The numbers this week are concerning – after mild (but suprise) inflationary figures in the US we are now looking at broad price increases with few exceptions this week.
This coming week we will see inflation figures in the UK and Canada and the FOMC Minutes,
The people are revolting! And not in ways that you might expect. Although the people agree on a fact together – that there are fundamental failures at the highest level of the U.S. government, there are various rallying cries.
One of those is BLM, a corporate-funded exercise in controlling the anti-government narrative. When married with Antifa, a 1,2 punch emerges in battling the US government for leftists. The other approach is to equate government corruption with evil – even to equate almost any assertions of control as evil.
Regardless of any animosity between the groups, the clear message is that things are not all right in the governance of Western nations – a socio-cultural failure has been developing into an existential threat.
Does anybody care about the Coronavirus anymore? Russia has announced it has a vaccine it is rapidly producing but the S&P500 has traded back to its all-time high anyway. Warren Buffet is buying his first gold-miner, graduating to gold-bug after not getting any of his bids filled in the March crash while offering his airliners at the low.
If the market sold off next week nobody would be surprised, but for us the way that this can happen is through an event of the financial system. A de-leveraging or bad debt contagion would have to arise to convince holders to sell, who would otherwise be quite confident in a nuclear government response in the event of a falling market.
Also this week, China is expanding its testing of its Central Bank Digital Currency. So far there are no further hints of it being asset-backed and we are still wondering what the strategy is for this fundamental change in policy, where China would open the currency up to market forces in a way it has not done before as well as give up on attempting capital controls within China.
Italy and the Bank of England have also expressed interest in Central Bank Digital currencies.
Bitcoin is well behind the rest of the digital asset-market in bullishness. After giving up its equity and gold correlations weeks ago, the quiet market is a little bizarre. Bitcoin should be a uniquely strong value-adding asset for institutional portfolio’s in the current conditions as 1. digital gold, 2. entry to digital assets and 3. as an asset yet to mature.
Volumes in bitcoin were lower this week, after last week began to look like a period of heightened volume.
Although the price moves have been made, the money trade – dropping fiat for sound money – has gained momentum in sentiment. With Warren Buffet investing into a gold miner, this trade may have a long way to go.
Gold has had a tough week, falling over early in the week. Our expectation is that the trend continues. The Comex contract expiry on the 27th of August will keep things interesting.
The dollar index had made a double-bottom before showing the potential for a rally. Since then, USD has remained weak.