It’s been a very dull week in the markets overall
The Chinese hot air spy balloon drifting across America was the biggest story, until Joe Biden’s, State of the Union “fairy-tale”, but most participants find it challenging to get their teeth into something tangible.
Cryptocurrencies held the ground they made in the previous week. Still, despite the encouraging claims from the eternally bullish, it has been difficult to attract new business, so we are stuck and awaiting the next breakout.
As someone who bought BTC scale-down below 20,000, I dumped half my position around 23,000, the rest I will think about selling if we get above 28,000, alternatively, if we retest the recent lows I will look to buy back what I sold. I want to remain long as insurance against a SHTF scenario, which appears to be coming ever closer.
In energy, I purchased some Nat Gas at 2.50, because its cheap, the risk is relatively low, and there is a chance of a violent short covering rally occurring over the coming weeks.
I know. Because something is cheap it doesn’t mean it will not become cheaper. But at 2.50, the risk-reward ratio is now in my favour.
I am optimistic about energy, but probably for all the wrong reasons.
The west is stepping up the rhetoric against Putin, and things might escalate.
I am not going to discuss the morals of the situation. Still, Putin does not think like many in the west. With the increased condemnation of Putin and additional weaponry going into Ukraine, he might react like a cornered rat. Any significant move on his behalf would add upward pressure on energy prices.
Sticking to commodities, I’m seeing grains and beans continue to hold well, and there could be more upside.
I don’t know how much down they will mark Ukrainian wheat crop, but it’s not going to be a bumper year.
The most significant question mark is over American production and Chinese purchasing. There is a lot of sabre-rattling amongst the superpowers. Still, I wonder whether the USA will stop selling to China over a balloon, in the same way as Putin will possibly stop exporting to the EU.
And let’s not ignore, we still have to factor in potential weather problems this time of year.
An increase in non-ferrous metal prices will depend on what is happening in China.
Many discuss a return to growth, but it still needs to be done.
The western world is on the ropes right now, and a queue is forming to kick it whilst its down.
China is the leader of the gang, followed by Russia. Still, many other countries, especially those which have felt the west has intimidated them for too long, will enjoy watching western economies slide.
We know India is sitting on the fence. Yet, Middle East and Sub-Saharan Africa is increasingly looking to the East for support, and finding it, even if it does come with a heavy price.
Over the past decade, as western cities and towns become increasingly dilapidated, and uncivilised, many other countries around the world are building new towns and infrastructures and enjoying the growth that Chinese money has allowed them to enjoy.
I expect this pattern to continue for some foreseeable time, until we reach a point where developing countries are more important to the Chinese than the old European nations, who realistically have little to offer regarding raw materials or manufactured goods.
As I see it, the EU and its Napoleonic Laws have crippled European economies and growth. Turning this heavy ship away from the rocks it seems determined to strike will be very difficult.
This week EU President Von der Layen, openly complained that the UK is throwing away EU law and is becoming unfairly competitive with the continent.
I suggest that she studies why the continent is less competitive. I am sure she will discover it is a direct result of the heavy-handed laws her organisation has inflicted on European businesses.
And let us not forget, it is the power-grabbing expansionist policies of the EU that ultimately lead to the Russian invasion of Ukraine.
And as a footnote, lets not forget how badly most western countries reacted to the Chinese or Corona virus! Few western politicians will walk away unscathed by the amount of money wasted on covid!
Whether the eternally indebted western countries can turn their fortune around is a major question. It won't be easy and could prove impossible.
That leads me to believe consumption will remain low, reflecting poorly in our equity markets.
With this in mind, we could see the value of numerous products and instruments increase, not because of demand, but because the dollar and the Euro continue to weaken against other currencies.
I am worried about the long-term prospects of the Euro, which, as my day-to-day money, is buying me less and less each week.
Its not excellent reading, but it’s better to be forewarned, than not warned at all.
I maintain a safety-first stance, with a very diversified portfolio.
As you have read, I have held physical gold for some time, and do not plan on selling it anytime soon, irrespective of the value.
I have BTC, because when they introduction of CBDC, it will be imperative that we have alternative forms of exchange.
I also hold CCD (concordium) because I know the people and I am really impressed with their investment and long-term plans.
I am using financial markets and futures for my shorter-term commodity punts, and have FIAT accounts in Euro, GBP and dollars.
That said, I am also looking at moving some of this into BRIC currencies.
Outside of the markets, I increased my holding of agricultural land, and hold some holiday properties as a cash business.
It’s not large, but it is diverse.
Moreover, suppose my opinion is wrong concerning these geo-political changes and potential developments.
In that case, we will all be better off anyway.
So, until next time.
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