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GoldSilver – New breakout levels in Gold and Silver with your buy level in Platinum

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Gold/Silver – New breakout levels in Gold and Silver with your buy level in Platinum

Precious Metals had a volatile week led by a fury of economic data that the Federal Reserve is closely monitoring. The upward surprise in the ADP figure on Thursday was enough to take Platinum, Palladium, and down 1.5-2%, pushing Platinum below the psychological $900 mark. Following the data release, the ISM Services number came in at 53.9 versus the expectation of 51.3 driving the odds of a July interest rate hike up to 93.6%. The sell-off in the market was not limited to Precious Metals but broadened, with the S&P and Dow having the largest one-day sell-off since May. A reversal of fortune occurred on Friday, with seemingly opposite data showing 209k jobs created versus the expectation of 230,000, leaving the Federal Reserve scratching their heads. Will the Fed raise one more time or two? Either way, a Fed pivot is near, and the bottom in Gold is closer.

Daily Gold Chart


 

After four straight weeks of losses, we have the first signs of "exhaustive selling," indicating the potential for "bottoming action" in Precious Metals. Gold briefly tested the 200 DMA at $1904, where bargain hunters are beginning to emerge. The critical level we will watch next week will be $1943, where Gold futures failed on July 5th. Any close above could trigger a short covering rally to $1985. You will want to watch the psychological $2000 level and ultimately $2008 as your breakout level. Any close over $2008 should trigger a wave of buying up to all-time highs and eventually extend to our long-term target of $2500/oz. We anticipate that the Fed's reckless acceleration in interest rates will ultimately catch up with them, leading to a reversal in policy once a contraction in U.S. GDP occurs in Q1 2024 while an acceleration in the Euro Zone and China pressure the U.S. Dollar and Interest Rates.

To further help you develop a trading plan, I went back through two decades of my trading strategies to create a Free New "5-Step Technical Analysis Guide to Gold that can easily apply to Silver." The guide will provide you with all the Technical analysis steps to create an actionable plan used as a foundation for entering and exiting the market. You can request yours here: 5-Step Technical Analysis Guide to Gold.

Daily Silver Chart


 

Silver futures traded on either side of the 200 DMA for most of the week near $23, where new speculators are entering the market looking for a higher beta asset class to participate in once Gold breaks out. While a price setback would be temporary, our long-term thesis remains that tightness in the physical markets, a decline in mining supply, and solar and E.V. demand should offset any potential for prices to decline further. The new breakout level in Silver is $23.53, where traders will begin to cover shorts frantically. Our thesis remains that over the next 18-24 months, we expect Copper to make new all-time highs and Silver to break $35/oz.

Having the flexibility to enter and exit the market quickly makes it essential for Precious Metals investors to have a futures trading account alongside their core Physical Precious Metals holdings. If you are interested in speculating on the rise and fall of the price of Precious Metals on a shorter-term basis, such as two weeks or two months, or If you have never traded futures or commodities, check out this new educational guide that answers all your questions on transferring your current investing skills into trading "real assets," such as the 1000 oz Silver futures contract. You can request yours here: Trade Metals, Transition your Experience Book.

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Phillip Streible

Contributing to kitco.com

Time to Buy Gold and silver

Tim Moseley

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The market was expecting delays’ – Fastmarkets’ William Adams on China’s critical metals turnaround

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The market was expecting delays' – Fastmarkets' William Adams on China's critical metals turnaround

China surprised the critical minerals industry by ramping up nickel production from Indonesia in a short period of time, noted William Adams, head of battery research at Fastmarkets.

On June 22, 2023, Adams spoke to Kitco at the 15th Lithium Supply and Battery Raw Materials 2023 in Henderson, Nevada.

Nickel prices are off nearly 30% year to date. Adams said nickel prices have been declining partly because of constrained electric vehicle sales in Europe. The continent's EV manufacturers prefer batteries with a higher nickel content. Indonesia has also been a supply surprise.

"We've seen a significant increase in supply from Indonesia," noted Adams, who said the Chinese started to partner with nickel miners in the country last decade. "They've brought on new nickel supply…in quite a surprisingly fast time.

"The market expected there would be delays, but even with COVID…they've still managed to push forward and get that new supply on the market."

Adam was asked to identify an under-covered metal in the critical minerals space.

"I think it's graphite," said Adams. "So much graphite is processed and produced in China. That's going to cause an issue. We're going to need to see much more diversification of supply within graphite."

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Why direct lithium extraction is the critical mineral sector's needed technology

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Michael McCrae

For Kitco News

Time to Buy Gold and silver

Tim Moseley

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Multichain MPC bridge sees 100M outflows sparking fears of exploit

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Multichain MPC bridge sees $100M+ outflows, sparking fears of exploit

 Jul 7, 2023

 

Abnormally large outflows from the Multichain MPC bridge platform are sparking fears of a multi-million dollar exploit.

On July 6, observers noticed that approximately $102 million worth of crypto has been withdrawn from Multichain’s Fantom bridge on the Ethereum side, as well as $666,000 from Dogechain and $5 million from Moonriver.

Multichain likely hacked. Exit all multichain assets. Good idea to revoke approvals to multichain bridge if you had any

— Curve Finance (@CurveFinance) July 6, 2023

On July 6, 7,214 Wrapped Ether (WETH) tokens (worth $13.6 million), 1,024 Wrapped Bitcoin (WBTC) (worth $31 million) and $58 million worth of US Dollar Coin (USDC) were withdrawn from the Fantom bridge’s Ethereum smart contract, with a total of approximately $102 million in cryptocurrency withdrawn.

July 6 withdrawals from the Multichain Fantom Bridge contract on Ethereum. Source: Blockchain data

In addition, the Dogechain bridge’s Ethereum contract saw a withdrawal of $666,000, which represented more than 86% of its total deposits, leaving only around $100,000 worth of assets remaining in the bridge. $5,872,661 worth of USDC and Tether (USDT) were withdrawn from the Multichain Moonriver bridge contracts on Ethereum, leaving only around $700,000 remaining on it.

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Several on-chain sleuths took to Twitter to label the event as a possible exploit. Blockchain security firm Peckshield tagged the Multichain team in a post showing the Fantom bridge transactions, saying “You may want to take a look.”

