Sell bitcoin and gold

Societe Generale with the note. BTC is a ponzi scheme and should always be sold. Sell gold because US real interest rates are about to bottom as inflation falls:

The recent rise in equity indices and commodity prices indicates great progress in putting the COVID-19 crisis behind us. Meanwhile, the vaccine rollout is fuelling expectations that the V-shaped recovery has further to run even beyond the currently strong base-effect-inflated, phase. With more optimistic views on future demand emerging, deflation fears have faded fast,but inflation expectations have surged, with US 10y breakevens at 2.5%, an eight-year high. So,a favourable mix for risky assets, but much less so for fixed-income long maturities.

But if the background is so favourable, why the negative performances in gold and Bitcoin? Both assets are off their respective peaks. Gold is down 16.8% since hitting $2,039/t oz on 11/08/20, although it has admittedly regained 8.4% recently. And at $36,780 on19/05/21, Bitcoin has lost 42.1% since it peaked on 13/04/2. Such negative performances follow much longer periods of positive performance in both cases.

Outshining…Bitcoin has clearly ‘outshone’ gold both to the upside and now also to the downside. But with such a gap in volatility and amplitude, does it make sense to compare the two assets at all? We agreed that investors perceive both as offering protection (or at least alternatives) against official central bank money, the value of which is being undermined by unprecedented monetary and fiscal stimulus. But without a yield of their own, the only potential reward to investors in Bitcoin and gold is from their positive price movement, which is essentially the only thing they have in common, apart from their ability to trigger rush buying.

The role of Bitcoin remains highly contested…It comes as no surprise that the place of Bitcoin in any investment portfolio remains highly contested, precisely because of its erratic price movements. After the latest leg down (and notwithstanding the 74% rise since 8 September 2020 when inflation fears re-emerged) investor enthusiasm must surely have cooled. And under which allocation heading should Bitcoin be classified anyway?

◼ Not a currency. Despite Elon Musk’s teasing, Bitcoin still can’t be used to buy a Tesla.
◼ Not a commodity. The energy transition is increasing demand for rare metals, but not for energy-slurping data centres per see.
◼ Not cash.Bitcoin will not increase your portfolio’s liquidity ratio or help settle your taxes.

So maybe Bitcoin needs to be classified under a new “virtual asset” category of its own, alongside other crypto currencies such as Ethereum and other token assets?
But then the Fed, PBoC and other central banks tend not to appreciate competition from fiat currencies that undermine their monopoly. Regulation may be the biggest threat ahead for Bitcoin…. where as gold’s place in an investment portfolio is much better understood.

While we do not anticipate vast gains, we do assign gold a 5% direct weight in our Multi AssetPortfolio (MAP) to serve as a portfolio stabiliser. In the event of rising inflation, gold can partially offset capital losses on bonds. Also, in the event of runaway inflation (not our expectation) or a return to deflation (not our scenario either, but arguably still central banks’ biggest fear), gold has a protective role in partially offsetting losses on equities.

History shows that over time the price of gold closely tracks real bond yields (Chart3). Also, the price ratio of copper (the most cyclical metal) to gold (the most defensive) has proved a neat model for anticipating higher US Treasury yields (Chart 4,SGe 2.2%1Q22). Interestingly, gold has risen recently,gaining 8.4% since 9 March 2021.

Given the still high equity weighting in our MAP at 59%, combined with the increasingly loudly articulated and ‘terrifying’ T-word (whisper it-tapering), a portfolio stabiliser in the form of gold makes especially good sense to us. In short, investors do not need to be big believers in a commodities super-cycle; we tend to remain sceptical as a part from opportunities that might arise from base effects and the fleeting impact of replenishing inventories, there is little reason for investors to take much interest in precious metals.

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Comments

    • I love those guys. I’m about to dip my toes into the water of buying some of their international stocks

  1. I used to own 850 bitcoin which I sold 50% up at $33 as I thought it was a ponzi scheme. That was a huge mistake

    • Lord DudleyMEMBER

      Was it a mistake? If your decision was sound based on the information you had at the time, I wouldn’t call that a mistake. If you could go back in time and change the way you make decisions for that particular scenario, you’d need to make the same behaviour adjustment for all scenarios. That raises the question, given the consistent application of reckless behaviour, whether you’d even have that money to invest in the first place

      Never underestimate the selection bias that occurs for people who get wealthy from things like Bitcoin.

      • Like house price smugness, on par with the self satisfied smirk on Morrisons mug.

  2. Goldstandard1MEMBER

    I bought *insert much higher thing* for X and I sold it. That’s life. Not many people had bitcoin back then and held it. It was as likely to do what it did as a metiorite hitting the earth in the next 50 years…..possible but very unlikely.

