Gap Offers Opportunity

The global stock market's market distortion was revealed last week. Let me share it with you in visual form below.

I put together three ETFs: Vanguard S&P 500 ETF (NYSEARCA:VOO) in the blue line representing the S&P 500 broad U.S. stock index; Vanguard Total World Stock ETF (NYSEARCA:VT) in the black line representing the global stock market and Vanguard FTSE All-World ex-US ETF (NYSEARCA:VEU) in the red line representing the stock market outside of the United States.

Vanguard VOO VT VEU Monthly

Source: TradingView

The first chart above depicts the price dynamics since September 2010. Over this long period, the US stock market has outperformed both the global market and the rest of the world.

VOO received +257%, VT received +107%, and VEU received only +21%. Indeed, the gap is huge.

Smart money waits for a market crash before adding or purchasing stocks. In this regard, I've created a new chart below to show how these three instruments have performed from the deep valley in 2020 to the top of 2021. Continue reading "Gap Offers Opportunity"

Bitcoin VS Gold VS S&P 500

How does gold and its digital competitor Bitcoin relate to each other?

Gold is a traditional store of value, while Bitcoin from a conventional standpoint is highly risky. Even though the latter was nicknamed "digital gold," we can see from the chart below that it does not act like one.

Which opinion do you support?

View Results

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Gold BTC USM2 Real IR Quarterly

Source: TradingView

In the above quarterly chart, I combined 5 items:

The gold price is in black bars on scale A. The Bitcoin price is in orange bars on scale B. The U.S. money supply indicator M2 (M2) is in histogram on scale C. The red line represents the U.S. real interest rate (RIR) on scale D. There is a 2-year correlation coefficient of Bitcoin to gold (blue) in the sub-chart. Continue reading "Bitcoin VS Gold VS S&P 500"

Is 'Crypto Spring' Coming?

Last week, crypto enthusiasts got a boost when the crypto market cap almost reached the mark of $1 trillion, the highest level since last November.

That very month, I shared with you the bullish signal in the Bitcoin chart I spotted then. It was a Bullish Divergence on the weekly chart of the main coin.

Below is the distribution of your opinions on that bullish alert.

Poll Results

The "I am Bearish" option had gathered the most votes. The second largest bet was to see Bitcoin bounce back towards its prior consolidation area at $30-$35k. The price of digital gold was $16.5k at that time.

Before we check what happened to the price of Bitcoin since then, let us review the major crypto market.  
Top 5 Cryptos

Source: coinmarketcap.com

These are the five largest cryptocurrencies in the table above. Top coins are monumental at #1 Bitcoin with gain of 26% year-to-date (YTD) and #2 Ethereum with profit of 30% YTD. Binance’s native coin BNB has attained #3 spot (+28% YTD) long ago, surpassing the Ripple, which is now only #4 with gain of 20% YTD. Cardano closes the ranking at #5 with the largest gain of 47% YTD. Continue reading "Is 'Crypto Spring' Coming?"

Is Dollar's Dominance Over?

Last September, the Congressional Research Service published an "In Focus" report. They had already attempted to address speculation about the dollar's dominance in the face of global economic and geopolitical changes at the time.

Three major threats were addressed in that document.

China and its currency have risen to sixth place, accounting for 1.66% of global payments.

The next source of concern was US financial sanctions, as the share of Russian exports to Brazil, China, India, and South Africa in US dollars fell from 85% in Q2 2018 to 36% in Q4 2021.

Digital currencies, which include cryptocurrencies and digital currencies issued by central banks, have completed the list.

“Some policymakers have expressed concerns about an international race to create a digital currency with widespread adoption, arguing that the United States should create a U.S. digital currency to maintain the dollar’s prominence in international payments.”

"To date, there is no evidence of a shift away from the US dollar as the dominant reserve currency," the study concluded.

Back in October, I shared my most recent update for the dollar index, as it hit the first target with a fresh outlook.

At the time, I proposed two paths for the dollar: a continuation to the next target of $121 on an aggressively hawkish Fed, or a consolidation before resuming to the upside. The majority of readers supported both paths, with the consolidation option coming out on top.

The question of the dollar's dominance is resurfacing these days, as its value has plummeted dramatically. It is too early to tell whether this is a consolidation or a global reversal.

One thing is certain: the path of unending growth has been abandoned.

In my charts, I see a clash of perspectives. The technical chart is about to give a strong bearish signal. The chart comparing fundamental factors, on the other hand, supports the king currency's continued strength.

Let me show you each of them one by one, beginning with the emerging bearish alert. Continue reading "Is Dollar's Dominance Over?"

Top Fiat vs Gold in 2022: Focus on Inflation

It is time for my traditional yearly post to find out which fiat could beat the conventional store of value this year.

Let us see below how you predicted the future back at the end of December 2021.

Poll Results

The U.S. dollar was again the favorite bet for many of you. The next choice was the British pound, likely because it finished second in 2021. Among the top three bets, the Canadian dollar was an interesting choice that could be justified by the previous top ranking.

This time I changed the list of currencies to include only the top 5 currencies based on real foreign exchange turnover according to the Bank for International Settlements as per the table below.

OTC Foreign Exchange Turnover By Currency

Source: Bank for International Settlements

The following top 5 fiat currencies are listed in the table above: U.S. dollar (USD), euro (EUR), Japanese yen (JPY), British pound (GBP) and Chinese yuan (CNY). Continue reading "Top Fiat vs Gold in 2022: Focus on Inflation"