Monthly Archives: December 2020

Outlook for Both Crypto and Gold, Silver Bullion Continues to Be Strong

The outlook for gold and silver bullion prices has turned back to Strong earlier last fall. Several significant factors — now accelerated by this latest crisis and the economic strains of the worldwide over-reaction to it — are increasingly working in favor of precious metals as an investment into 2020 and beyond.

gold bullion coins and silver bullion coins as Tangibles investments.

Gold , Silver Bullion Coins, image ©2019 by marquixHD. All rights reserved.

Demand for Non-Fiat Investments

In the intermediate term, and with the up and coming Crypto currencies becoming increasingly popular after 2011–3, some investment money looking for alternatives to fiat or paper investments had gone into Bitcoin, Litecoin, and other of the so-called virtual “currencies” or, rather, Crypto coins or tokens.

In light of the above, we’re obviously talking about physical precious metals bullion coins and bars here, not papered-over derivatives of them like any ETFs or investment funds. While trying to play in on the demand for gold or silver, they only are tracking gold and silver prices (which may or may not be profitable, but has got nothing to do with why these prices may rise in the first place). So what this article is about is bullion-in-hand or real physical gold or silver bullion products.

Gold Now Made a Tier-1 Asset under Basel-III Rules

With a number of both fundamental and technical events more recently, this trend in favor of Crypto has seemed to be reversing for a few months prior to fall 2019. The most prominent one among these is the move of Gold Bullion in Basel III banking regulations to a tier-1 asset, up from tier-2. This means that gold held by commercial banks as a capital reserve is now an asset which is marked to market with a 100% instead of the earlier 50% of its market value when it was classed as a tier-2 asset.

Silver Bullion Coins, image ©2019 by marquixHD. All rights reserved.

Precious Metals Prices Have Clearly Bottomed Out

So far, the result of all of the above has been a bottoming-out in precious metals prices, followed by a significant turnaround, in the wake of this summer’s Basel III re-classification of commercial bank gold holdings. Adding to the mix are the liquidity shortages in the New York interbank or Repo market in the Fall of 2019 that was not possible to fully be swept under the carpet. As a result, the gold price received its trigger to break out of its own narrow-sideways-channel between $1300 and $1430 and began testing the $1500 barrier later last Fall. While $1500 seems to be a significant hurdle and may take some time for gold prices to tackle, once cleared the upward move in gold is likely to accelerate. Silver should then follow suit.

Another All-Time High for Christmas

This year, Crypto coin traders have been waking up to some Christmas treat really: right on Boxing Day, and while LTC was doing very nicely on its own and has broken above $130 again in a long time, over in the BTC-to-dollar market new record highs were set.
Bitcoin broke above the $25,000 mark for the first time, thereby setting yet another all-time high for the Crypto currency against the U. S. dollar.
The move appears to have been fueled by continuing uncertainty in the United States over the stolen election and possible remedies against that attempted coup d’etat on the part of some over-eager Biden supporters in several states. The US Dollar Index had already suffered, with the value coming down from just under 100 to around 89 at the time of writing, and a number of Forex and Crypto traders have been observed mentioning that they would short the dollar further, unless the Dollar Index reading recovered back over the 90-91 area. As this hasn’t happened yet, the dollar-defying moves in all markets, including Crypto-against-dollar ones all over Crypto exchanges and P2P Crypto trading is not even surprising.
It remains to be seen whether or not rhings reverse once “silly season” ends and the markets return back to more regular trading and hours in early January. But for now, Crypto coins seem set on testing new highs. For BTC, that would be the important £30K mark, while LTC might continue forward to test the next significant high at around $146, last seen in 2019.
While only the markets themselves will be able to prove or disprove these numbers, there is still room left for some upward phantasies either way as both targets are at least a few days away.