Hi @MultichainOrg you may want to take a look: https://t.co/D4GKGpuBtw pic.twitter.com/3qURqGmes8

— PeckShield Inc. (@peckshield) July 6, 2023

This led one commenter to remark that it looks like “another massive hack.” On-chain investigator Spreek posted the Dogechain transactions with the comment “dogechain multichain drained.”

Cointelegraph could not confirm by the time of publication whether the contracts were “drained” or whether a large amount of funds were simply withdrawn by users.

Cointelegraph reached out to the Multichain team on their Discord channel, but did not get a response by the time of publication. 

In a later tweet, Multichain told its Twitter followers that the movements were abnormal and the team “is not sure what happened and is currently investigating.”

The lockup assets on the Multichain MPC address have been moved to an unknown address abnormally. The team is not sure what happened and is currently investigating.

It is recommended that all users suspend the use of Multichain services and revoke all contract approvals…

— Multichain (Previously Anyswap) (@MultichainOrg) July 6, 2023

Related: Poly Network urges users to withdraw after exploit affects 57 crypto assets

Multichain is a multi-party computation (MPC) bridging network. When a user wants to bridge assets from one chain to another, the Multichain network first confirms that the assets have been locked on the first chain and then mints derivative assets on the second chain.

When a withdrawal is made, the network goes through this process in reverse: it first confirms that the derivative coins have been destroyed on the second chain, then releases the assets backing them on the first chain.

The Multichain team claims that the cryptographic keys controlling this process are split into multiple shards and distributed throughout the network. This should theoretically prevent any single person or group from being able to make unauthorized withdrawals.

Multichain has been suffering from unspecified technical problems over the past few weeks. On May 31, the team announced that their CEO had gone missing and they were experiencing “multiple issues due to unforeseeable circumstances,” leading to delayed transactions. On July 5, Binance halted withdrawals of some Multichain derivative tokens due to the network failing to process transactions in a timely manner.

Asia Express: HK crypto ETFs on fire, Binance warns on Maverick FOMO, Poly hack

Update July 7, 12:41 am UTC: This article has been updated to include the most recent Twitter post and update from Multichain.

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Stronger US jobs data pressure gold silver

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Stronger U.S. jobs data pressure gold, silver

Gold and silver prices are lower in midday U.S. trading Thursday, following a much stronger-than-expected U.S. ADP employment report this morning that showed a gain in jobs that was double market expectations. The report pushed the U.S. dollar index well off its overnight low and also pushed U.S. Treasury yields higher. August gold was last down $10.50 at $1,916.70 and September silver was down $0.497 at $22.905.

The June U.S. ADP report showed a rise of 497,000 jobs, compared to market expectations for a gain of 220,000. That data falls into the camp of the U.S. monetary policy hawks, who want to see the Federal Reserve continue to raise interest rates. Now comes the U.S. employment situation report from the Labor Department Friday morning. The key non-farm payrolls number was forecast up 240,000 versus a gain of 339,000 in the May report. However, today''s strong ADP jobs number has many thinking Friday''s Labor Department jobs report will also be stronger.

The latest FOMC minutes from the Federal Reserve were released Wednesday afternoon and they also leaned hawkish. The minutes from the June 13-14 meeting showed that while almost all Fed officials deemed it "appropriate and acceptable" to keep the key Fed funds rate unchanged at a 5.0-5.25% range, some would have supported a 0.25% increase, according to a Bloomberg report. The minutes also said "almost all" FOMC members agreed that further tightening of U.S. monetary policy will be needed this year. The gold and silver markets did not react strongly to the minutes.

All of the above have likely now moved the needle over to high odds that the Federal Reserve will raise interest rates at its July FOMC meeting, after pausing at the June meeting.

  Looking past Turkey's gold sales, central banks continued to buy gold in May

Asian and European stock markets were mostly lower in overnight trading. U.S. stock indexes are solidly lower at midday.

The key outside markets today see the U.S. dollar index modestly lower but up from overnight lows. Nymex crude oil prices are slightly down and trading around $71.25 a barrel. The benchmark 10-year U.S. Treasury note yield is rising and presently fetching 4.067% and at the highest level since March.

Technically, August gold futures bears have the overall near-term technical advantage. Prices are in a two-month-old downtrend on the daily bar chart. Bulls'' next upside price objective is to produce a close above solid resistance at $1,950.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the February low of $1,846.80. First resistance is seen at today''s high of $1,934.00 and then at this week''s high of $1,942.90. First support is seen at today''s low of $1,908.50 and then at $1,900.00. Wyckoff's Market Rating: 3.5

September silver futures bears have the overall near-term technical advantage. A choppy, two-month-old price downtrend is in place on the daily bar chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at $24.00. The next downside price objective for the bears is closing prices below solid support at the March low of $20.425. First resistance is seen at $23.25 and then at this week''s high of $23.535. Next support is seen at today''s low of $22.72 and then at last week''s low of $22.485. Wyckoff's Market Rating: 3.5.

September N.Y. copper closed down 305 points at 373.80 cents today. Prices closed nearer the session low. The copper bears have the overall near-term technical advantage. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the June high of 396.40 cents. The next downside price objective for the bears is closing prices below solid technical support at the May low of 356.50 cents. First resistance is seen at today''s high of 377.60 cents and then at this week''s high of 380.95 cents. First support is seen at today''s low of 372.25 cents and then at last week''s low of 368.30 cents. Wyckoff's Market Rating: 3.0.

By

Jim Wyckoff

For Kitco News

Time to Buy Gold and silver

Tim Moseley

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How the Lightning Network for Bitcoin Will Be Adopted Through Ordinal Inscriptions

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How the Lightning Network for Bitcoin Will Be Adopted Through Ordinal Inscriptions

 Jul 6, 2023  #Bitcoin, #bitcoin news

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How the Lightning Network for Bitcoin

Ordinal inscriptions are emerging as a new use case for the Bitcoin blockchain, and they are expected to drive more efficient use of the limited block space. This will lead to broader adoption of the Lightning Network as a scaling solution for Bitcoin as a global currency. The Lightning Network's growth will provide a trustless alternative to centralized payment processors, expanding Bitcoin's reach and appeal.

One of the unique features of Bitcoin is its flat fee and data structure, which means that the cost and block space required to send $1 in BTC is equal to those for sending $1 billion in BTC. This quirk has made it difficult for Bitcoin to be used for low-value transactions, which is where the Lightning Network comes in. By enabling off-chain transactions, the Lightning Network allows for fast, cheap, and scalable micropayments, making Bitcoin more practical for everyday use.

