Bitcoin. Controversial. Game changing. Complicated yet simple. While most of my non fiat money is in precious metals, there’s a lot I love about Bitcoin. The dramatic rise and subsequent crash that Bitcoin experienced in 2011 occurred well before I possessed my first unit of this crypto-currency. Since then, it has recovered dramatically and at $19.65 last check is up almost 4x since the end of 2011.
Bloomberg published an article on Bitcoin a few days ago titled: Bitcoin’s Gains May Fuel Central Bank Concerns: Chart of the Day. Here are a few excerpts:
An increase in the value of bitcoin, the world’s largest online currency, may fuel concerns that virtual money could undermine the role of central banks.
The CHART OF THE DAY shows that bitcoin has more than doubled in the past 12 months, strengthening to $16.37 from $5.88, according to data from Mt. Gox, the world’s largest bitcoin exchange. The money, issued by a decentralized network of computers, has recovered after falling to $2.14 in November 2011 from a high of $29.58 five months earlier.
This might be the best economic stimulus that could ever come to France. The only shame of it all is that they waited until after France went “totally bankrupt.” All we need now is for all Central Bankers globally to go on a permanent strike so that the rest of us can rebuild the society they destroyed. From the New York Times:
PARIS — The French central bank is going on strike.
More than 1,500 employees were demonstrating Tuesday in Paris, union officials said, in a protest against a restructuring of the Banque de France that is expected to result in the loss of about 2,500 jobs by 2020. The bank currently employs around 13,000 full-time workers.
I guess now we know the answer to the question: How many Central Planners does it take to bankrupt France? 13,000
What a joke.
Full article here.
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Since nothing else moves the markets these days besides the utterances of insane Central Planners armed with printing presses, I figured it would be a good idea to preview tomorrow’s Fed decision. I find the setup particularly interesting since the consensus seems to be expecting QE3 and I do not. Have a watch!
While today was an interesting day in “the farce” on a lot of levels, I want to focus on gasoline. In the morning it traded down to a new recent low, but it reversed hard to close with a more than 1% gain. See chart below.
Well so what right? Gasoline has pulled back recently and had a small bounce today you say. Perhaps. The reason why I think it is important is because equities were generally very weak and on days like that you wouldn’t expect to see such a divergence. In addition, I think Obama’s latest very public political witch-hunt for oil speculators scared off longs in the energy market and that was part of the recent weakness. Here is my take on the speculator meme. If that is correct, then the market may be trying to adjust itself back higher where it actually belongs in order to price out unproductive consumption in a world where a larger and larger percentage of global GDP represents an unproductive misallocation of capital due to the welfare state and money printing. If this is the case, it will also be a huge thorn in the side of the Central Planners who are obviously attempting to smash commodity prices as much as possible before announcing QE3.
Precious metals and the FOMC
Also of note to me today was gold. It was slammed hard but came back in very impressive fashion. Silver not so much…In any event, the key day this week will be Wednesday when The Bernank and his cadre of clowns will announce their latest rate decision. In the last couple of months the Central Planners have used any comment out of the Bernank to raid the precious metals. Will Wednesday be the same? No one knows but I suspect physical buyers are waiting in the wings to pounce this time if they try it again.
China is Headed for a Revolution of Some Sort
As China’s economy continues to weaken we are seeing increased signs of tension. This quote from a Bloomberg article today really demonstrates how much of a tinder box this place really is.
Chinese legislators have amassed outsized assets, with the wealth of the richest 70 members of the National People’s Congress amounting to $90 billion last year, 12 times the combined wealth of the 660 top officials in the U.S. government, Bloomberg News reported Feb. 27.
My guess is that some savvy political mind will start to tap into domestic frustrations and blame those Chinese leaders in bed with the Western elites. This will create further riffs between the U.S. and China going forward. Read the Bloomberg article here.