The dollar, Bitcoin, gold, silver and oil. Let's see how things are doing. The U.S. Dollar has been on a tear for the last month or so. Just yesterday, the dollar tanked more than half a point but later in the day, jumped 1.5 points up to where it sits at 104.409 at time of writing. Exactly one month ago, on January 5, the dollar hit a low of 102.043 so it's actually up almost 2.4 points since then.
Recent remarks from FED Chair Jay Powell suggests he doesn't plan on any rate cuts soon, sparking a rally in the dollar. Oil, which fell below $72 earlier today, quickly shot up back above $73 and appears to be headed higher. This may have something to do with the U.S. military getting involved in Iraq, Syria and Yemen over the weekend while markets were closed.
Bitcoin Briefly touched $43.5K this morning after a rally than began last night around 8 pm when it hit a low of $42,283. By lunchtime today though, Bitcoin lost most but not all of its gains. It now sits at $42,583. Still up $300 in the last 24 hours.
Gold is maintaining a steady hold above $2,000. From a close of just under $2,040 on Friday, gold is getting whipsawed by the strong dollar and the strengthening price of oil. Usually, a strengthening dollar would suppress gold but if oil goes up, so does gold. If oil continues to rise, so should gold's price. The relationship between oil and gold has been very stable for more than 7 decades and there's no reason that should change now.
From the intel I'm getting, the dollar is rising because of a 'flight to safety'. This is when investors flee currencies that are falling in value. The USD is still the reserve currency and would offer better protection against inflation. In the end, there will likely be no place to hide your stash if it's in some form of currency.
A good place to park it would be in silver. Something's going on over there!!!
Think about it. Silver is in everything from solar panels to cell phones and tablets to batteries and electric cars, silverware, jewelry and more. Although the numbers are not out yet, it is projected there will have been a silver deficit of 140 million ounces in 2023. The year before saw a massive record deficit of over 237 million ounces. If things keep up, solar panels alone will be eating up 20% of the total yearly silver supply in just 3 years!
Silver derivatives skew the real free market price of silver which has deterred buyers from investing in the sector. In January of 2000, silver was at $5.40 and today is up more than 400%. Yet, silver is the only commodity to have neither broken its 1980 high or kept up with inflation. Are we to see a sudden spike in precious metals soon? Central banks around the world have been buying gold hand over fist. While 2022 was a record year 1,081.9 tonnes purchased while 2023's total, while slightly lower, is still a remarkable 1.037.4 tonnes. 229 tonnes of gold was sold to various central banks just in the last quarter. Since 2010, they've accumulated an estimated 7.8K tonnes of gold.
The biggest buyer of 2023 was the Bank of China with 225t, followed by Poland with 130t. Singapore added an impressive 77t to their holding. They know something but aren't telling us. It sure looks to me like they're planning on going back to some kind of gold backing.
In the meantime, watch the USD fly. If a flight to safety is indeed occurring, then it would be feasible to see the dollar go back up to a 107 handle in short order. Darn, that would be bad for exports!
We'll see in time.
Blessed are the HODLers! It really does pay to hold for the long term.
Peace and love to everyone!
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