Bitcoin’s Looking Great. Gold Not So Much.

A Tale of Two Assets. Plus an update on gold miners.

Today, we are going to look at gold, bitcoin, and our way of playing it, MicroStrategy (NASDAQ:MSTR), which has now 10xd (!) since we first covered it last year. Amazing.Finally, there’ll be a short update on gold miners. Remember them?

Let’s start with gold.

Gold – and most other metals – has been hit since the U.S. election last week. It’s down $200, or about 7%, with U.S. dollar strength being a big factor (the dollar has been storming higher since October).

While I think this bull market might be punctured, as I put it last week, and that gold probably has a bit further to fall, I am not unduly worried. 2024 has hitherto been a great year for gold, and it remains an essential long-term core holding.

It is an even more essential holding for UK investors. I think sterling has big problems ahead of it, and gold serves as your hedge against crap governments.

Labour or Tory – I’m no fan of either.

They’re both as bad as each other, in my view. The less government there is, the better things run. But that’s irrelevant idealism. Of greater concern here is reality: there has never been a Labour Government that did not devalue sterling.

· Blair and Brown crashed sterling in 2007-8 (though until then their record was okay);

· Under Wilson, Callaghan, and Healey, we ended up going to the IMF in 1976. Callaghan and Wilson also devalued in 1967.

· Cripps and Attlee devalued in 1949.

· Ramsay MacDonald’s National Government, which followed Labour from 1929-31, took us off the gold standard in 1931.

Why should this Labour Government be any different? If anything, it is even less competent. Sterling devaluation is coming. How exactly might not yet be clear. I rather suspect it’ll be an attempt to make us competitive against an ultra-streamlined US, but that’s just a guess. You must own some gold (and some bitcoin) in such an environment: non-government money.

Bitcoin’s Looking Great. Gold Not So Much.

A Tale of Two Assets. Plus an update on gold miners.

Let’s start with gold.

It is an even more essential holding for UK investors. I think sterling has big problems ahead of it, and gold serves as your hedge against crap governments.

Labour or Tory – I’m no fan of either.

· Blair and Brown crashed sterling in 2007-8 (though until then their record was okay);

· Under Wilson, Callaghan, and Healey, we ended up going to the IMF in 1976. Callaghan and Wilson also devalued in 1967.

· Cripps and Attlee devalued in 1949.

· Ramsay MacDonald’s National Government, which followed Labour from 1929-31, took us off the gold standard in 1931.

I’m obviously very biased against socialism. I don’t think socialism has solutions to these problems. I don’t think Mamdani particularly has solutions. I don’t think you can socialize housing. If you just impose rent controls, then you probably have even less housing, and eventually, it’s even more expensive.

But to Mamdani’s credit, he at least talked about these problems. So my cop-out answer is always to say: The first step is to talk about the problems, even if you don’t know what to do about them. There’s been a failure of, let’s say, the center left-center right establishment to even talk about them.

According to Global Markets Investor, 655 large U.S. companies have already gone bankrupt this year, the most in 15 years. Not yet a “recession,” per se, but a perceptibly slow tightening of the vise.

Credit conditions are stiff. Debt is heavy. Tariffs are pushing up costs. Consumers are fatigued. The Fed may pause in December.

Industrials lead the pack, followed by consumer discretionary and healthcare.

Stocks have developed a habit of selling off into the weekend before rebounding this year.

One big explanation might be that traders don’t want to be leveraged going into two days where the market’s closed in New York – but stay open online.

Any random Trump tweet can and has moved the market!

Ostensibly, if the weekend is quiet, stocks can recoup their Thursday/Friday declines.

What we’ve seen since 2008 is nothing short of a theft of the commons. Except it happened in little pieces that seemed unrelated at the time. But if we look at the story holistically, it all comes together.

When we step back and view the entire picture, what emerges is not just a story of market excesses and economic shifts. What we see is the gutting of middle America – be it intentional or otherwise.