There has been much debate about who will be crowned the ultimate global store of value, gold or bitcoin. Based on the most recent technical development of the bitcoin-to-gold ratio chart, the market is voting on bitcoin. We are currently hold long positions in bitcoin and short positions in gold based on this analysis that I’ll attempt to explain as clearly and quickly as possible: Looking at the weekly ratio chart of bitcoin-to-gold you’ll notice that the highlighted triple-top resistance (ceiling) level from 2021 has been penetrated. This indicates that bitcoin is out performing gold and is doing so at a significant technical resistance level formed by a three year old triple top. We first highlighted this macro ratio chart here in this column on July 9 . In this same article we called for bitcoin to hold support between $59,000 to $49,000 before moving to our target of $105,000 to $109,000. That target is not met and we need to update our target resistance zone to higher levels Bitcoin is continuing to push higher and based on the price behavior and price structure of the advance I think it’s prudent to adjust our target higher to a range of $129,000 to $153,000. We currently hold a 3% allocation of the iShares Bitcoin Trust (IBIT) in the growth portfolio of our investors at Inside Edge Capital and intend to hold the position to see if that target zone can be tested. To further this analysis of our long bitcoin/short gold thesis, I would like to show that gold is technically in a weak position from several macro forces and longs should heed caution. As I said I’m in fact currently short gold. The chart below is a fairly complex 20-year look at the real 10-year bond yield (calculated by subtracting expected 10-year inflation from the nominal yield of the 10 year treasury note) overlaid on the price of gold. The two markets have an inverse relationship going back to 2024. If real yields are moving higher then gold moves lower, and vice versa. To make the comparison simpler I’ve inverted the price of gold on the chart to show the two moving in the same direction. If you think about it intuitively it makes sense. If real yields are going up your actual return on risk-free government bonds is increasing making a yield-less investment in gold less attractive. If on the other hand the real yield of treasuries are falling (either from falling nominal yields or an increasing expectation of coming inflation) then gold becomes more attractive. A significant divergence has developed in the past two years that will be closed either from real yields falling or the red line moving higher on that chart, which as we said is the price of gold moving lower (shown on the left scale). My bet is real yields may come in a bit, but I think the better bet is for gold to sell off. Gold has the possibility of breaking the dotted upturned support line from earlier this year and moving into the highlighted support zone of $2450-$2375 early in 2025. One way to easily short gold is to buy the DB Gold Short ETF symbol ‘DGZ ‘ -Todd Gordon, Founder of Inside Edge Capital , LLC DISCLOSURES: (Gordon owns bitcoin ETF IBIT in his wealth management company Inside Edge Capital, LLC. He is personally short gold via a short futures position . Charts shown are MotiveWave and Optuma.) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
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2024-12-17 18:48:14
