Early Voting Forecast: Gold and Bitcoin Win!

The Grey Swan Fraternity weighs in on a-political money OCTOBER 30, 2024 UPDATE A GREY SWAN PUBLICATION Early Voting Forecast: Gold and Bitcoin Win! “The American Dream is freedom, prosperity, peace, liberty and justice for all. That's a big dream. It's not always easy to achieve, but that's the ideal.” – Donald Trump --------------------------------------------------------------- [Turn Your Images On] Markets place their final bets ahead as the votes roll in. [Turn Your Images On] Addison Wiggin, Grey Swan Reader, October 30, 2024— This morning’s GDP data indicated a slowdown, with 2.8% annual growth. Meh. While that’s not much below the 2.9% rate economists expected, it is one of the last data points wonks like us were anticipating before the election. The market ignored the figure, and is cast an early vote for… Bitcoin. Yesterday, bitcoin soared to $73,546, coming within $150 of a new all-time high before pulling back. And while we were checking the gold price today, we happened to catch this screen shot: [Turn Your Images On] You may recall, we anticipated gold hitting $3,200 following the breakthrough at $2,100 back on March 1, 2024. The chart of the last few months shows momentum headed to $3200… and then some. Curious, we did some back of the envelope math yesterday. Looking at technical trading data, historical money supply and the Federal Reserve Balance sheet – then a bit of fuzzy BRICS buck analysis, election chaos insight and central bank bullion stockpiling – and we extrapolated a point on the chart that has the yellow metal cresting at $22,000. Yeah, we know. Crazy. Never happen. We’re checking our math again. That said, with the election less than a week away, what do the actual trading numbers mean? Yesterday, too, we organized an impromptu Zoom recording of our Grey Swan Investment Fraternity contributing members to ask that question and get their #1 idea on how to use grey swan events to protect and build wealth in 2025. Legacy Grey Swan fraternity members will have access to the recording as soon as edits are done. But I don’t think I’m spoiling too much here by pointing out there was a strong consensus that the uptrend in gold and bitcoin is likely to continue. Grey Swan contributor Mark Jeftovic, more specifically, strongly indicated he expects Bitcoin’s cycle should bode well for 2025, even if the overall stock market sees lackluster returns. He also expressed confusion over why gold bugs think investing in Bitcoin is an either/or – gold or Bitcoin – choice. The consensus extended beyon gold and Bitcoind to silver and with due diligence resource miners. Copper got a lot of accolades as well for its use in solar panels, the electrical grid and all matter of electronic gadgets, AI or not. More to come from the contributors… For now, as is our wont, we focus on gold, as a proxy for the meltdown on the fiat-based political money system. What better time than right before the electoral minions head to sanction their winner? Today another friend of Grey Swan, Jim Rickards joins us. Jim is an attorney by training and trade. His skill in international corporate law landed him the head legal job in the 1990s at hedge fund Long Term Capital Management. After that firm’s fantastic and historic meltdown, the receivership hired him again to sift through the contracts he’d presided over. In private, Jim jokes that he got paid to put the deals together and to unwind them when the fund blew up. Following the 9/11 attacks, Jim was invited to help build financial models for the Pentagon who wanted to track large financial transactions as one tool spooks could use to anticipate terrorist plots at home and abroad. His backstory and financial acumen, plus his historic work in currencies and geopolitics through his bestsellers, is how we met him and why we brought him to Agora Financial, a company I founded, (now Paradigm) a decade ago. We don’t agree much on politics. But politics are what they are right? That said, Jim’s forecast for gold, the dollar, the BRICS and the stock market are eerily similar to our own forecasts you’ve been reading in Grey Swan. The potential for several Grey Swan events, particularly those tied to a debt crisis, is why Jim is also a proponent of gold, even at today’s all-time high prices. Jim begins by calling gold “the once – and future – money,” the title of a book Nathan Lewis and I published with John Wiley & Sons in 2013. More from Nathan tomorrow. For Jim’s view on gold, keep reading below. Enjoy – Addison CONTINUED BELOW... --------------------------------------------------------------- [What we are heading toward has been planned for a very long time…. A World War III used to reset pretty much everything.]