Betting On A Greater Fool: Bitcoin & Gold Edition

JC Parets
December 1, 2020

Today a conversation came up about whether Gold is an "investment" but Bitcoin is just "Speculation".

Come on...

Let's be serious. One is a useless rock and the other is an almost useless currency. Both of these are speculations. Both of these can be considered "investments". But the only reason to buy either of these is because you think someone else will pay you more for it in the future.

If you don't think a greater fool will pay you more down the road, there's no reason to own either of them.

On another note, the behavior we're seeing in both of these is eerily similar. Keep in mind, since earlier this year we were bullish on both of them, betting that Bitcoin and Gold would trade much higher. Our targets? The former all-time highs: Gold's 2011 peak and Bitcoin's 2017 peak.

Mission accomplished. Great trades! Since then, they're someone else's problem.

Look at both of these and tell me they're not behaving exactly the same. Granted, on different time horizons, but as they say, "The markets are fractal", meaning that you'll see the same behavior patterns across timeframes.

Click on Chart to Zoom in

The bets were exactly the same: That we would retest former all-time highs.

So now what?

Well we've been waiting patiently. I think both have a high likelihood of breaking out to new highs and beginning a new leg higher, like 2016 in Bitcoin and 2004 in Gold.

The question is: How long will it take?

That I don't know. So why rush?

  • We want to own Gold if it's above the 2011 highs. If it's below that, then this useless rock is someone else's problem.
  • We want to own Bitcoin if it's above the 2017 highs. If it's below that, then this almost useless currency is someone else's problem.

What's wrong with that?

JC

 

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