With carnage in the markets you would think that gold' would be . Quite the opposite, it is down with equities. Now much of this is simply institutions that use gold for a hedge are now selling to cover their margin calls. However with all the wreckage in the markets smaller investors as well as larger investors are going to look for not only a safe haven, but for growth that can offset their losses, and a hedge vs . So what will they buy now?
Your kidding right?
There is simply not a lot of VALUE in the stock market regardless of what you may hear. Simply you are paying a premium for growth like NVDA with a 55PE or Amazon at 219.
Sure you will see a rise in gold prices, but the world economy is still growing, and it is already trading at the top of its range. Now gold is an inflationary hedge, but many already own gold , so how much more can flow into this market? Most hold "digital gold" and a little physical.
I think money starts flowing into the crypto markets especially after the Senate Hearing this past Tuesday. Money managers are looking for growth right now and with a 400 billion dollar market cap, and the future being bright for block chain, there is plenty of room for growth here. Retail investors that are pulling their money out of the market as a whole, are concerned about which reduces their purchasing power, and another round of , to settle the markets, would be a boost for deflationary currencies such as Bitcoin'. Who wants fiat deterioration?
Yesterday we posted that we were looking for a pullback from the 8398 level to around 7500 where we would look to buy. Well we did not quite get there and are trading around the 8275 level. So do I buy here? As we may still pull back and are trading close to the top of the channel, and the 8400 level, the risk to reward tells me to be patient. I do not mind buying a breakout which is 125-150 pts away, when there is an opportunity to buy 775pts lower at the 7550 level. I'll be patient here.
Could continued selling pressure in the equities markets cause another pullback? Sure but unlike the gold derivatives market which is very deep, any selling in the crypto space has likely been done to cover margins in the market.
Bottom Line: As the dust starts to settle the best opportunity for growth is in the crypto space right now. Your buying off the highs, near the lows, in a young market that has the potential to be a disruptor. Is this a risky market? Sure it is, but so is the derivatives market as we have seen this week.
Curious to know, you find that you can make more in equities than crypto?