Dear user (whether a consumer of our website, just a consumer of this research or an interested reader):
Going forward, we will hope to provide market data such as the above so that our commentary will have immediate context.
Today, as you can see, digital currency prices were generally down 4%-7%. We believe this is most likely caused by very many factors but the factors we are seeking most earnestly include:
All else equal, we would have thought that the dramatic political news coming from the UK over the past two days would have led to higher prices for digital currencies — Queen Elizabeth II of England approving PM Boris Johnson’s plan to suspend Parliament for 5 weeks until October 14 — just two weeks before the October 31 deadline by when the UK will depart from being a member of the EU, whether or not there is an agreement how to handle relations between the UK and EU after that date. We would have thought, again, all else equal, that such dramatic news of future uncertainty would cause flight into assets like gold and digital currencies as a place to store wealth during the time of uncertainty. Gold is acting as expected. Price action in the Digital Currency space leads us to believe some other, technical, issue is dominating those markets currently.
Totally and completely separate from those real-world actions, one of the most famous Emerging Markets investors, Mark Mobius, has recently suggested to at least one television audience that investors hold 10% of their portfolios in physical gold.
We suggest you watch the below video after reading this article.
But for context, we remind our readers that just in the US:
And that’s just in the US.
Through 1991, there had been well over 100 modern banking or currency crises. Since then, there was the “Tequila Crisis” of 1994 in Mexico (and Latin America more broadly), numerous defaults by Argentina, an entire “Asian Debt Crisis” in 1997-1998 and a default of all its government debt by Russia in 1998.
We do not necessarily hold with Mr. Mobius the rationale that physical gold should be held because of the risk of expropriation by governments. However, we do recognize that the concern and rationale he voices is rooted in lots and lots of historical precedent and that perhaps much of that historical precedent isn’t necessarily known or obvious to our readers or his viewers.
We believe there are many, many factors which drive all asset prices — including technical (short term, trading related), economic, fundamental, cyclical (1-5 year) and secular (10-30 year, such as the dramatically shrinking population of Japan or the very quick economic expansion of China).
Our hope here is to elucidate and generate a better crystallization of your own views, thoughts and opinions into your own actionable trading or holding actions.
We hope this contributed to your process.
Tim Shaler is Chief Economist of iTrust Capital. He is a published Real Estate economist, was a portfolio manager and asset allocation expert at his previous firms and is an adjunct professor at Webster University. His MBA (Finance) and MA in Russian Economic History are both from the University of Chicago.
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