KINGSTON, NY, 19 JULY 2018—Two trend lines are approaching critical junctures and moving in opposite directions. The price of the safe-haven asset gold is trending down and the value of cryptocurrencies, which are striving for legitimacy, are moving higher.
Gold fell to $1,210 an ounce today, and is down over 10 percent from its January watermark of $1,362.90.
While the mainstream business media had anticipated gold would rise as Tariff and Trade War fears escalated, our position maintained that they would have marginal effect on global economies and markets, and, in fact, if they were a serious threat, gold, indeed would have risen.
As we have long forecast, the price of gold would decline as U.S. interest rates rise. Higher interest rates boost the dollar, push up bond yields, make gold a less attractive investment since it does not bear interest... and since gold is dollar denominated, it makes it more expensive for holders of declining currencies.
For example, India, a major purchaser of gold, registered its sixth month of gold import declines as the value of its rupee, which is down 7 percent year-to-date against the dollar, continues to weaken.
Besides factors such as a sharply declining dollar, currency wars, rapidly rising inflation, and equity market meltdowns which would spike gold prices, so too will wild card events such as escalating war tensions in the Middle East.
BITCOIN, OTHER CRYPTOS ON THE MOVE
In making our 2018 "Cryptomania Cash-In" Top Trend forecast, we anticipated substantial volatility as governments increasingly imposed bans, regulations and controls on trading crypto assets, and set new limits on initial coin offerings (ICOs).
Those factors, as well an unexpected number of hacks into exchanges that dampened investor confidence, drove a 55-percent drop in combined market cap valuation of the top 50 largest cryptocurrencies in the first half of 2018.
But while diving crypto values were grabbing the headlines, we were tracking a growing number of major banks, financial firms, hedge funds and investment groups that we forecast would increasingly embrace and institutionalize cryptocurrencies.
For example, earlier this week, Bitcoin jumped 4 percent to $6,612, after it was reported global investment firm BlackRock was forming a "working group" to explore how to capitalize on the cryptocurrency trend. And now Bitcoin is at around $7,470.
This latest development further confirms our "Crypto" Top Trend of 2018 forecast that when establishment firms such as Goldman Sachs, Fidelity, Wells Fargo, etc., broaden and increase their investments and interests in cryptocurrencies, it would fuel long term growth and assure legitimacy in the mainstream global financial community.
TREND FORECAST: We had long forecast that once gold dropped below $1,285 per ounce, the downside risk would be approximately $1,200. And for the past five years, we had noted that gold must break above $1,450 per ounce, which it has not, to move toward the $2,000 range.
On the crypto front, we maintain our forecast that Bitcoin must move into the high $11,000 per coin range to accelerate upward growth, which will in turn drive other leading digital currencies higher.