( [Turn On Your Images.]( All the players, including Russia and the West, are owned by the same Global cult... Unfortunately, there doesn't appear to be any real opposition to those who appear to be in control. [These 5 steps can help you prepare for America’s incoming punishment.]( --------------------------------------------------------------- CONTINUED... The Golden Rule Is Real Jim Rickards, [The Daily Reckoning]( There’s so much to discuss right now, from the upcoming election to geopolitical instability. But today I want to talk about gold. I call it the once — and future — money. The use of gold as money existed from antiquity until gold backing broke down entirely in 1971. Still, central banks and finance ministries hold over 37,000 metric tonnes of gold in reserve. Why? The answer is that gold is still at the base of global monetary systems. It’s simply the case that no government wants to admit this because the shortage of gold relative to bank notes would be exposed if they did. But gold is coming to the fore of the monetary system again. Central banks are buying gold as fast as they can. Let’s look at some pertinent data before turning to the key geo-economic trends that will drive the dollar price of gold much higher in the near future. The dollar price of gold today is $2,754 per ounce (subject to the usual daily fluctuations). As recently as Nov. 3, 2022, gold was $1,630. That’s a 69% gain in under two years. Gold was $1,375 per ounce in early June 2019. That means the dollar price of gold has doubled in just over five years. Most of the gains over that period have occurred in the past year. Gold was still $1,845 in October 2023. Whether we consider a multiyear trend or a more recent trend, gold has moved steadily higher with dramatic momentum lately. There’s a simple but important bit of math behind these price moves that investors should understand. It’s the key to making huge profits in gold in the months ahead. Investors tend to focus on the dollar price of gold and to analyze the price in round numbers. That makes sense. If gold goes up $100 per ounce and you own 500 ounces, that’s a $50,000 profit. Another $100 per ounce gain means another $50,000 profit. That’s real money for you. What investors may not realize at first is that each $100 gain (and $50,000 profit) is easier than the one before. That’s because each gain is measured in constant $100 increments, but the measurement begins from a higher base. A constant dollar gain is a smaller percentage of an expanding base so it’s easier to achieve in percentage terms. For example, if the price goes from $2,500 to $2,600 per ounce, that’s a 4% gain. But if the price goes from $2,900 to $3,000 per ounce (same $100 gain), that’s a 3.5% gain. Obviously, a 3.5% gain is easier to pick up than a 4.0% gain, but it’s the same $100 gain and $50,000 profit in your pocket. This dynamic is even more dramatic if we look at $1,000 price increases. (That means $500,000 in profits if you own 500 ounces). When the price moves from $2,000 per ounce to $3,000 per ounce, that’s a 50% gain. But when the price moves from $9,000 per ounce to $10,000, that’s only an 11% gain. Same $1,000 per ounce gain and same $500,000 in profit, but a much easier hurdle to move 11% compared with 50%. The math is obvious, but the psychology is not. And investor psychology is the engine that will drive gold prices to much higher levels faster than most investors can imagine. Below, I show you why gold is poised to blast off. Read on. Gold Is on the Launchpad The last time gold was taken seriously as a monetary asset was in the mid-1970s. The last time that retail investors had much appetite for gold investing was in the early 1980s. Gold hit $800 in January 1980. That was the all-time high at the time. Gold was flat to down from 1981–1999, hitting $250 per ounce in 1999 at the end of a 20-year bear market. From there, gold reached a new high of $1,900 per ounce in August 2011, a 670% gain in 12 years. Then gold fell into a second bear market, falling $850 to $1,050 per ounce in December 2015. That was a 45% crash from the 2011 high. If you treat the 1999 low of $250 per ounce as a baseline, the 2011–2015 crash was actually 51.5%: (850 / 1650 = 51.5%). That calculation is important. Jim Rogers, the greatest commodity trader of all time, told me that no commodity goes to the moon without a 