Gold Does It Again
The amazing resiliency of gold in the last few weeks shows tremendous strength. On Friday gold once again traded down to $1,265 and was under severe pressure, only to rally back to close back over the $1,270 level. I have received many emails telling me gold is going to collapse because of the cryptocurrencies.
Bitcoin continues to hit new highs, trading over $7,500 with the new-found buying power because of the Chicago Mercantile Exchange and its new futures product for the currency. There is now going to be two exchanges offering futures and derivative products on Bitcoin, which is bringing in buyers who in the past would not play in this space.
We have written many times about cryptocurrencies being competitive with metals, possibly taking some of the new money away. However, we believe the strength gold is showing at these levels lends to a rally and are buyers at the $1,260 level. Bitcoin is overbought and should see a significant sell-off.