DANNY
Crypto Commentary
Rising oil worsens inflation and puts Fed rate hikes back in focus, making non-yielding gold and silver less attractive. Investors are also selling metals to meet margin calls. An estimated $1.83 trillion in combined value was wiped out over recent sessions; both metals remain under pressure as long as oil keeps rising and rate-hike expectations stay high. x.comÂ
Gold's price discovery could shift fast if China's reported move to restrict paper gold trading weakens confidence in paper contracts. Gold is priced mainly through leveraged paper, with one physical ounce backing multiple claims and the system depending on almost nobody demanding delivery, while China sits on a reported 30,000 tonnes of physical gold. Weaker trust in paper would mean more demand for real metal and more pressure on an already leveraged market. x.comÂ
Gold is dumping because the Iran conflict pushed up oil and inflation, leaving less room for rate cuts and lifting yields, and more downside lies ahead. It was overheated at peak attention, and retail is now skipping it for cash and short-duration Treasuries. The setup mirrors 1979, when an Iran war doubled oil prices and led to crisis and a gold dump; higher real yields also raise the cost of capital and pressure the concentrated AI leaders. x.comÂ
Gold faces continued selling pressure as GLD records its biggest weekly outflow since March. November seasonality often favors gold, but gold is still not bullish beyond a bounce. x.com x.comÂ
Gold is set to take off as energy-driven stagflation traps the Fed and negative real rates favor it. Today's dovish hold was likely its last chance to hike: once the AI bubble bursts, the Fed loses that option, while current debt-to-GDP rules out Volcker-style hikes without fiscal insolvency. Per Macrotrends' chart, gold rose eightfold from its 1976 low to its 1980 high, equivalent to $32,000 gold over five years in today's terms. x.com x.com x.comÂ
Gold has no escape hatch until crude pulls back, as markets take fire from energy-driven inflation expectations, rising yields and a surging dollar. With Brent near $100, the US 10-year yield above 4.70% and the dollar index back above 101, yield spikes compress valuations and a strong dollar drains global liquidity. Relief depends on Trump resolving the Strait of Hormuz bottleneck, whether by buyout, retreat or escalation. x.comÂ
Gold tends to give back geopolitical spikes because it moves on real rates and the dollar, not missiles. The pattern repeats: a shock sends retail into gold, rates rise to fight inflation, and gold gives it back as smart money sells into retail fear, as with Ukraine in 2022 and at least three times in recent years. Per @KobeissiLetter, gold has erased $7.3 trillion of market cap since the Iran war began. Buying gold out of fear isn't a hedge but exit liquidity. x.comÂ
China's physical buying near $4,000 and a Fed lagging inflation support gold despite rising rates. Per Bloomberg, the Shanghai Gold Exchange's Au99.99 contract traded roughly 430 tons last week, its busiest week since April; buyers pay in full and take delivery. Gold historically does very well when rates rise while the Fed is behind the curve, as it is now. Warsh is no Volcker, and heavy US debt would constrain him even if he were. x.com x.com x.comÂ
The Fed's continuing inflation focus and prospect of expensive money for longer are eroding Bitcoin's initial relief from the rate hold. At the 3.75%-4.00% hold, two officials voted to hike; Warsh left further tightening open but did not commit to a December hike. BlackRock's Bitcoin ETF drew $136M yesterday, its third straight inflow session, showing buyers are still present. x.com x.com x.comÂ
Gold's failure to rise even after rates pulled back decently challenges the earlier high-rate explanation for its weakness. GLD is close to fresh 11-month lows and just closed at a new 14-month low relative to the S&P 500. Gold has trended down since its parabolic January peak. x.com x.comÂ
Gold and silver may benefit if yields ease a little further from their local high for a while longer. The FOMC meeting and minutes could be good for both. x.comÂ
Gold is hard to hold at a 0% yield while interest rates keep rising. @Mr_Derivatives notes gold's 3.93% drop at the close was the fifth-worst drawdown of the year, driven by rates. x.comÂ
