“The end is near!” Most people would normally label such pessimism as crazy and deluded, but I think more and more people are starting to see that things are indeed spiraling out of control right now.
First, the JPY bit the dust because of Yield Curve Control (YCC), then EUR slapped itself in the face by pursuing green energy and sanctions against Russia, and now GBP followed in JPY’s footsteps by conducting temporary purchases of long-dated government bonds, which is essentially YCC.
https://twitter.com/jbutterfill/status/1574750120222023680
- jbutterfill
When a fiat currency begins to experience instabilities, people will try to escape it. As seen in the chart above, since the pound’s value has dropped, a substantial quantity of GBP (more than ten times the typical amount) has been changed into bitcoin. They most likely collect this data from an analytical website such as intotheblock.com or CryptoQuant, which compiles the British pound to Bitcoin transaction across all centralized crypto exchanges. I think what the post failed to mention is that the tragic tumble of GBP doesn’t just favour Bitcoin or crypto. In fact, GBP probably flows into all better-performing tradable assets. I’m confident that much of the outflow of GBP also flows into commodities like gold and silver. It’s just that the transaction, buying and selling of precious metals are not as easily traceable as crypto.
[London Vault Holdings Data, Image source: https://www.lbma.org.uk/prices-and-data/london-vault-holdings-data]
I’m not entirely sure if the image above has anything to do with people fleeing from weak currencies (at this point, the only strong currency remaining is the dollar, and it has an annual inflation rate of 8.5%). The silver holding of LMBA in the vault has been in free fall since the beginning of this year. I’m not entirely sure what this means; does it suggest that people have started stockpiling more physical silver? Or perhaps the industrial demand for silver is gradually growing MoM. One thing that can be said with absolute certainty is that there has been a great deal of fear and uncertainty over fiat currencies. Perhaps now is the moment to increase your portfolio's diversification by investing more in commodities, precious metals, and cryptocurrencies; not financial advice of course.
