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Trade tensions between the US and China appear to be easing as the two powerhouses come to agreement. The lifting of tariffs is good for economic stimulus but safe have assets such as gold are now starting to cool off, will Bitcoin follow suit?
US China Trade War Over?
Officials from both sides stated yesterday that tariffs could be rolled back as part of the first phase of a wider deal. Reuters reported that a timetable has yet to be set but both China and the US are in agreement that a trade deal can be made.
Experts have warned that there is still a lot of work to be done and the situation is fragile and can fall apart quickly. Optimism has returned to markets on the development as global stocks were boosted yesterday.
Not all assets have benefited from the easing of trade tensions however. Gold, after hitting a six year high in September has retreated. The safe haven narrative only appears to apply when economic pressures are escalated. Gold prices have retreated 5.3% since this year’s peak and have slumped almost 2.7% this week in a fall to $1,468/oz according to goldprice.org.
Goldbug and undecided Bitcoin detractor, Peter Schiff, didn’t miss the opportunity to point out that the precious metal is still investment worthy.
“Gold is selling off on the prospects of the trade war ending. But it’s not the trade war, but the war on savings waged by central banks that is behind gold’s rise. Future U.S. trade & budget deficits will now be larger than ever, making gold ownership more important than ever!”
Gold is selling off on the prospects of the trade war ending. But it's not the trade war, but the war on savings waged by central banks that is behind gold's rise. Future U.S. trade & budget deficits will now be larger than ever, making #gold ownership more important than ever!
— Peter Schiff (@PeterSchiff) November 7, 2019
Ok, so when it was a trade war, it was that causing gold’s increase, but now it is the FED dropping interest rates. Mr Schiff appears to be a little undecided at the moment so maybe he should look towards Bitcoin again.
It was pertinently pointed out further down the thread that precious metal prices are also susceptible to manipulation;
“Derivatives markets run precious metals pricing. JPM and many other bankster crooks caught numerous times rigging metals markets. It’s a farce with zero price discovery just like the equity and debt markets.”
Back in September it was widely reported that JP Morgan traders were accused by the DoJ of manipulating precious metal markets.
What About Bitcoin?
So, back to Bitcoin, will it follow gold prices and retreat also as the safe haven narrative loses steam? At the time of writing BTC is still consolidating in the low $9,000 range where it has been for the past two weeks.
Analysts remain on the fence as to Bitcoin’s next direction and technical signals are ambiguous.
How many times have you flipped your bias in the last few days?
After big moves, $7.2k-$10k, consolidation is common and many people get chopped up trying to guess what's next.
Let PA develop and get involved when the direction becomes clear. pic.twitter.com/NHclZaTJMQ
— Mayne (@Tradermayne) November 8, 2019
One thing is for sure though, with the current banking/credit/debt crisis exacerbating, there will still be a huge need for a safe haven, be it Bitcoin or gold.
Image from Shutterstock
