Trump Euphoria, Bitcoin and Gold

“My hope for bitcoin is that it can improve the efficiency of the information system that we call ‘money.’”

– Elon Musk, appointed to the new Department of Government Efficiency (DOGE)

November 13, 2024—On the Friday before the election, we recommend that you hedge the results of the impending vote with Bitcoin and Gold.

Since Wednesday’s opening, bitcoin has soared 22%… shooting to $92,600 this morning.

Turn Your Images On

The bellwether crypto is up over 150% over the past year. And it’s getting a serious huff of Trump Trade fumes.

Trump’s campaign promise, among many disruptive ones, includes replacing Gary Gensler, the existing SEC chair who was slowly noodling over regulatory changes for crypto.

We speculated all year that backroom deal-making was being organized to support the Fed coin and a new era of highly regulated (manipulated) CBDC coins.

The election results put an end to that fear with some earnest abandon.

Another puff of fumes fueling the Trump pipe dream came yesterday in the form of another campaign promise coming into focus: The “Department of Government Efficiency’ – or DOGE after the crypto coin Elon Musk owns and often discusses.

Musk and entrepreneur-turned-presidential candidate Vivek Ramaswamy will head up the new de-government task, which has a mission—a mandate, rather—to make forceful suggestions on how to remove $2 trillion of wasteful spending from the Deep State bureaucracy.

During this euphoric phase of the so-called Trump Trade, the market doesn’t need a lot of fumes to get high.

Gold hasn’t fared as well. In fact, it’s down nearly $200 (priced in dollars) since its historic high of $2,800 on October 30.

Yep.

But you’re wrong if you think we’re going to apologize for gold. Our friend Dominic Frisby takes a quick review of both alternatives to the U.S. Dollar below. Enjoy – Addison

Bitcoin’s Looking Great. Gold Not So Much.

Dominic Frisby, The Flying Frisby

Today, we are going to look at gold, bitcoin, and our way of playing it.

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 sterlin

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 U.S., but that’s just a guess. You must own some gold (and some bitcoin) in such an environment: non-government money. ~~ Dominic Frisby, The Flying Frisby

Regards,

Addison Wiggin,
Grey Swan

P.S. Just as there has never been a Labour government that hasn’t devalued the British Pound… so there has never been a Republican or Democratic administration in modern times that didn’t devalue the dollar, whether through foreign exchange or a massive run-up in debt and inflation.

Bitcoin enthusiasts point out that cryptocurrency has no “top” price because fiat currencies have no bottom. Gold, to a lesser extent, also fits into that scarcity mold.

That’s why we view both assets performing well throughout Trump’s second term.

Or, as Grey Swan reader Marcus suggested last week:

“Things will go well in 2025 if (and this is a big IF) Elon Musk is successful at cutting the $2 trillion from our government expenditures as he anticipated.

“If that happens, it will reduce the pressure on our government to borrow money to pay our debts. This will set into motion a domino effect of positive results.”

Send your thoughts to: addison@greyswanfraternity.com.

“My hope for bitcoin is that it can improve the efficiency of the information system that we call ‘money.’”

– Elon Musk, appointed to the new Department of Government Efficiency (DOGE)

November 13, 2024—On the Friday before the election, we recommend that you hedge the results of the impending vote with Bitcoin and Gold.

Since Wednesday’s opening, bitcoin has soared 22%… shooting to $92,600 this morning.

Turn Your Images On

The bellwether crypto is up over 150% over the past year. And it’s getting a serious huff of Trump Trade fumes.

Trump’s campaign promise, among many disruptive ones, includes replacing Gary Gensler, the existing SEC chair who was slowly noodling over regulatory changes for crypto.

We speculated all year that backroom deal-making was being organized to support the Fed coin and a new era of highly regulated (manipulated) CBDC coins.

The election results put an end to that fear with some earnest abandon.

During this euphoric phase of the so-called Trump Trade, the market doesn’t need a lot of fumes to get high.

Gold hasn’t fared as well. In fact, it’s down nearly $200 (priced in dollars) since its historic high of $2,800 on October 30.

Yep.

But you’re wrong if you think we’re going to apologize for gold. Our friend Dominic Frisby takes a quick review of both alternatives to the U.S. Dollar below. Enjoy – Addison

Bitcoin’s Looking Great. Gold Not So Much.