Ordinal inscriptions are essentially non-fungible tokens (NFTs) that are used to represent a specific order or sequence. They are being used to create unique digital collectibles and art, and their popularity has driven up transaction costs across the Bitcoin network. However, this demand for ordinal inscriptions is also driving innovation in layer 2 solutions like the Lightning Network, which are essential for Bitcoin to become a viable global currency.

Understanding Bitcoin and the Lightning Network

Bitcoin is a decentralized digital currency that uses a peer-to-peer network to enable transactions without the need for intermediaries such as banks or financial institutions. Transactions are recorded on a public ledger called the blockchain, which is maintained by a network of computers around the world.

The Lightning Network is a layer 2 network built on top of the Bitcoin network that enables faster and cheaper transactions. It uses smart contracts to create payment channels between two parties, allowing them to transact without broadcasting their transactions to the entire network. This reduces the load on the Bitcoin network and makes transactions faster and cheaper.

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The Lightning Network has gained popularity in recent years as a scaling solution for Bitcoin. It has been hailed as the solution to Bitcoin's scalability problem, which has been a major obstacle to its adoption as a global currency. The Lightning Network offers a trustless alternative to centralized payment processors, expanding Bitcoin's use cases beyond just a store of value.

There are several Bitcoin Lightning Network analytics platforms that provide real-time data on the network's performance and usage. These platforms allow users to monitor the network's capacity, fees, and other metrics, which can help them optimize their transactions and improve their overall experience.

Overall, the Lightning Network is an exciting development in the world of Bitcoin that has the potential to revolutionize the way we transact online. As more users adopt the Lightning Network, we can expect to see faster and cheaper transactions, increased adoption of Bitcoin as a global currency, and a more efficient use of the limited block space on the Bitcoin network.

The Role of Ordinal Inscriptions in Bitcoin Adoption

Ordinal inscriptions have the potential to play a significant role in driving the adoption of Bitcoin's Lightning Network. The ability to create NFT-like inscriptions on the Bitcoin blockchain opens up new possibilities for the use of Bitcoin beyond just financial transactions.

Ordinal inscriptions allow users to create digital artifacts on the Bitcoin blockchain for storage, trade, and exchange. This capability opens up new possibilities for Bitcoin, making it more versatile and useful for a wider range of applications.

One of the key benefits of ordinal inscriptions is that they allow for the creation of unique, identifiable assets on the Bitcoin blockchain. This is made possible through ordinal theory, which provides a methodology for individually identifying and tracking each individual satoshi throughout the Bitcoin coin supply.

With ordinal inscriptions, users can create unique digital assets that are verified and tracked on the Bitcoin blockchain. This opens up new possibilities for the use of Bitcoin in areas such as gaming, art, and collectibles.

As more applications for ordinal inscriptions are developed, it is likely that we will see increased adoption of Bitcoin's Lightning Network. This is because ordinal inscriptions provide a way to create and verify unique digital assets that can be traded and exchanged on the Lightning Network.

Overall, the role of ordinal inscriptions in driving Bitcoin adoption is significant. By making Bitcoin more versatile and useful for a wider range of applications, ordinal inscriptions have the potential to attract new users and increase the adoption of Bitcoin's Lightning Network.

The Impact of Payment Processors on Bitcoin’s Lightning Network

Payment processors play a crucial role in the adoption of Bitcoin's Lightning Network. As the network continues to grow and gain popularity, payment processors will be essential in facilitating transactions between buyers and sellers.

Centralized payment processors, such as Visa and Mastercard, have dominated the global payments industry for decades. However, Bitcoin's Lightning Network has the potential to challenge their dominance by offering faster, cheaper, and more secure transactions.

Bitcoin's Lightning Network is primed to become the default global payments processor, thanks to its unique combination of Bitcoin's monetary policy and Lightning's transaction network. The Lightning Network is a Layer-2 payment protocol built on top of the Bitcoin blockchain. It enables near-instant payments by using Bitcoin's native smart contract functionality.

While the Lightning Network is still in its early stages of adoption, the prospect of increased adoption looks very promising. In 2021, Visa handled more than $1 trillion in payment volume and close to 20 billion transactions per month. In comparison, the Lightning Network handled about $20 million in payment volume and slightly over 800,000 transactions in February 2022.

Payment processors will be instrumental in driving adoption of the Lightning Network. They will help to bridge the gap between traditional payment methods and the Lightning Network, making it easier for merchants and consumers to transact using Bitcoin.

In conclusion, payment processors have a significant impact on the adoption of Bitcoin's Lightning Network. As the network continues to grow and gain popularity, payment processors will be essential in facilitating transactions between buyers and sellers. The Lightning Network has the potential to become the default global payments processor, challenging the dominance of centralized payment processors such as Visa and Mastercard.

Demand and Market Dynamics of Bitcoin

Bitcoin's popularity has been on the rise since its inception. The market cap of Bitcoin has been increasing steadily, and it has become one of the most valuable cryptocurrencies in the world. The demand for Bitcoin-based tokens has also been on the rise, as more people are looking to invest in the cryptocurrency market.

However, the demand for Bitcoin has not been immune to market dynamics. During bear markets, the demand for Bitcoin has been known to decrease, as investors tend to shy away from risky investments. This has led to a decrease in the market cap of Bitcoin, as well as a decrease in demand for Bitcoin-based tokens.

Despite these market dynamics, the surge of Ordinals demonstrates a significant market that Bitcoin is built to sustain on the base layer. Ordinals have proven demand on Bitcoin, but fees will push users to Layer 2.

The sudden emergence of inscribed Bitcoin blocks has been met with criticism, but it offers a glimpse of how Bitcoin block space will evolve. The popularity of NFT-like Ordinal inscriptions and the experimental BRC-20 token standard has driven up transaction costs across the Bitcoin network. The frothy demand for “stamping” limited block space with new data pushed transaction costs so high that in May 2023, Binance twice had to pause BTC withdrawals, a risky and undesirable step.

In conclusion, while the demand for Bitcoin can be affected by market dynamics, the surge of Ordinals demonstrates a significant market that Bitcoin is built to sustain on the base layer. The emergence of inscribed Bitcoin blocks offers a glimpse of how Bitcoin block space will evolve, and it is expected to drive adoption of Bitcoin's Lightning Network.

