[2014] What's the next stock market bubble?

[Ralph Sir Edward]

What I've been reading is that the Treasury could revalue gold to $10,000 or more, per ounce, use that gain to buy Bitcoin and allow financial institutions to create stable coins. Interesting is our government did introduce the Bitcoin Act in 2024 and President Trump did sign an executive order in March to codify the new Bitcoin reserve.

I'm certain that cash will become less used and a digital currency will be more used. It kind of already is going digital in a way considering credit card purchases, Venmo and apps account for more purchases than cash.

I have heard a lot about silver and gold prices heading up. It's hard to tell how a gold revaluation will affect silver prices. Definitely, if the Treasury revalues gold to $10,000 the odds of silver values heading to the current 80-1 mark or $125 per ounce seem reasonable. Even without a re-valued gold price, the silver to gold ratio could normalize to 50-1 or $80 per ounce is what I've been reading. Hard to say.

Bill

Treasury revaluing gold really doesn't mean anything by itself. It only means something if the Treasury restores convertibility of dollars to gold (and vice versa), which isn't going to happen.

The Treasury has X tons of gold. It's actually worth what the market is willing to pay for it, in terms of a fiat currency. Mark it at $42.22 or $10,000, it's just a bookkeeping entry. The amount of gold didn't change. The government will still issue as many "dollars" as it wishes, at either price, because there is no interaction with the dollar and Treasury gold. (i.e. you can't slap either 42.22 <or> $10,000 at the Treasury and get a troy ounce of gold (31.1 grams); or slap a troy ounce and get either $42.22 <or> $10,000 for it. That's convertibility.)

The Central Banks have been buying gold because the Bank Of International Settlements (BIS) made gold a First Tier Asset in Jan 2023. That meant that international commercial banks could book bullion gold towards their reserve requirements, the same as Treasury Bonds or cash. It made gold a monetary commodity, while not making it a monetary currency. Yes, I know, weird, but that is the situation today. Banks seem to consider gold a better store of value than fiat currencies. Whether or not they are right, only the future will tell.

 

[WaikikiFirst]

here is the other chart of XLK (tech) vs Gold. Using both tickers separated by ":" gives you the ratio, so, yeah, if the line rises the numerator is winning and if the line is falling, theh denominator is winning. This is easier to read and says Gold still trailing XLK by about 10% over 5 yrs (seems to me), but you read it.
I read "The ratio started @ 0.0625 five yrs ago. Ratio is now 0.0694. Ratio rose, so XLK (the numerator) outperformed by about 10% over 5 yrs.

 

[WaikikiFirst]

SPY vs US REITs. SPY gave you > 1.5x the return of REITs over 5 yrs. Ratio started @ 4.8x and now = 7.5x

 

[easyrider]

5 Yr return for OVERALL US RE (as represented by REITs). Not just residential, and not mom & pop low overhead RE
Way below tech, most likely way below SPY, get to that later
View attachment 117057

It really depends on the amount you start with and continue to contribute. A high return that starts out at a low amount means very little in earnings in the beginning years of most accounts. After 40 years, the median 401k value is about $95,000 at retirement age.

Bill

 

[Carolinian]

5 Yr return for OVERALL US RE (as represented by REITs). Not just residential, and not mom & pop low overhead RE
Way below tech, most likely way below SPY, get to that later

REITs are a financial product. I always prefer actual ownership of property over a financial product.

In recent years some of the big boys in the financial world like Blackrock have been buying up lots of residential rental property, mostly single family homes.

 

[Carolinian]

Treasury revaluing gold really doesn't mean anything by itself. It only means something if the Treasury restores convertibility of dollars to gold (and vice versa), which isn't going to happen.

The Treasury has X tons of gold. It's actually worth what the market is willing to pay for it, in terms of a fiat currency. Mark it at $42.22 or $10,000, it's just a bookkeeping entry. The amount of gold didn't change. The government will still issue as many "dollars" as it wishes, at either price, because there is no interaction with the dollar and Treasury gold. (i.e. you can't slap either 42.22 <or> $10,000 at the Treasury and get a troy ounce of gold (31.1 grams); or slap a troy ounce and get either $42.22 <or> $10,000 for it. That's convertibility.)

The Central Banks have been buying gold because the Bank Of International Settlements (BIS) made gold a First Tier Asset in Jan 2023. That meant that international commercial banks could book bullion gold towards their reserve requirements, the same as Treasury Bonds or cash. It made gold a monetary commodity, while not making it a monetary currency. Yes, I know, weird, but that is the situation today. Banks seem to consider gold a better store of value than fiat currencies. Whether or not they are right, only the future will tell.

