November 2021
Thanksgiving. It is a tradition this nation has observed in some capacity, formal or informal, since 1621. That's exactly 400 years. Our Canadian friends up north have also celebrated it officially for well over one hundred years. Our point is not to give you a history lesson. It is rather to acknowledge that for generations, we in North America have found reasons during times of blessing and times of hardship to reflect on our lives and find reasons - many of them - to be thankful. This year is certainly no different, even though we have entered a period of increasing challenge and in many cases, hardship.
It's during times such as this that we are reminded of the importance of faith, family, and friends. They are the three "f's" that will see any person through the most challenging of circumstances. Here at OWNx, we are thankful for all three. We are also grateful for whatever small part we can play in helping secure a brighter future for you and your family in these uncertain times.
See you next year. We hope you had a Happy Thanksgiving and we wish you a Merry Christmas!
The OWNx Team
Gold and Silver
What Do the Charts Say?
On November 4th, we made a social media post stating the following:
"A sideways consolidation between $1,740 and $1,820 has gone on for six months now. That’s quite a long time in the #gold market. Wouldn’t be surprised to see some significant movement in price before the end of the year."
Almost on queue, the price of gold and silver began a solid upward march to break out to the upside of what we described in our last newsletter as a "falling wedge." In that newsletter, we said, "If [the price of gold] breaks out to the upside, [the downtrend] is probably over and new highs can be expected. If it breaks to the downside, the correction could continue into at least 1Q 2022."
The price action over the last few weeks is a welcome development. It is no surprise that the price of gold has paused and pulled back to re-test the uptrend trend line. That's just the way these things often work out. The next rally will be very important. Should it surpass the recent high near $1,870, it will give strong support to the intermediate price trend having reversed from down to up.
In the meantime, the price of silver continues to be range bound between $22 and $30. Its moves are more pronounced than gold in percentage terms (that is, it has a higher "beta.") That means in general, over the long-term you are likely to generate greater percentage gains in your metals account if you hold silver rather than gold. However, silver's higher beta is a double-edged sword. What is true to the upside is also true for the downside. Those holding it must be able to stomach the volatility in price as the market makes its moves.
Instability in the geopolitical and economic outlook continues to be of concern. Additionally, inflation is well entrenched and a growing number of economists are admitting that it is going to be with us for some time. Therefore, outside of a major financial system disaster, the fundamentals are in place for gold and silver prices to firm up here and resume their bull market going into 2022. The charts seem to agree.
And now a word about... cryptos.
Over the last several years, some of our clients have asked about bringing cryptos onto the OWNx platform. There are many reasons why we have hesitated to do so. Chief among them are:
- The market has been fragmented and too volatile.
- There have been way too many scams set up and successfully executed.
- The technology to interface with exchanges has been immature and insecure.
- It was anything but certain that the industry would survive regulatory scrutiny.
Those issues are resolving themselves. The market is still fragmented and volatile, however, there is enough history for investors to get a sense of where and how to avoid getting scammed. Interfaces to exchanges have become much more secure and reliable. Finally, with the advent of things like Bitcoin ETFs, it appears as though the powers that be are not going to regulate the industry into oblivion.
With all of these trending favorably, cryptocurrencies are now being seen by an increasing number of investors as a legitimate asset class. Not just something out of the wild-wild-west. We see this is a welcome development in the world of investing as the present system and its very complex structure come under greater pressure in the years to come.
Still, if you are not comfortable with the volatility of silver, it's probably best to stay on the sidelines. The crypto world is much, much more volatile and by all indications will continue to be for at least the next few years. Additionally, cryptos had a good run in 2021 while, as you know, gold and silver languished. Is it better to chase cryptos or invest in an asset class like precious metals that have proven for centuries its durability in times of economic uncertainty?
These are questions each individual must ask themselves as the world of money, banking, and investing adapts to both instability and new technologies.
Gold or Bitcoin? Store-of-value debate rages as Bitcoin grows
"Rather than positioning Bitcoin and gold as polar alternative assets, we think they can complement each other in a portfolio. Gold has better applications in some cases, and Bitcoin in others... Both offer virtually no correlation to traditional asset classes, with gold’s correlation at 0. Still, Bitcoin is currently most aptly characterized as a speculative asset."
DeFi Matures As Innovative Crypto-Based Futures Issuance And Trading Rises
"SEC Chairman Gary Gensler hasn’t called for banning cryptocurrencies in the U.S., but the relationship between regulators and the “Wild West” of the crypto landscape has predominantly been antagonistic. However, as DeFi has matured, and proven its staying power, U.S. regulators' views seem to have matured as well." (Article from Forbes)
What Bitcoin and Ether’s Options Tell Us About Their Maturity
"Stephen Ehrlich, CEO of brokerage Voyager Digital, concurs, saying that crypto options are similar to where equity options were two decades ago but will eventually catch up. 'I think it’s just a matter of time,' he told CoinDesk TV’s 'First Mover' program on Friday. 'As those products become more easily to obtain and to trade, you’ll see that volume grow. But we’re still a few years from that happening.'"
OWNx offices will be closed on December 24th and 27th for Christmas, and the 31st and 1st for New Years.