloomberg
Click to enlarge


At the moment, the trade appears to have been to sell bitcoin and buy gold. We wonder how long that will last. When will the trade ‘flip’? Buy bitcoin, sell gold.

Who knows? Being a stubborn old fool, our position remains the same: Buy gold, and leave bitcoin to others.

Serious speculators only.

Now over to Ryan Dinse. But before we pass the proverbial baton, a short note to let you know that we’re reopening memberships for Ryan’s brand new crypto trading service — Extreme Crypto Trader.

Just remember, this service is high-risk. For that reason, and because we don’t want ‘tyrekickers’ checking it out, getting all the valuable info, and then asking for their money back, this service comes without a trial period.

If you want in, you’re in. If you’re not sure, then that alone is a sign that it’s not for you. So don’t join, because there are no refunds if you simply just change your mind.

Naturally, this ‘no trial period’ policy doesn’t infringe upon consumer protection laws, but you should know what qualifies within those laws and what doesn’t.

You should check our Terms & Conditions if you’re in any doubt.

Other than that, to make sure we only have folks who are committed to Ryan’s crypto trading service, we have created a ‘priority access’ list.

You’ll get the opportunity to join this list from Wednesday. But please, serious investors and speculators only.

Cheers,
Kris


Every Aussie Investor Joins the Blockchain Revolution
Ryan Dinse, Editor, Exponential Stock Investor

Every Australian investor will be using blockchain technology soon.

Whether they know about it or not…

Here is a quote from Business Insider last month:

Australia’s equity market the ASX has decided to replace its CHESS system to record changes in shareholding with distributed ledger technology found in blockchain.

The global equities exchange community has been watching the ASX as it develops and tests a system to cut the cost of transactions, and make them faster and more secure.’

In other words, share trading is moving to the blockchain.

Why?

Because it’s cheaper, faster and more secure.

This could spell the end for T+ 2 settlements. A process by which an actual share traded on your computer screen takes two days behind the scenes to officially settle.

The potential is eventually for settlements to take place in minutes. Even seconds…

It’s just one more sign that blockchain technology has reached a tipping point. And is starting to fulfil its immense promise.

Which is exactly where your Exponential Stock Investor service is looking right now.

There’s a couple of ways to play this huge opportunity.

The first and most obvious way is to target the companies that have direct cryptocurrency and blockchain features.

Two of my recommendations in Exponential Stock Investor are based on exactly this idea. They’re what I call blockchain pure plays.

But to stay ahead of the herd, other less obvious picks are the places to look, too. I’ve recommended a few of them already.

The key is to work out how blockchain intersects with trends in data processing technology.

Then simply wait for the market to catch up…

Another recommendation found in ESI is an example of this type of play. It’s a revenue generating data recovery and analysis business with a huge and growing footprint. And it’s in a very lucrative market — the sports industry.

It’s already a great opportunity.

And that’s before any obvious blockchain-big data link.

But remember, it has a product that sucks up data. Data that will be a very valuable asset as the blockchain story plays out.

Joining the dots now is how we make huge returns in the future.

Your most recent recommendation is a company that sucks up the data. It creates sensors for machines that use this data to work autonomously.

Can you see what we are trying to invest in here?

It’s not simply one industry.

It’s up and down the entire data value chain.

But it’s based on the simple realisation, that bolckchain technology turbo charges this growing trend — in ways no one has realised is possible yet.

This strategy is already paying dividends…

A great start, but only the start…

When I launched this service, I included a guide for you on the overall strategy behind investing in exponential stocks.

The gist was, that out of every 10 picks we only needed two to create the returns they were capable of (to make very good long-term returns).

In the report I showed you how you could afford to lose money on around half even!

So I have to be honest and say I’m a bit shocked that all our current picks are all in profit.

A sea of green!

The best pick is up 387%, and the worst is up 6%.

It’s a great start but I still feel it’s only the beginning for this industry.

2018 will be the year blockchain goes mainstream. And a decade from now people will call this the start of the ‘blockchain boom.’

True momentum hasn’t even begun yet — but it’s about to.

Don’t forget that this industry is almost 10 years old. And hundreds of billions of dollars have gone into cutting edge research designed to do one thing…

Up end the status quo.

People who think this is just another dot-com-bubble forget one thing. The difference between now and the dot-com boom, is that at the end, there won’t be a crash. There will be no bubble to burst at all.

There will only be a long list of companies that failed to keep up.

Good Investing,

Ryan Dinse
Editor, Exponential Stock Investor