The Bank of International Settlements has always maintained its own gold reserves. National central banks have maintained gold in their own reserves for centuries before the BIS was even created. The percentage of gold in central bank reserves hit a low of 9% about 15 years ago, and has been increasing since, especially in the last few years, and is now up to 24% and rising as they gradually dump each others fiat currencies to buy gold. It was the Basel III banking regs that made gold a first tier asset class for commercial banks and has played a role in the gold price increase. Gold and silver have always had a foreign exchange cross with all other currencies in the FX market. As J.P. Morgan once said "Gold is money. Everything else is credit".

 

[easyrider]

Treasury revaluing gold really doesn't mean anything by itself. It only means something if the Treasury restores convertibility of dollars to gold (and vice versa), which isn't going to happen.

The Treasury has X tons of gold. It's actually worth what the market is willing to pay for it, in terms of a fiat currency. Mark it at $42.22 or $10,000, it's just a bookkeeping entry. The amount of gold didn't change. The government will still issue as many "dollars" as it wishes, at either price, because there is no interaction with the dollar and Treasury gold. (i.e. you can't slap either 42.22 <or> $10,000 at the Treasury and get a troy ounce of gold (31.1 grams); or slap a troy ounce and get either $42.22 <or> $10,000 for it. That's convertibility.)

The Central Banks have been buying gold because the Bank Of International Settlements (BIS) made gold a First Tier Asset in Jan 2023. That meant that international commercial banks could book bullion gold towards their reserve requirements, the same as Treasury Bonds or cash. It made gold a monetary commodity, while not making it a monetary currency. Yes, I know, weird, but that is the situation today. Banks seem to consider gold a better store of value than fiat currencies. Whether or not they are right, only the future will tell.

The scenario I though interesting is what Russia said about the USA 's plan to devalue the National Debt using Stable Coin. Russia says that the USA will reset the financial system by placing the the National Debt into crypto currency and flood the crypto cloud with Stable Coin. Part of the plan would be the Bitcoin Act which creates a Bitcoin National Reserve. Another part of the plan is to have the Treasury revalues gold to raise capital to purchase Bitcoin. Another part of the plan is to allow financial institutions to create Stable Coins.

We certainly live in interesting times.

Bill

 

[Carolinian]

The scenario I though interesting is what Russia said about the USA 's plan to devalue the National Debt using Stable Coin. Russia says that the USA will reset the financial system by placing the the National Debt into crypto currency and flood the crypto cloud with Stable Coin. Part of the plan would be the Bitcoin Act which creates a Bitcoin National Reserve. Another part of the plan is to have the Treasury revalues gold to raise capital to purchase Bitcoin. Another part of the plan is to allow financial institutions to create Stable Coins.

We certainly live in interesting times.

Bill

One of the big financial gurus (I don't recall which) called crypto a "digital Ponzi scheme". Why would any thinking government or central banker sell a real asset to buy that???

 

[easyrider]

One of the big financial gurus (I don't recall which) called crypto a "digital Ponzi scheme". Why would any thinking government or central banker sell a real asset to buy that???

Devaluing and eliminating a good portion of not all of the National Debt by placing the National Debt into the crypto cloud using Stable Coin is what the Russians says the USA is doing . The USA does have a Bitcoin Reserve of about 200,000 Bitcoin worth about two trillion two hundred eighty billion USD. There are plenty of articles related to this.

Bill

https://finance.yahoo.com/news/putin-adviser-accuses-us-using-022953212.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAG0t-BSmbWX-YlbaWhR_FziEia6wt0CJ0-5h1MkOLIoientAJtSFtWxtBezoMaT2VeL7IFTEYqqDQEjDajJDX9QoPzBbxkr86QEb1_mms6QsCN-Dk-JDskjJgAHgqE9235vcQPa0yAy5SbvqqhkPqyX0Do7ibEruav5w-oL1eFf_

 

[Brett]

Devaluing and eliminating a good portion of not all of the National Debt by placing the National Debt into the crypto cloud using Stable Coin is what the Russians says the USA is doing . The USA does have a Bitcoin Reserve of about 200,000 Bitcoin worth about two trillion two hundred eighty billion USD. There are plenty of articles related to this.

Bill

OK -- we'll see how the "Crypto Cloud" scheme works out


.

Meanwhile, the bubble continues

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[easyrider]

Meanwhile, the bubble continues

What is a young investor ? I bet they are far and few in-between. Without a mentor helping them, the young probably don't invest in stocks unless they receive a program from work.

Bill

 

[am1]

Should stocks rise with the cease fire? Oil goes down.

 

[emeryjre]

If stock appreciation is all from inflation
Why has NVDA appreciated much more than the Nasdaq 100
Both items are subject to the same inflation
I know the answer
How about anyone else

 

[fillde]

Should stocks rise with the cease fire? Oil goes down.

That was no cease fire. That was a historic Mid-East Peace Treaty.