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| Money Metals News Alert | January 15, 2024 – Gold finished last week slightly higher following a healthy bounce on Friday. Stock prices also rallied, the U.S. dollar finished essentially flat for the week, and Treasury yields fell.
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The U.S. began a bombing campaign in Yemen Friday... another escalation in the geopolitical turmoil. While the prospect of war is rising, given U.S. involvement in Ukraine, the Middle East and, now, northern Africa, the markets aren't reacting.
Either investors have grown jaded with the news, or markets are on autopilot and there aren't many humans involved. Perhaps it is a combination of both.
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 | Gold : Silver Ratio (as of Friday's closing prices) – 88.1 to 1 | | |
| Bitcoin Is No Substitute for Gold | | | |
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With Bitcoin making the news last week when the Securities and Exchange Commission (SEC) finally approved exchange traded funds, it's a good time to review the topic again.
Bitcoin still offers the potential to serve as a form of honest money and to end-run the central bankers and politicians who have abused the fiat system so badly.
Yet some proponents still market the crypto asset as "digital gold."
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That combined with the dramatic rally in bitcoin prices over the past year means there are plenty of interested investors.
There are good reasons to own bitcoin, but they are not the same reasons to own physical gold.
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The notion of bitcoin as "digital gold" is dangerous and misleading.
First, the comparison with gold is nonsense. Bitcoin is not a reliable store of value nor is it a solid safe-haven asset.
Bitcoin is not proven or permanent. It is better to think of bitcoin as a promising technology.
If it succeeds in gaining widespread adoption and use, it will help solve some massive problems with world monetary systems. That hasn't happened yet and there is no certainty it will. | | |
Additionally, bitcoin will flourish just so long as it remains the most popular, useful, and secure cryptocurrency. Bitcoin is certainly the frontrunner. It has a bigger network effect and an advantage in terms of "brand" awareness versus other tokens, many of which have failed or been exposed as outright frauds.
Ask anyone who can remember the social media pioneer MySpace whether those advantages meant the technology company would remain permanently on top.
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Bitcoin's fortunes are tied to a community of volunteer developers working to improve and update the protocol. Humans are making judgments about the direction development should take, and it is therefore possible they will get it wrong.
Take, for example, the controversial decision to implement the Lightning Network.
Several years ago, there was a split in the community over the question of how best to scale up the ability for bitcoin to process more transactions per second, when severe speed limitations and costs became apparent during periods of high volume.
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A majority decided to abandon trying to scale on the bitcoin blockchain itself and instead pursue a technology called Lighting Network.
While progress has been made in developing this second layer solution, there are plenty of problems remaining. Among them is the fact that Lightning is nowhere near as decentralized or secure as the bitcoin network itself.
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Bitcoin is an innovative technology with both the potential to change the world AND the potential to fail and become worthless. Investors should buy it because they understand the project and believe it will succeed, not because it is "digital gold."
Gold is a completely different animal. It is not a technology, and its value isn't dependent on innovation, electricity, and an internet connection. There are no developers behind it.
Physical gold is scarce, durable, and beautiful and therefore valuable. These properties have made it useful as a safe haven and as a store of value for thousands of years. There is no substitute.
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| Key Economic Data Scheduled for This Week | |
- Wednesday, January 17th – Retail Sales. Economists expect some improvement in retail sales growth for December versus the prior month. The forecast is for 0.4% growth, following 0.3% reported for November.
- Wednesday, January 17th – Industrial Production. Production is expected to fall by 0.1% in December, versus a 0.2% increase in November.
- Friday, January 19th – Consumer Sentiment. Consumer sentiment has been somewhat anemic for months. No improvement is expected in the January survey, with the consensus calling for the same 69.7 as was reported in December.
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| This week's Market Update was authored by Money Metals Director Clint Siegner. | | |
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| This copyrighted material may not be republished without express permission. Offer only available through email promotion. Offer does not apply to previous orders and may not be combined with any other offer or program. Special shipping rates or other restrictions may apply to international orders. The information presented here is for general educational purposes only. Money Metals Exchange and its staff do not act as personal investment advisors. Nor do we advocate the purchase or sale of any regulated security listed on any exchange for any specific individual. While our track record is excellent, investment markets have inherent risks and there can be no assurance of future profits. You are responsible for your investment decisions, and they should be made in consultation with your own advisors. By purchasing from Money Metals, you understand our company is not responsible for any losses caused by your investment decisions, nor do we have any claim to any market gains you may enjoy. Money Metals Exchange is not a regulated trading "exchange" as defined by the CFTC and the SEC. | | |
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