(13 SEPTEMBER 2017)DAILY MARKET BRIEF 2:Gold consolidates and Bitcoin takes a hit

Gold has largely increased since the start of the year going from $1150 to $1350. The sharpest increase was during the summer. The decline of the dollar was largely followed by an increase in the precious metal. Now that central banks needs to deliver within the short-term (balance sheet normalization for the Fed, reduction of the asset purchase program for the ECB), we believe that there are more upside for the yellow metal as we consider that global economic conditions are clearly not enough good to support a change in the monetary policy.

This year has been a great year for Bitcoin so far. Debates are strong regarding the question if Bitcoin will become a safe haven. Jamie Dimon, JP Morgan Chase CEO, has declared that “Bitcoin is a fraud”. Cryptocurrencies are a new asset class and the war between fiat money and cryptocurrencies will be on regulatory issues. Needless to say that the power of money is not a power central banks are willing to let decentralize. Bitcoin took a hit since this comment. Other would also say that China and its ICO ban are weighing on the most famous cryptocurrency. Further downsides are likely but Bitcoin still has a lot of potential. Only less than 0.01% of the global population has a bitcoin wallet. If this would reach 1%, the demand for Bitcoin would skyrocket, knowing that there are only 18 million coins available.

By Yann Quelenn