Bitcoin will recover
By Yann Quelenn
Although Bitcoin has been hammered down 20% this month, it still has great potential. We think it is a possible safe haven. Fewer than 0.01% of the world’s population has a bitcoin wallet. If this would reach 1%, the demand for Bitcoin would skyrocket, because there are only 18 million coins available.
Cryptocurrencies are a new asset class, one at war with fiat money, and that war will be fought on regulatory issues. Central banks are keen to preserve their monopoly on money, something they will not let go of without a fight.
The latest punch to Bitcoin came yesterday from Jamie Dimon, JP Morgan Chase CEO, who declared it a fraud and said he would fire any trader handling it. Market watchers add that China’s ban on ‘initial coin offerings’ (ICOs) also are weighing on Bitcoin.
Bank of England will sit tight tomorrow
By Arnaud Masset
At its Monetary Policy Committed meeting tomorrow, 14 September, we believe the Bank of England will make no significant policy changes. Tightening money in the midst of Brexit negotiations would be too risky, even though the pound sterling rallied yesterday on reports of economic strength.
The GBP hit a one-year high against the US dollar, after British inflation in August came in higher than expected. It registered 2.9% annually versus a median forecast of 2.8% and growth of 2.6% in July. Core inflation, which excludes the most volatile components, came in at 2.7% versus 2.5% expected and 2.4% in July, suggesting that the fuel-prices are not the sector driving the expansion. The sharp depreciation of the pound over the last few months drove up the cost of imported goods. Clothing and footwear tabs rose, as did those for restaurants and hotels. Unemployment has declined slightly, and earnings are stable. The lack of wage growth suggest that disposable incomes fire up inflation.
Gold still has an upside, as central banks dither
By Yann Quelenn
Although gold has slid a bit this week, we believe there are gains to come, as central banks continue to equivocate about their plans to tighten money supplies and unwind their balance sheets. They are unsure that finance markets can bear hawkish moves, so they are hesitating as to when they finally will act.
The yellow metal has had a good run since January, climbing $1150 to $1350 an ounce. The sharpest increase was during the summer, when the decline of the USD was followed by an increase in gold.