Challenges and Solutions in Scaling Bitcoin Network

The limited block space in the Bitcoin network has been a major challenge in scaling the network. As more transactions are added to the network, the block size limit of 1MB becomes a bottleneck, leading to high transaction fees and longer confirmation times. This has made Bitcoin less attractive for everyday transactions, limiting its adoption as a currency.

To address this challenge, various scaling solutions and technologies have been proposed. One of the most promising solutions is the Lightning Network, which uses payment channels to enable instant and low-cost transactions off-chain. This reduces the load on the main blockchain, allowing for more transactions to be processed without increasing the block size limit.

However, the Lightning Network also presents its own challenges. For instance, the network requires users to lock up funds in payment channels, limiting liquidity and making it difficult to route payments across the network. To address this challenge, solutions such as Atomic Multi-Path Payments (AMP) have been proposed, which allow for payments to be split across multiple paths, increasing liquidity and reducing the risk of channel depletion.

Another challenge in scaling the Bitcoin network is ensuring decentralization. As the network grows, the number of nodes required to validate transactions increases, leading to higher resource requirements and potential centralization. To address this challenge, technologies such as sharding and sidechains have been proposed, which allow for the network to be divided into smaller, more manageable parts, while still maintaining decentralization.

Overall, while the limited block space in the Bitcoin network presents a significant challenge to scaling, various solutions and technologies such as the Lightning Network, AMP, sharding, and sidechains offer promising ways to address this challenge. As these technologies continue to evolve and mature, they are likely to play a critical role in driving adoption of Bitcoin as a currency.

Privacy and Security Aspects of Bitcoin

Privacy and security are two critical aspects of Bitcoin that have been at the forefront of discussions since its inception. The decentralized nature of the network has made it an attractive option for many users, but it has also raised concerns about the privacy and security of transactions.

One of the most significant privacy upgrades to the Bitcoin network was the implementation of Segregated Witness (SegWit) in August 2017. This upgrade separated the transaction signature data from the transaction data, allowing for more efficient use of block space and increased transaction capacity. Additionally, SegWit enabled the implementation of second-layer solutions like the Lightning Network, which further enhances the privacy and security of transactions.

At the protocol level, Bitcoin's security is maintained through a consensus mechanism called Proof of Work (PoW). This mechanism ensures that all transactions are validated and added to the blockchain in a secure and tamper-proof manner. However, the PoW mechanism requires a significant amount of computational power, which has led to concerns about the environmental impact of Bitcoin mining.

Privacy is also a concern for Bitcoin users, as the public nature of the blockchain means that all transactions are visible to anyone who has access to the network. To address this, users can utilize various privacy-enhancing technologies like CoinJoin and Schnorr signatures. These technologies help to obfuscate the transaction data, making it more difficult to trace the flow of funds.

In conclusion, while Bitcoin's decentralized nature provides many benefits, it also presents challenges related to privacy and security. However, the implementation of upgrades like SegWit and the development of second-layer solutions like the Lightning Network have helped to address these concerns. As the network continues to evolve, it is likely that additional privacy and security enhancements will be implemented to ensure the continued growth and adoption of Bitcoin.

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The Intersection of Bitcoin and NFTs

Bitcoin's Lightning Network has been gaining popularity in recent years as a way to speed up transactions and reduce fees. However, the Lightning Network is not without its challenges, including the need for users to manage channels and the risk of channel closures.

Ordinal inscriptions may provide a solution to some of these challenges by allowing users to create NFT-like inscriptions on the Bitcoin blockchain. These inscriptions can be used to represent ownership of various assets, including non-fungible tokens (NFTs) and even profile picture (PFP) NFTs like the popular Bored Apes.

By inscribing ownership of these assets on the Bitcoin blockchain, users can ensure that their ownership is secure and immutable. This can also help to reduce the risk of fraud and theft, as the ownership of the asset can be easily verified on the blockchain.

While the use of ordinal inscriptions for NFTs is still in its early stages, it has the potential to drive adoption of Bitcoin's Lightning Network by providing a more seamless and secure way to manage channels and assets. As more developers work on ways to integrate ordinal inscriptions into Bitcoin wallets and other applications, we may see a new wave of innovation in the NFT space that is powered by Bitcoin's Lightning Network.

Overall, the intersection of Bitcoin and NFTs is an exciting area of development that has the potential to revolutionize the way we think about digital ownership and asset management. As more users and developers explore the possibilities of ordinal inscriptions, we may see a new era of innovation and growth in the Bitcoin ecosystem.

Bitcoin and Other Cryptocurrencies

Bitcoin is the world's first and most popular cryptocurrency. It was created in 2009 by an anonymous person or group under the pseudonym Satoshi Nakamoto. Bitcoin is decentralized, which means it is not controlled by any government or financial institution. Instead, it is powered by a network of computers around the world that validate transactions and maintain the ledger of all Bitcoin transactions, known as the blockchain.

Other cryptocurrencies have emerged in the wake of Bitcoin's success, such as Ethereum (ETH), Solana (SOL), Shiba Inu (SHIB), Uniswap (UNI), Crypto.com Coin (CRO), and many others. These cryptocurrencies have their own unique features and use cases, such as smart contracts on the Ethereum network, meme tokens like Dogecoin (DOGE), and BRC-20 and ERC-20 tokens that can be used on various blockchain platforms.

Bitcoin's Lightning Network is a layer-two scaling solution that allows for faster and cheaper Bitcoin transactions. It works by creating payment channels between users that can be used to send and receive Bitcoin without having to wait for confirmations on the blockchain. The Lightning Network has the potential to significantly increase the adoption of Bitcoin by making it more practical for everyday transactions.

Ordinal inscriptions, a new development in the Bitcoin space, allows users to create digital artifacts, such as NFTs, on the Bitcoin blockchain for storage, trade, and exchange. While inscriptions could increase the network's overall security budget, it may also increase fees and consistency of fees for Bitcoin miners, thereby increasing mining desirability, and ultimately increasing the network's security.

