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.

If you’re from New York—or know anyone there—you’ll probably agree: most New Yorkers are fed up with crime, the outrageous cost of living, government incompetence and corruption—and, yes, the rats.

But the fact that a hard-core socialist like Mamdani is their favorite pick to solve those problems tells you that most voters have no idea why any of it is happening.

Their hatred of Donald Trump—and a steady diet of MSNBC—has made them blind to the obvious: it’s the Left’s policies creating these problems. You have rent control shrinking supply by forcing landlords to pull units from the market, union giveaways jacking up the cost of transportation, zero-bail laws putting criminals back on the streets, and so on and so forth.

Markets are having themselves a moody little week.

The Dow’s off 1%, the S&P 500’s down 2%, and the Nasdaq — where the AI darlings dance — has stumbled nearly 4%.

Even the refuge assets are catching cold: gold glitters less, and bitcoin, ever the high-strung teenager of finance, is down nearly 8%.

At the moment, traders aren’t sure what to make of it all.

Trump’s tariffs are under review at the Supreme Court, Zohran Mamdani’s socialist experiment is about to begin in New York City, and the AI trade — Wall Street’s favorite bedtime story — is between plot twists.

It isn’t hard to see why young people are looking for an alternative.

This cohort came of age through financial crises, inflation, a pandemic, trillion-dollar federal debts, chronic political deceit, a rough job market, predatory credit, expensive degrees with dubious ROI, and rents that make homeownership a punchline.

The status quo clearly isn’t working for the young. In that vacuum, socialism seems “cool,” so why not try it?

Decline will be felt by the economy on a lag and could be what ends up torpedoing his second term, along with his tariffs and the greatest bubble in history way overdue to burst in the next few years.

I objectively expect the music to stop while Trump is still in office, and no president gets re-elected in a bad economy (or his VP Vance), and this should be the worst since 1930-33.

If this decline had occurred right after he entered office, he wouldn’t have been blamed for it, or not as much. But after a full year+ and his tariffs appearing as a trigger, he will very much end up being blamed.