50% correction along the way. Gold had its 50% correction in 2015. Now it’s off to the moon. The point is that despite two bull markets (1971–1980 and 1999–2011) and two bear markets (1981–1999 and 2011–2015), gold investing never captured the popular imagination in the way that housing did in the early 2000s or that stocks have today. Individual investors have been in and out of the market and investors from the early 2000s have done quite well. Hedge funds trade momentum but get out at the first speed bump. They don’t think of gold any differently than they do soybeans or oil. It’s just a trade. The institutional investor footprint in the gold market is almost non-existent. From an investment perspective, gold has been an orphan asset with a few supporters but not many. That’s all about to change radically. Here’s why: The first key to gold’s coming surge is the role of central banks. Retail and institutional investors may not be that interested in gold, but central banks definitely are. In recent years, central bank holdings of gold have surged from 33,000 metric tonnes to over 37,000 metric tonnes, a 12.0% gain measured by weight. This increase has been heavily concentrated in two countries — Russia and China. Russian gold reserves have risen from 600 metric tonnes in 2008 to 2,335 metric tonnes today, a gain of 1,735 metric tonnes or nearly 200% from the 2008 base. China also had about 600 metric tonnes in 2008 and today has 2,264 metric tonnes, a 275% gain. (There is good reason to conclude that China has undisclosed gold reserves, which would make those total and percentage gains ever higher). [Turn Your Images On] Source: TalkMarkets The Big 10 holders of gold include the usual suspects — The U.S., Germany, Italy, France, Switzerland and Japan. But the list also includes some newcomers such as Russia, China and India. Other important countries are vying for a place in the global gold club. In the second quarter of 2024 (most recent available data), Poland added 18.7 tonnes, India added 18.7 tonnes, Turkey added 14.7 tonnes, Uzbekistan added 7.5 tonnes and the Czech Republic added 5.89 tonnes. Why the large gold holdings and why the rapid additions to gold reserves if gold is not a monetary asset? The question answers itself. Gold is a monetary asset. Central bank net buying is equivalent to about 20% of annual gold mining output. That doesn’t indicate a gold shortage, but it does put a firm floor under the dollar price of gold. That creates what we call an asymmetric trade. On the upside, the sky’s the limit, but on the downside, the central banks have your back to some extent because they will definitely buy the dips to increase their gold hoards. That’s the best type of trade to be in. So the stage is set. The simple math of easier percentage gains for constant dollar gains is the dynamic that can set off a buying frenzy and lead to super-spikes in the dollar price of gold. Central bank buying causes a relentless increase in the dollar price of gold and offers limited downside because they will buy the dips. All that is needed to set off the super-spike is an unexpected development that is not already priced in. Now we have it. The BRICS met in Kazan, Russian Federation last week. The BRICS have a rotating presidency and this year Putin is president of the BRICS. The world is waiting for the announcement of a new BRICS currency. That may come in time, but not yet. The new currency may be 10 years away. What happened instead was that Putin and the BRICS announced a new blockchain-based digital ledger to record trade payments using existing currencies of the BRICS members. The significance of this system (tentatively named “BRICS Clear”) is that there are no dollars involved and the secure payment channels are relatively safe from U.S. and EU sanctions. Russia will sell oil to China for rubles, Brazil will sell aircraft to China for reais and India will sell technology to China for rupees and so on. (Alternatively, any BRICS member can elect to take the currency of any other BRICS member, all to be recorded on BRICS Clear). Payments can be settled on a net basis instead of a gross basis. This means, for example, that Russia and China can trade goods and record payments. There will be “due to” and “due from” on the ledgers. Those can be netted out with only the net amount changing hands. And this does not have to be done in real-time; it can be done monthly or quarterly. This greatly reduces the amount of payments and message traffic. The central bank or commercial banks in each country can provide payments