In conclusion, Bitcoin and other cryptocurrencies are rapidly evolving and changing the way we think about money and finance. The Lightning Network and ordinal inscriptions are just two examples of the innovations that are driving the adoption of Bitcoin and making it more practical for everyday use. As the cryptocurrency space continues to grow and mature, we can expect to see even more exciting developments in the future.

Role of Miners and Transaction Costs in Bitcoin Network

Miners play a crucial role in the Bitcoin network as they are responsible for verifying transactions and adding them to the blockchain. They are incentivized to do so by earning rewards in the form of newly minted bitcoins and transaction fees.

Transaction costs in the Bitcoin network are determined by the supply and demand for block space. Miners prioritize transactions with higher fees as they are more profitable to include in the next block. This has led to a situation where users who are willing to pay higher fees get their transactions processed faster, while those who are not willing to pay higher fees may have to wait longer.

Bitcoin miners have been facing a dilemma in recent years due to the increasing demand for block space and the limited block size. This has led to higher transaction fees and longer confirmation times, making Bitcoin less attractive as a payment option for small transactions.

Ordinal inscriptions can help solve this problem by reducing the amount of data that needs to be stored in each block. By encoding multiple transactions into a single ordinal, miners can process more transactions per block, reducing the demand for block space and lowering transaction costs.

Furthermore, the Lightning Network, a layer-two solution built on top of Bitcoin, can also help reduce transaction costs by enabling off-chain transactions that do not need to be recorded on the blockchain. This can significantly increase the scalability of the Bitcoin network and make it more attractive as a payment option for small transactions.

In conclusion, miners and transaction costs play a crucial role in the Bitcoin network. Ordinal inscriptions and the Lightning Network can help reduce transaction costs and increase the scalability of the network, driving adoption and making Bitcoin a more attractive payment option for small transactions.

Bitcoin as a Global Currency

Bitcoin has often been touted as a potential global currency due to its decentralized nature and borderless transactions. The use of ordinal inscriptions on the Bitcoin blockchain may further drive its adoption as a global currency. With the Lightning Network, transactions can be completed in a matter of seconds, making it a more practical option for everyday use.

The European Union (EU) has been exploring the potential of digital currencies, with some officials suggesting a digital euro could be introduced in the near future. While the EU has not yet made a decision on the matter, the use of Bitcoin as a global currency could provide an alternative for those looking for a decentralized and secure option.

The CEO of Twitter, Jack Dorsey, is a vocal proponent of Bitcoin and has stated that he believes it will eventually become the world's single currency. While this may be a lofty goal, the use of ordinal inscriptions on the Bitcoin blockchain could further drive its adoption and bring it closer to this vision.

In times of war or economic uncertainty, the use of a decentralized currency like Bitcoin could provide a more stable option for individuals and businesses. The ability to transact without relying on a centralized authority can provide a sense of security and stability in uncertain times.

As Bitcoin becomes more widely accepted, it may also become a more practical option for global exchange. The use of ordinal inscriptions on the blockchain can provide a level of transparency and security that traditional financial systems may not be able to match.

Overall, the use of ordinal inscriptions on the Bitcoin blockchain can further drive its adoption as a global currency. While there are still challenges to overcome, such as regulatory hurdles and scalability issues, the potential benefits of a decentralized and secure global currency are hard to ignore.

Frequently Asked Questions

What is the Lightning Network and how does it improve Bitcoin transactions?

The Lightning Network is a second-layer payment protocol that operates on top of the Bitcoin blockchain. It allows for near-instant and low-cost transactions by creating payment channels between users. These channels enable parties to transact with each other without broadcasting every transaction to the Bitcoin network, thereby reducing transaction fees and increasing transaction speed.

Can payment channels like Lightning Network make Bitcoin more scalable?

Yes, payment channels like the Lightning Network can significantly improve the scalability of Bitcoin. By moving most transactions off-chain, the Lightning Network reduces the load on the Bitcoin network and allows for more transactions to be processed. This increased scalability can enable Bitcoin to become a more widely adopted payment system.

How do ordinal inscriptions enhance the security of Lightning Network transactions?

Ordinal inscriptions are a new type of non-fungible token (NFT) that can be used to create digital artifacts on the Bitcoin blockchain. These inscriptions can be used to verify the authenticity of Lightning Network transactions, making them more secure. Additionally, ordinal inscriptions can be used to create unique digital assets that can be traded or exchanged on the Lightning Network.

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What are the benefits of using Lightning Network for Bitcoin transactions?

The Lightning Network offers several benefits for Bitcoin transactions, including near-instant transaction confirmations, low transaction fees, and increased privacy. Additionally, the Lightning Network can enable micropayments, which can be used for a wide range of applications, including tipping content creators, paying for online services, and more.

Are there any potential drawbacks to using Lightning Network for Bitcoin transactions?

One potential drawback of the Lightning Network is that it requires users to lock up funds in payment channels. This can limit liquidity and make it more difficult to move funds between different payment channels. Additionally, the Lightning Network is still a relatively new technology and may be subject to bugs or other security issues.

How does Lightning Network compare to other scaling solutions for Bitcoin?

There are several other scaling solutions for Bitcoin, including increasing the block size limit and implementing Segregated Witness (SegWit). However, the Lightning Network offers several advantages over these solutions, including lower transaction fees, faster transaction confirmations, and increased scalability. Additionally, the Lightning Network can be used in conjunction with other scaling solutions to further improve Bitcoin's scalability.

Tim Moseley

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Gold pauses ahead of FOMC minutes release

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Gold pauses ahead of FOMC minutes release

Gold prices are near steady up and silver solidly higher in midday U.S. trading Wednesday. Short covering from the futures traders was featured, especially in silver, ahead of the afternoon FOMC minutes from the Federal Reserve. August gold was last up $0.10 at $1,929.60 and September silver was up $0.308 at $23.42.

Despite a holiday-shortened U.S. trading week, it’s still a busy one for the marketplace. The latest FOMC minutes from the Federal Reserve will be scrutinized for any fresh clues on the timing of the next monetary policy move by the central bank. The U.S. employment situation report for June is out Friday. The key non-farm payrolls number is forecast up 240,000 versus a gain of 339,000 in the May report.

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Asian and European stock markets were mostly lower in overnight trading. U.S. stock indexes are mixed at midday.