  3. Lol. I sold 300000 realestate.com shares at 10c many moons ago and still doubled my money

  4. Gold is on a tear the last week… I think a lot of BTC refugees are seeing the light….that golden light

  5. I’m watching and ready to jump back in (or catch a falling knife depending on your view). Just want it to fall a bit more. Not BTC though – even if it goes to $100K you are not really getting return for the risk.
    It may be a ponzi but Ponzi’s can run wild for a while so IMO let the intellectual argument rage and just throw some crumbs and see what happens.
    Already have ETH & DOT and now thinking Cardano, Hedera Hashgraph or PowerLedger. If either drop enough and I buy I will post it so you can mock me when it all goes to zero.
    ETH & DOT still up on purchase price but way way down on where it got to and I think it could go either way and I’m fine not knowing.

    • I’m still with BTC. Level 2 solutions will float BTC first. China FUD comes and goes… like all the other Alts.

  6. BakuninMEMBER

    Fiat currency and fractional reserve banking are pyramid schemes and central banking is the biggest con known to mankind.

          • Fiat currency has been around since the nation/city-state, only thing that changes is the token or unit of accounting eg. it the state goes poof so does the token no matter what form its denoted in. So in your opinion the drama is about the state and not the unit of account hence all governments are Ponzi’s, good luck with hedging that.

            Its just a historical observation so there is no trolling involved. Personally I don’t confuse the outcome of corporatist neoliberalism with monetary systems because you can get the same outcomes with either hard or soft.

          • BakuninMEMBER

            Fiat money is the most liquid asset, except in extreme disequilibrium.

            The state is also committed to debasement.

            1971

            Not everyone has mountains and mountains of debt, hence some need to diversify.

            Good luck with that, Skip.

          • Go read the article I posted on afternoon links and the Chicago school effect. Btw get back to me on wages and productivity diverging followed by the aforementioned and loose credit with a side of casino antics to make up for it. But yeah currency debasement…

          • BakuninMEMBER

            I’m not going on a wild search.

            Fiat paper currency isn’t sound money, but It’s impossible to reason with Keynesian and MMT prostitutes. Even if you present them with evidence that shows that white is white and black is black you still will not be able to change their ideologically warped minds.

            So, let’s turn to the cold hard stats, current trends and historical facts about currency and its related debt:

            Global debt reached US$281 trillion in 2020 and is set to go much higher in 2021.
            Real interest rates are now negative and there is 20 trillion of negative-yield debt around the globe.
            Global money supply increased by approximately 27% over the last 12 months
            US M2 increased 24.2 % YoY in Mar 2021
            The Fed’s balance sheet will probably expand to between $8.5 trillion and $10 trillion by the end of 2021 depending on the size of the U.S. budget deficit.
            Currency is not money because it has an associated debt. Gold is money and has been for 5,000 years; everything else is credit.
            There gave been 775 fiat currencies in the history of the world and 75% of them no longer exist.
            The dollar, the Yen, the Euro and the Pound have lost 96-99% of their value over the last 100 years
            Examples include:
            the debasement of Roman Denarius from 50 BC – 300 AD.
            The Pounds Sterling 380 years ago used to be worth a pound of silver. It now takes 174 Sterling to purchase a pound of silver.
            The US Dollar has lost 96% of its value since 1913.
            The IMF have announced that the world needs a new Bretton Woods and the WEF is openly talking about a currency reset
            Ray Dalio now prefers Bitcoin over bonds and Michael Burry is betting on hyperinflation.

            Fiat currency isn’t money.

            You need any more help with this?

  7. Mike Herman TroutMEMBER

    I’ve been accumulating gold while watching bitcoin soar… has been difficult at times…..will continue to add monthly…..

  8. One thing the coronavirus has taught me is that no-one knows what they are talking about. Actually two things, the second being, don’t automatically believe anything you read or hear.

  9. Ailart SuaMEMBER

    I wonder if all this speculation and all the grey matter that’s focused on it will one day cease and we’ll begin redirecting it into tangible innovation. Not the Afterpay type of innovation, which IMO, is just another Ponzi scheme. I don’t know if anyone watched the 60 minutes Afterpay ‘advertorial’ last night. It turned my stomach. All I could think about when it finished, was the poor naïve investors who bought in late.

    • “I wonder if all this speculation and all the grey matter that’s focused on it will one day cease and we’ll begin redirecting it into tangible innovation.”

      Best laugh I’ve had in days. Cheers!

      • Ailart SuaMEMBER

        I’m glad I’ve ‘tickled your funny bone’ – but I’m curious to know why you find it so amusing. Care to elaborate?

        • Not having a dig. I agree with what you say, but history has repeatedly shown that wherever there is an easy buck to be made, that’s where the efforts of many of the brightest will be directed. I hope that changes some day.

          • Karl Marx hoped for the same change and even devised a system he was sure would do that. I hope you agree that failed miserably.