Dominic Frisby, The Flying Frisby

Today, we are going to look at gold, bitcoin, and our way of playing it.

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.

Why should this Labour Government be any different? If anything, it is even less competent. Sterling devaluation is coming.

Regards,

Addison Wiggin,
Grey Swan

Bitcoin enthusiasts point out that cryptocurrency has no “top” price because fiat currencies have no bottom. Gold, to a lesser extent, also fits into that scarcity mold.

That’s why we view both assets performing well throughout Trump’s second term.

Or, as Grey Swan reader Marcus suggested last week:

“Things will go well in 2025 if (and this is a big IF) Elon Musk is successful at cutting the $2 trillion from our government expenditures as he anticipated.

“If that happens, it will reduce the pressure on our government to borrow money to pay our debts. This will set into motion a domino effect of positive results.”

Send your thoughts to: addison@greyswanfraternity.com.

In one refrain from our book Empire of Debt, we warned that late-stage credit systems always suffer the same fate: the debasement of money disguised as growth. Ray Dalio said the quiet part out loud in an interview yesterday:

“If you depreciate the money, it makes everything look like it’s going up.”

Which is precisely why the markets get jittery at the top. And why politics are as wacky and polarized as they have been.

In New York, Mayor Zohran Mamdani is demanding higher taxes on the rich to plug budget holes left by former Mayor Adams. He wants billions from Albany. Governor Hochul has yet to weigh in.

In California, Sergey Brin, Eric Schmidt, and other Silicon Valley billionaires are backing a new pro-business PAC to fight a proposed 5% wealth tax on the state’s 200 richest residents. Larry Page has already moved to Florida. The line to Nevada is forming.

Ray Dalio, again, with the map:

“When governments run large deficits and the debt is no longer bought willingly, they have two choices: raise taxes and cut spending, or print money. Those that can print, do. Those that can’t, fall apart.”

Populist politics surge. Moderates vanish. Scapegoating begins. The wealth gap widens until it becomes an impassable chasm.

The S&P 500 topped 7,000 for the first time yesterday, adding to its stack of all-time highs this year and continuing the trend set in 2025.

But… those highs are measured in dollars. When priced in gold, which topped $5,500 — also a historic number— this morning, stocks are actually at a 12-year low.

Trump is trying to force two converging economic events that haven’t aligned like this in over 40 years.

The first is the cost of borrowing. After the fastest rate-hiking cycle in decades, rates are rolling over. Trump wants them at 1%. Jerome Powell’s term ends at the Fed on May 15. The path is being cleared for a true believer in lower interest rates to take his spot.

The second is the cost of living. Oil has fallen from $95 to just over $60 in a year. Gas is averaging $2.88 nationally. And because oil feeds into everything — shipping, food, plastics — falling prices cascade across the economy. The capture of Venezuela’s Nicolas Maduro is not a coincidence. Venezuela is one of the leading exporters in the OPEC block of oil producers.

A push for lower interest rates, jawboning by Trump administration officials, and concerns over U.S. debt levels are giving the dollar a good thrashing.

Dollar-denominated assets, from global commodities to U.S. stocks — even competing fiat currencies — will see prices rise versus the U.S. variety until this trend shifts.

“If you depreciate the money, it makes everything look like it’s going up.”

Which is precisely why the markets get jittery at the top. And why politics are as wacky and polarized as they have been.

In New York, Mayor Zohran Mamdani is demanding higher taxes on the rich to plug budget holes left by former Mayor Adams. He wants billions from Albany. Governor Hochul has yet to weigh in.

Ray Dalio, again, with the map:

Populist politics surge. Moderates vanish. Scapegoating begins. The wealth gap widens until it becomes an impassable chasm.

The S&P 500 topped 7,000 for the first time yesterday, adding to its stack of all-time highs this year and continuing the trend set in 2025.

But… those highs are measured in dollars. When priced in gold, which topped $5,500 — also a historic number— this morning, stocks are actually at a 12-year low.

Trump is trying to force two converging economic events that haven’t aligned like this in over 40 years.

A push for lower interest rates, jawboning by Trump administration officials, and concerns over U.S. debt levels are giving the dollar a good thrashing.

Dollar-denominated assets, from global commodities to U.S. stocks — even competing fiat currencies — will see prices rise versus the U.S. variety until this trend shifts.