  Spot gold and silver prices hold gains, testing resistance in quiet holiday trading

The key outside markets today see the U.S. dollar index higher. Nymex crude oil prices are solidly higher and trading around $72.00 a barrel. Reports said Saudia Arabia and Russia will extend their oil-production cuts by another month. Meantime, the benchmark 10-year U.S. Treasury note yield is presently fetching around 3.898%.

Technically, August gold futures bears have the overall near-term technical advantage. Prices are in a two-month-old downtrend on the daily bar chart. Bulls’ next upside price objective is to produce a close above solid resistance at $2,000.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the February low of $1,846.80. First resistance is seen at today’s high of $1,942.90 and then at $1,950.00. First support is seen at this week’s low of $1,917.70 and then at $1,900.00. Wyckoff's Market Rating: 4.0.

September silver futures bears have the overall near-term technical advantage. A choppy, two-month-old price downtrend is still in place on the daily bar chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at the June high of $24.835. The next downside price objective for the bears is closing prices below solid support at the March low of $20.425. First resistance is seen at today’s high of $23.45 and then at $24.00. Next support is seen at $23.00 and then at last week’s low of $22.485. Wyckoff's Market Rating: 4.0.

September N.Y. copper closed down 180 points at 377.60 cents today. Prices closed near mid-range. The copper bears have the overall near-term technical advantage. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the June high of 396.40 cents. The next downside price objective for the bears is closing prices below solid technical support at the May low of 356.50 cents. First resistance is seen at 382.50 cents and then at 385.00 cents. First support is seen at today’s low of 373.25 cents and then at last week’s low of 368.30 cents. Wyckoff's Market Rating: 3.5.

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Jim Wyckoff

For Kitco News

Time to Buy Gold and silver

Tim Moseley

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Gold prices to remain in neutral territory for the rest of 2023 silver to see slightly higher prices – BMO Capital Markets

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Gold prices to remain in neutral territory for the rest of 2023, silver to see slightly higher prices – BMO Capital Markets

Gold's brief push above $2,000 an ounce in mid-May could represent the yellow metal's high-water mark for the year as markets continue to adjust to dynamic interest rate expectations and a resilient U.S. economy.

In their latest quarterly outlook, analysts at BMO Capital Markets said that they are leaving their year-end average gold price target unchanged at $1,905 an ounce, and warned that the precious metal is losing momentum as it has not been able to hold its gains above $2,000.

"Gold has struggled for direction over recent weeks as markets digest climbing treasury yields, dollar strength, the potential lagged impact of an unprecedented cumulative rate-hiking cycle, and elevated geopolitical risk," the analysts said in the report. "Our base case remains that uncertainty coupled with macro headwinds will see gold prices well supported into Q3; however, as we gain clarity on the central bank rate trajectory and the ‘hard landing' scenario is averted, we see gold losing some of its luster into year-end."

The neutral outlook comes as gold prices hold support above $1,900 an ounce but remain unable to break initial resistance around $1,930.

The report noted that BMO's chief economist Douglas Porter does not see any serious sign the U.S. economy is rolling over, which could support the Federal Reserve's aggressive monetary policy stance.

"In our view, a severe U.S. economic downturn and consequent reactionary Fed rate cuts anytime soon are unlikely, and as such, after we are likely past the nadir in the macrocycle, we do see gold and silver prices softening into year-end," the analysts said

While BMO sees gold running in place for the rest of the year, the Canadian bank is slightly more optimistic about silver. The bank raised its 2023 average silver price to $22.70 an ounce, up 3% from its second-quarter price forecast.

BMO's modest increase in its silver price outlook comes as the precious metal tests resistance around $23 an ounce. Although the bank is positive on silver, they do see some potential headwinds for the rest of the year.

  Spot gold and silver prices hold gains, testing resistance in quiet holiday trading

"Silver's supportive fundamentals have struggled to supplant muted institutional investor appetite, with little sign sustained ETP inflows will materialize near term," the analysts said.

"In our view, silver prices are poised to roll over into year-end, owing to weaker jewelry and silverware demand compared to the same period last year, industrial demand headwinds, and diminishing safe-haven demand."

Despite foreseeing challenges through the rest of 2023, the analysts noted that the silver market is supported by long-term bullish fundamentals.

"Longer-term silver demand from solar installations and the rollout of the 5G network should provide a multi-decade annuity as the world accelerates renewable targets and pushes to increase connectivity," the analysts said. "That said, despite the acceleration in renewable generation capacity targets owing to the increased emphasis on energy security, we expect ongoing thrifting and emerging technologies such as thin films to offset some of the potential gains in silver demand."

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Neils Christensen

For Kitco News

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Tim Moseley

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Gold silver see mild rebounds on short covering

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Gold, silver see mild rebounds on short covering

Gold and silver prices are modestly higher in midday U.S. trading Monday. Short covering from the futures traders is featured following the recent selling pressure in both markets. Activity was muted to start the U.S. holiday-shortened trading week. August gold was last up $4.20 at $1,933.50 and September silver was up $0.11 at $23.13.

Asian and European stock markets were mixed to higher in quieter overnight trading. U.S. stock indexes mixed at midday. The S&P stock index futures hit a 14-month high last Friday. Trading was quieter today as many American traders and investors are taking an extra day off, ahead of the U.S. Independence Day holiday Tuesday when all U.S. markets are closed. Some U.S. markets close early today.

It’s still a busy week for the marketplace as the U.S. employment situation report for June is out Friday. The key non-farm payrolls number is forecast up 240,000 versus a gain of 339,000 in the May report.

U.S. Treasury Secretary Janet Yellen travels to China Thursday for meetings with high-level Chinese officials.

  Here's why gold price is above $1,900 despite two looming rate hikes

The key outside markets today see the U.S. dollar index near steady. Nymex crude oil prices are a bit firmer and trading around $71.00 a barrel. Meantime, the benchmark 10-year U.S. Treasury note yield is presently fetching around 3.85%.

Technically, August gold futures bears have the overall near-term technical advantage. Prices are in a two-month-old downtrend on the daily bar chart. Bulls’ next upside price objective is to produce a close above solid resistance at $2,000.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the February low of $1,846.80. First resistance is seen at today’s high of $1,939.90 and then at $1,950.00. First support is seen at today’s low of $1,917.70 and then at $1,900.00. Wyckoff's Market Rating: 3.5.

