Gold hit by jobs growth numbers this morning. When the report came out that the U.S. economy added 201k in August, the yellow metal immediately sank back below the $1,200 level.
Meanwhile, emerging market currencies continue their slide, boosting the U.S. Dollar and putting pressure on the price of Gold.
No one knows for sure how long the sell-off in emerging markets will last. In the past 10 years, there have been seven major downtrends, but none of them lasted as long as this one.
Dollar denominated debt seems to be the problem for most emerging growth countries.
Emerging-market stocks have been under pressure as tighter U.S. monetary policy is seen, worries about global trade and economic meltdowns in Argentina and Turkey.
So, if the U.S. Dollar continues to strengthen, a sustained rally in the price of Gold from this point is highly unlikely.
Strong headwind emerges in the Cryptocurrency arena
The price of Cryptocurrencies are under continued pressure as one story after another delivers bad news for investors in these markets.
On Wednesday, it was reported that Goldman Sachs has shelved plans to create a Bitcoin trading desk. Also hurting the prices of the most popular Cryptocurrencies was the recent rejection by the Securities and Exchange Commission of several bitcoin based exchange traded funds.
So what does the future hold?
Bitcoin investors have been experiencing wild gyrations in the price of bitcoin in 2018. The digital currency began the year on a high note. Bitcoin prices nearly reached $20,000 in December, 2017 as investors poured dollars into cryptocurrencies.
At the time of this report today the price of Bitcoin is trading at $ 6,426.00.
But before we discuss further the future of cryptocurrencies, I wanted to share a story released a few months ago to give you a sense of how speculative the cryptocurrency market really is.
The Securities and Exchange Commission set up a mock Initial Coin Offering (ICO) to educate investors and teach people about the dangers and pitfalls of investing in cryptocurrencies.
Their lesson is, If it sounds too good to be true, it probably is.
The goal of the project was to acquaint investing novices with signs of fraud before it’s too late. “The rapid growth of the ‘ICO’ market, and its widespread promotion as a new investment opportunity, has provided fertile ground for bad actors to take advantage of our main street investors,” said SEC Chairman Jay Clayton in a statement. “We embrace new technologies, but we also want investors to see what fraud looks like, so we built this educational site with many of the classic warning signs of fraud.”
The site,HoweyCoins.com, mimics a coin offering, proclaiming, “Combining the two most growth-oriented segments of the digital economy, blockchain technology and travel, HoweyCoin is the newest and only coin offering that captures the magic of coin trading profits AND the excitement and guaranteed returns of the travel industry.”
Anyone who clicks on “Buy Coins Now” will be led instead to investor education tools from the SEC and other financial regulators. “Fraudsters can quickly build an attractive website and load it up with convoluted jargon to lure investors into phony deals,” said Owen Donley III, chief counsel of the SEC’s office of investor education and advocacy. “But fraudulent sites also often have red flags that can be dead giveaways, if you know what to look for.”
The HoweyCoins site hits on several tell-tale signs of a scam. Guaranteed returns? White paper with wordy-but-vague explanation of the investment. An anxiety-inducing countdown clock? Celebrity endorsements?
While those attributes don’t necessarily mean the offering is bogus, it’s wise to be aware and skeptical.
But there are many still out there who believe that there still is a bright future for the cryptocurrency investor.
I believe the key to the future will be the creation of the Cryptocurrency ETF. Cryptocurrency bulls have been hopeful that the U.S. securities regulator will grant the first bitcoin exchange traded fund (ETF) this year, but they’ve been left disappointed by a series of rejections and postponements.
Bill Barhydt, chief executive of bitcoin payment start-up Abra, said that’s because, so far, the applicants haven’t fit the financial archetype that the U.S. Securities and Exchange Commission is looking for. He goes on to say, he thinks the issue with the SEC, is that the people who are doing the applications don’t fit the mold of who the SEC is used to approving,
In my opinion, this is a major hurtle that this industry must get over before there is any hope that this market will have a future. Otherwise the “wild west” of unregulated cryptocurrencies will continue, with investors throwing their money at something most don’t understand. Just getting caught up in the excitement with the hope of making a quick fortune in a short period of time.
As the saying goes, “let the buyer beware”.
Have a wonderful Friday.
Disclaimer: This editorial has been prepared by Walter Pehowich of Dillon Gage Metals for information and thought-provoking purposes only and does not purport to predict or forecast actual results. This editorial opinion is not to be construed as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein cannot be attributable to Dillon Gage. Reasonable people may disagree about the events discussed or opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. It is not a solicitation or advice to make any exchange in commodities, securities or other financial instruments. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisers with respect to these areas. By posting this editorial, you acknowledge, understand and accept this disclaimer.