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.

Debts and deficits will eventually cause a crisis. Treasury Secretary Scott Bessent’s effort to help bail out the Japanese Yen this week is entirely motivated by self-preservation. The contagion signal flashing in Japanese bonds since late ‘25 is infecting the BOJ, which may be forced to sell U.S. Treasurys to stabilize its own currency.

The copper price is no doubt benefiting from inflation driven by money printing. But the doc don’t lie. Copper’s new all-time highs, while gold and silver still languish, are a sign the AI growth story is also that of the global economy itself.

Many miners were profitable with gold around $2,000 and silver near $50. At sustained prices closer to $4,000 gold and $60 silver, the arithmetic changes dramatically.

The stock market is getting an unexpected boost to kick off August, bucking the historically weak summer session for the U.S. stock market.

What’s happening? The Bank of Japan and the U.S. Treasury are making a coordinated effort to support Japanese yen; a move last attempted nearly 30 years in the height of the Asian Financial contagion (1998).

Many miners were profitable with gold around $2,000 and silver near $50. At sustained prices closer to $4,000 gold and $60 silver, the arithmetic changes dramatically.

The stock market is getting an unexpected boost to kick off August, bucking the historically weak summer session for the U.S. stock market.