September silver bears have the overall near-term technical advantage. A choppy, two-month-old price downtrend is in place on the daily bar chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at the June high of $24.835. The next downside price objective for the bears is closing prices below solid support at the March low of $20.425. First resistance is seen at last week’s high of $23.335 and then at $23.50. Next support is seen at today’s low of $22.91 and then at last week’s low of $22.485. Wyckoff's Market Rating: 4.0.

September N.Y. copper closed up 390 points at 379.85 cents today. Prices closed near the session high today on short covering. The copper bears have the overall near-term technical advantage. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the June high of 396.40 cents. The next downside price objective for the bears is closing prices below solid technical support at the May low of 356.50 cents. First resistance is seen at 382.50 cents and then at 385.00 cents. First support is seen at today’s low of 375.95 cents and then at 372.50 cents. Wyckoff's Market Rating: 3.5.

By

Jim Wyckoff

For Kitco News

Time to Buy Gold and silver

Tim Moseley

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Crazy Battle between Securities and Commodity Hangs Crypto in a Regulatory Limbo

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Crazy Battle between Securities and Commodity Hangs Crypto in a Regulatory Limbo 

Welcome to the fascinating world of cryptocurrencies, where digital assets have emerged as a disruptive force within the financial ecosystem. However, navigating the regulatory landscape surrounding these innovative forms of currency can be a bewildering experience. Despite their name, regulatory bodies like the Internal Revenue Service (IRS) do not recognize cryptocurrencies as currencies. Instead, they are often categorized as property, which has significant implications for taxation.

Simultaneously, the Securities and Exchange Commission (SEC) has raised concerns about initial coin offerings (ICOs) and their potential classification as securities. This has led to discussions around registration requirements and investor protections in the realm of cryptocurrencies. As a result, the emergence of cryptocurrencies has not only challenged traditional definitions and classifications of commodity and currency but has also blurred the lines between traditional financial instruments and these new digital assets.

Whether you are an investor looking to navigate the legal complexities of the crypto space or simply curious about the evolving nature of digital assets, this article aims to unravel the intricacies of the crypto landscape and shed light on how cryptocurrencies fit into existing regulatory frameworks. By exploring the classifications of cryptocurrencies as securities and commodities, we hope to provide you with a deeper understanding of their implications and the broader impact on the financial world.

Understanding Traditional Assets

To navigate the complex world of assets, it is essential to grasp the classifications established by regulatory agencies like the IRS, CFTC, and SEC for tax and regulatory purposes. While some definitions rely on legal precedents, such as the renowned Howey Test for securities, others may vary across regulatory bodies. Nonetheless, gaining a fundamental understanding of traditional assets is crucial before delving into the cryptocurrency spectrum.

There are three primary categories into which financial assets are typically grouped:

1. Real Estate:
Real estate, as a category of traditional assets, encompasses the land and any structures or improvements attached to it. This includes residential homes, commercial buildings, factories, warehouses, and even natural resources like minerals or water rights associated with the land. Real estate encompasses the tangible, physical properties and resources tied to a specific location.

When purchasing real property, certain fees and additional expenses contribute to the overall cost basis of the property. Specific rules and deductions apply to your taxes when dealing with real estate. By understanding the intricacies of real estate, including the costs involved in property transactions and the tax implications of property ownership, individuals can make informed decisions when buying, selling, or investing in real estate assets.

2. Securities:
Securities are financial instruments that represent ownership or a stake in a company or entity. They include familiar assets like stocks, bonds, and derivatives. The Securities and Exchange Commission (SEC) is the regulatory body overseeing securities in the United States. To shed some light on the legal aspect, in a significant court case called SEC v W. J. Howey Co. in 1946, U.S. securities law defined securities as "investment contracts."

In simple terms, when someone invests in a security, they expect to profit solely from the efforts of the issuer or a third party involved. These profits can come from selling the security at a higher price, receiving dividends, or earning interest. This landmark case established the "Howey test." It was utilized in various SEC enforcement cases, including disputes involving tokens like Ripple's XRP and the creators of NBA Top Shot, a digital marketplace for sports collectibles known as non-fungible tokens (NFTs).

3. Commodities:
Commodities refer to physical goods traded in large quantities on specialized exchanges. They can include agricultural products like corn and wheat and precious metals like gold and silver. Their current market price typically determines the value of commodities. The Commodity Futures Trading Commission (CFTC) oversees certain aspects of commodities trading in the United States.

However, it's important to note that the CFTC's regulatory authority primarily covers wrongdoing related to commodities futures trading rather than spot trading, which involves immediate transactions of physical goods. Spot trading of commodities doesn't fall under the CFTC's direct jurisdiction like securities do under the SEC.

As the popularity of crypto assets continues to soar, questions arise regarding how these conventional asset categories apply to the growing realm of digital assets.

Cryptocurrencies challenge the traditional notions of physical-focused assets, prompting regulators to adapt their frameworks and policies to encompass these innovative financial instruments. Consequently, exploring the distinct characteristics and implications of digital assets within the context of existing asset classifications becomes imperative.


Image source: Crypto.news

Why the Classification of Cryptocurrencies Matters

To truly grasp the different categories that crypto-assets fall into and how it impacts their regulation, it's essential to understand the meaning behind the Howey Test. The Howey Test has emerged as a widely respected method to classify these assets, and it does so by posing these fundamental questions:

1. Is money being invested?
2. Is there an expectation of earning a profit from the investment?
3. Does the investment involve a common enterprise?
4. Are profits generated through the efforts of others?

If a cryptocurrency meets all four criteria outlined in the Howey Test, it is considered a security. This means that promoters are actively marketing these tokens, while investors anticipate earning profits primarily through the efforts of others. SEC Chair Gary Gensler emphasized this point in a statement on September 8, emphasizing the prevalence of token sales where the public expects profits based on the actions of others. By understanding these criteria, individuals can gain insights into how crypto-assets are classified and regulated under the Howey Test.

If a cryptocurrency is classified as a security, it means that the issuers and exchanges of that cryptocurrency must obtain licenses from securities regulators. However, getting these licenses can be pretty challenging, which is why the crypto industry puts a lot of effort into ensuring that their cryptocurrency sales and projects comply with securities laws.

Issuers try to avoid violating securities regulations by focusing on decentralization. If a cryptocurrency is developed in a way that doesn't have a central group driving up its value, it becomes less likely to be seen as security by regulators. This is why decentralized finance (DeFi) projects work towards decentralizing their development efforts and splitting governance through decentralized autonomous organizations (DAOs). 

