Today’s the first day in a long time financial markets appear willing to at least consider the reality of the geopolitical situation on the ground for what it is, as opposed to what most people would like it to be. As I’ve noted for months, the “trade war” is just one battle in a much larger, increasingly unstable struggle between the U.S. and China for global power and leverage to shape the next paradigm of world history.
A failure to appreciate how big this really is explains why investors have been so willing to swallow unrealistic happy talk from both sides. The risk that needs to be discounted in the market isn’t a risk of higher tariffs, but the risk of WW3. The U.S. and China were never going to sign a trade deal and blissfully return to the ways things were. That world is over. We now find ourselves in the very early days of a historic struggle to influence the future.
Gold
Back in January, I wrote a twitter thread centered around gold which ended up becoming very popular. It’s been around five months since then, so I want to provide a quick update.
I had outlined four reasons why I had become increasingly bullish.
10/ Now I want to summarize why I’m becoming increasingly confident a gold bull market is on the way.
1) Market cycles turning (discussed above).
2) Geopolitics, emerging multi-polar world order.
3) Sentiment.
4) Trading action.— Michael Krieger (@LibertyBlitz) January 4, 2019
The first three factors remain in play as far as I’m concerned, but the trading action has been pitiful in 2019 to-date as equities have soared. Nevertheless, I find it quite interesting that despite the S&P500 hitting a new record high a couple of weeks ago, the market in gold terms never really came that close.
The SPY/GLD ratio only got as high as around 2.44, or 6% lower than the September peak of 2.60 despite a gigantic snapback rally. This might mean absolutely nothing, but I doubt it.
Let’s now revisit some of my price forecasts.
25/ I think 2020 will be the breakout year. I think we’ll pass $2,000 that year and then get to $5,000 in the years that follow. 2019 is likely to be the hardest for bulls, we have plenty of price work to do before more people get interested.
— Michael Krieger (@LibertyBlitz) January 4, 2019
The price action has been less positive than I thought thus far, but I always maintained 2019 would be a slog. We still have six weeks to clear $1,350-$1,370, so we’ll see. If not, I still expect a breakout in early 2H19 as the reality of the global economic and geopolitical situation becomes impossible to ignore.
Bitcoin
Bitcoin’s been on a tear recently, but I want to highlight something far more important than price action. This past Friday, Rep. Brad Sherman of California uttered something I never expected a sitting politician to publicly admit about the real function of the USD and its central role in U.S. imperialism.
Wow, this is amazing. Authoritarian boomer politician explicitly states he wants to ban cryptocurrencies because they threaten the USD as global reserve currency.
If the USD’s status is really that weak, there’s no way to protect it. #bitcoin https://t.co/2rveZeBrkk
— Michael Krieger (@LibertyBlitz) May 9, 2019
The price soared higher after his comment and I immediately started wondering. Why is he saying this now? Do U.S. banks or the government have indications that sanctioned countries are either buying or using Bitcoin?
As I mentioned in last week’s post, The Old World is Dying, Bitcoin is a transformative asset which allows humans to do stuff they could never do before. Is the old guard finally starting to sweat as they see their archaic, centralized tools of power become increasingly irrelevant? This is just more evidence that the old world in in fact dying.
Source/More: Macro Update – Gold, Bitcoin and the Gigantic Global Debt Bubble | Liberty Blitzkrieg
