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I’ve predicted that a long period of deflation in the Western world would
end with a Fed taper, rate hikes and quantitative tightening.
That’s clearly in play now, and the deregulation of America’s thousands of
small banks is perhaps the most exciting event taking place on this new “inflationary
frontier”. Because of these powerful monetary trends, I’ve predicted big
problems ahead for Wall Street and somewhat better times for Main Street.
Having said, that, I think investors would be making a major mistake to
assume America is going to experience any kind of fabulous rebirth and relive
an economic growth era like the 1950s, let alone the Golden Age of the 1880s.
The country now sports some of the worst demographics on the planet
with horrific debt levels that are still growing under a president who is a
spectacularly successful businessman.
What happens when President Businessman is replaced with President
Socialist? Some sort of currency revaluation endgame is what happens. The
problems of America and most of the Western world are not going to be solved
with pump-up speeches, sporadic tax cuts, and insane “good guys versus
bad guys” wars.
American GDP growth is going to continue to wallow at low levels while
China and India blast into what I call the “bull era” at very high
velocity.
Global investors need to make themselves great, and the blockchain/crypto
asset class is one way to do it with style. I view blockchain as a sub-sector
of the gold asset class. Importantly, blockchain trading is set to become
more regulated very quickly.
Promoting regulation that doesn’t interfere with a market’s price
discovery process appears to be a key goal of the Trump administration. It
looks like new bitcoin
regulation will be focused mainly on specific criminal schemes. That won’t
stop the great upside price action taking place now on the legitimate
exchanges. That price action is defined by great demand and rock solid fixed
supply.
Institutional-grade trading of the cryptos is already beginning to happen,
as demonstrated with the superb launch of fully regulated bitcoin futures on
Sunday night.
The launch proved that institutional money managers view the $16,000
price area as solid.
My long-term price target is two million US dollars per bitcoin. At www.gublockchain.com I analyse
the main cryptos that are ready for serious upside action. A week ago, I
highlighted key currency Litecoin at $100 for the gold community, issued a
$1200 target, and showed potential subscribers a solid-looking chart.
The updated price action.
Even after this mighty blast higher, the $250 area for Litecoin should
probably not be viewed as anything but a minor pitstop on a rocket ride to
$1200.
I’ll be highlighting what could be the “next Litecoin” for
profit-hungry blockchain subscribers today. It’s critical for investors and
freedom fighters to understand that in the big picture, both gold and bitcoin
will remain investments that only create huge fiat money profits… until they
are widely used in daily life for payment of regular goods and services.
Then they can begin to compete with fiat money as the money of choice
for citizens in a very serious way. I’ve predicted that this will happen
because of the ability of blockchain technology to create digital gold-backed
currency. That currency can be kept in a regulated and insured account, like
a bank account.
Debit and credit cards based on these accounts are coming, and when that
happens I’ll dare to suggest that Mr. and Mrs. Fiat are going to start
feeling very uncomfortable. If these blockchain payment systems go
mainstream, government could soon find itself becoming obsolete in many ways.
I predict that central banks will begin buying bitcoin as an asset to hold
once it hits $2 trillion in “market cap”.
The US Treasury should have initiated a bitcoin buy program years ago to
help fix the government’s balance sheet. Instead it wasted precious time
playing stock market cheerleader, government bond enthusiast, and ruined the
bank account income of ageing citizens. That was a truly horrific mistake,
one that all the citizens of the world can only hope never happens again.
This is the superb daily gold chart. Gold has a rough general tendency to
rally after the US jobs report, unless a Fed rate hike is upcoming. In that
case, gold often stagnates until the rate hike is announced, and then surges
higher.
The Fed is scheduled to hike rates tomorrow, and gold is now poised
magnificently inside a bull wedge, ready to stage a mighty blast higher if a
hike is announced tomorrow.
Also, Chinese New Year buying will begin very soon. That tends to
bring enormous demand from not only Chinese citizens, but also from
gold-obsessed Indians who want to get in on the action. The combined
population of these two countries is about three billion people. Goldman
analysts just released a key study of gold and blockchain liquidity flows.
I’ll take it a step further, and state adamantly that blockchain will
increase demand for gold. Indian investors will seek to put a portion of
their huge blockchain profits into physical gold because they are
essentially mandated to do so by their Hindu religion. Western investors
will do the same thing when the stock market finally rolls over. If
gold-backed blockchain currency goes mainstream, demand for gold would
increase even more significantly, and do so in a sustained way. I
think it will happen.
Regardless of whether it happens or not, when Chindians get serious about
buying gold, the most powerful traders in the West also quickly position
themselves to profit from the inevitable upside price action.
The powerful commercial traders have covered huge amounts of short
positions and are eagerly racing to buy longs.
What’s particularly exciting about these two COT reports is that the
reports only cover the flows through last Tuesday. It’s highly probably
that the commercial traders have taken even bigger buy-side action with gold
and silver since the reports came out.
This is the key GDX chart. I’ve outlined the $23 - $18 area as a vital buy
zone for gold stock enthusiasts. Within that price area, the $21 and $18
price points are most technically significant. The tiny bear flag in play
suggests that investors will get a chance to buy the $21 area before an
imminent major gold price rally carries GDX much higher. Investors can join
me in placing some larger buy orders at both price points now, to be sure
we’re all poised to participate in the ensuing rally time fun!
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