to local sellers in local currency while recording a due from the BRICS Clear ledger on its books. That system can work well, but it leaves two issues unresolved compared to a single currency system. The first is stability in exchange rates while balances are left unsettled. The second is the overaccumulation of a certain currency by one party that may have limited use for that currency. If you don’t want to take exchange rate risk, you can take your counterparty currency balances and buy gold. And if you have too much of a certain currency standing on your accounts, you can reduce the balance by buying gold. The implications of this have not yet sunk into market pricing. It’s tantamount to an informal gold standard without fixed exchange rates. It relies on market forces (mostly denominated in U.S. dollars for now) and does not rely on huge hoards of freely convertible gold in central banks. Still, it works. It positions gold as an anchor in a new international monetary system without the strictures of the classical gold standard. The picture is now complete. Gold is on an upward path driven by central bank buying. Gold is poised to go much higher because the BRICS will use physical gold as their anchor instead of U.S. dollars. And investor psychology will cause a super-spike once the big dollar gains become a daily occurrence. It’s a powder keg and the BRICS have just struck a match. The smartest move for everyday investors is to buy gold now before the fun really begins. ~~ Jim Rickards, [The Daily Reckoning]( So it goes, Addison Wiggin, Grey Swan P.S. Politics make strange bedfellows. If you’re persuaded Trump has taken the lead, you’ll appreciate Rickards’ forecast for [The 2024 Election Meldown]( which you can view by clicking on this link [right here]( At the same time, we randomly discovered this headline on the World Socialist Web Site (WSWS.org) this morning: Gold price surging to new record highs calling into question role of the dollar “The continued surge in the price of gold,” writes Nick Beams, who we assume is a socialist himself, “its record high of more than $2,700 per ounce last week and has risen 40 percent in the past year has raised issues about what this signifies for the future of the dollar-based international monetary system.” Jim’s hardly a socialist. We’re more inclined to trust his [financial advice]( than the WSWS. Meanwhile, for you Grey Swan political junkies, some more red meat. The oft-cited, Michael Snyder reports on his Substack that food banks are in high demand in the swing states of Michigan, Wisconsin, and Pennsylvania. Snyder notes: The Biden administration is being blamed for this inflation crisis, and that will cost Kamala Harris millions upon millions of votes. At this moment, demand at food banks is high in many of the key swing states that Harris desperately needs to win. In Pennsylvania, we are being told that demand “is actually as high as it was at the peak of the pandemic”… National polling is still showing a dead heat (ha, ha, ha!). The betting site Polymarket shows Trump with a 67% chance to win. Ms. Harris is down to 33%. Guess who is now questioning the legality of betting on the elections? Either way, on Polymarket all the swing states have moved to the Trump camp, except Michigan, which remains a toss-up. In our current media environment it seems easier to trust betters than pollsters. How did we get here? Find out in these riveting reads: [Demise of the Dollar]( [Financial Reckoning Day]( and [Empire of Debt]( — all three books are now available in their third post-pandemic editions. You might enjoy one or all three. [Turn Your Images On]( (Or… simply pre-order [Empire of Debt: We Came, We Saw, We Borrowed]( now available at [Amazon]( and [Barnes & Noble]( or if you prefer one of these sites: [Bookshop.org]( [Books-A-Million]( or [Target]( Please send your comments, reactions, opprobrium, vitriol and praise to: addison@greyswanfraternity.com [Turn Your Images On] (c) 2024 The Wiggin Sessions @ Grey Swan, 1001 Cathedral Street, Baltimore MD 21201. Dedicated to examining “highly improbable, but imminent events” likely to change history, economics, politics and finance. Although our employees may answer your general customer service questions, they are not licensed under securities laws. They cannot address your particular investment situation. No communication by our employees to you should be deemed personalized financial advice. [Privacy Statement.]( That said, your feedback is very important. 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