They also utilize mechanisms like proof-of-stake as a consensus mechanism. The argument behind this approach is that if people are both investors and actively participate in the project's growth, such as by staking the coin or voting in DAO decisions, they are no longer solely reliant on a third party to generate returns, as required by the Howey test.

The risk of classifying cryptocurrencies as securities is that exchanges may choose not to list them to avoid being fined by the Securities and Exchange Commission (SEC) for trading unregistered securities. Cryptocurrencies may face state-specific rules and regulations. For instance, the New York Attorney General filed a lawsuit against KuCoin, and multiple state regulators have teamed up to target a coin featuring Elon Musk's image called TruthGPT Coin. These cases highlight the potential legal complications that can arise.

The SEC has provided guidance on initial coin offerings (ICOs) and digital assets. In their framework for the investment contract analysis of digital assets, the SEC emphasized factors such as the speculative nature of many ICOs and their lack of utility as payment or store of value, which could lead to these coins being classified as securities. Kik, an ICO project, faced legal consequences when its CEO said buying its tokens would result in significant profits. The SEC sued Kik, and the company was fined $5 million, nearly pushing them to bankruptcy.

Conversely, the Commodity Futures Trading Commission (CFTC) argues that cryptocurrencies like Bitcoin and Ether are commodities and can be regulated under the Commodity Exchange Act (CEA). The CFTC's rationale is based on the fact that cryptocurrencies like Bitcoin are interchangeable on exchanges, just like sacks of corn of the same grade have the same value. This determination was reinforced in the CFTC's case against Bitfinex, a crypto exchange, and Tether, a stablecoin issuer, where the agency stated that digital assets like Bitcoin, Ether, Litecoin, and Tether are all commodities.

Determining whether cryptocurrencies fall under the classification of securities or commodities has significant implications for their regulation. It affects licensing requirements, listing on exchanges, compliance with securities laws, and potential legal consequences. These classifications shape the regulatory landscape and play a vital role in how cryptocurrencies are treated within the financial ecosystem.


Image credit: Markethive.com

Where Things Stand in The Ongoing Regulatory Debate

The regulatory landscape for cryptocurrencies is constantly evolving, and it's challenging to predict how it will look in the future. Various stakeholders and factors are involved, making it a complex situation. In the United States, Congress has made efforts to grant the Commodity Futures Trading Commission (CFTC) broader authority to regulate the spot trading of non-securities tokens. Among these tokens, Bitcoin is currently the only one that both agencies, the CFTC and the Securities and Exchange Commission (SEC), openly agree on its classification.

One possible outcome of this ongoing debate is that specific cryptocurrencies may be classified as securities while others are treated as commodities. This would create an even more intricate regulatory landscape where different cryptocurrencies are subject to different rules and regulations.

Alternatively, lawmakers could establish crypto as its distinct asset class, introducing tailored regulations specifically for cryptocurrencies. This approach is largely followed by the European Union, which has implemented the Markets in Crypto Assets (MiCA) regulation. MiCA outlines steps that crypto issuers, wallet providers, and exchanges must follow to protect consumers and ensure fair trading.

However, even with these regulations in place, there may still be some legal areas that need to be addressed on a case-by-case basis. For example, determining whether a particular series of non-fungible tokens (NFTs) must adhere to specific rules. As the discussions continue and regulatory bodies navigate the complexities of cryptocurrencies, it remains a dynamic and evolving landscape with ongoing developments that will shape the future of crypto regulation.

Controversial Guidelines on How Cryptocurrencies Are Classified

The classification of cryptocurrencies has been a contentious issue, with different U.S. regulatory agencies offering their own definitions. The Securities and Exchange Commission (SEC) labeled cryptocurrencies as securities, considering them investment assets that generate returns. This categorization was based on federal security laws and the belief that anything traded on an exchange qualifies as a security, including cryptocurrencies.

However, the Commodity Futures Trading Commission (CFTC) took a different approach. Following a court ruling.pdf, the CFTC gained the authority to regulate digital currencies as commodities, treating them similarly to products like coffee and oil.

Additionally, the Internal Revenue Service (IRS) defined cryptocurrencies as taxable property for federal tax purposes, adding another layer to the classification debate.

Two other agencies, the Office of Foreign Assets Control (OFAC) and the Financial Crimes Enforcement Network (FinCEN), also provided their guidelines. OFAC considered digital currency on par with fiat currency, while FinCEN categorized cryptocurrencies as a form of money. These distinctions diverged from other agencies' commodities, property, or asset classifications.

These conflicting definitions within the same government highlight the challenge businesses face in legally classifying cryptocurrencies. However, efforts have been made to bring more clarity. For example, the SEC clarified that it does not consider Ethereum and Bitcoin securities but focuses on Initial Coin Offerings (ICOs). While there is an ongoing debate, this statement narrows the understanding of cryptocurrencies within the United States.

The different classifications can create confusion for businesses, which may struggle to understand which regulations apply to them. This confusion can lead to legal risks if companies fail to comply with the appropriate regulations. It can also discourage some businesses from entering the cryptocurrency market due to the uncertainty and complexity of regulations.

Moreover, the classification can impact innovation in the crypto industry. If a new cryptocurrency is classified as a security, it may deter innovation due to the stringent regulatory requirements. Conversely, if classified as a commodity, it may encourage development due to the relatively less strict regulations.

However, it's important to remember that the regulatory landscape for cryptocurrencies is still evolving, and changes may occur in the future that could affect crypto businesses. Therefore, it's crucial for companies to stay updated on the latest regulatory developments and seek legal advice to ensure compliance.

Classifying cryptocurrencies as securities or commodities is complex, with significant implications for investors and regulators. As the cryptocurrency market continues to evolve, it may be necessary to reevaluate and refine these classifications to reflect this asset class's unique nature accurately.

While the current classifications provide some clarity, they also highlight the need for a more nuanced regulatory framework to accommodate cryptocurrencies' distinctive characteristics. This is a challenge that regulators worldwide will need to address in the years to come.

This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

 

 

About: Prince Ibenne. (Nigeria) Prince is passionate about helping people understand the crypto-verse through his easily digestible articles. He is an enthusiastic supporter of blockchain technology and cryptocurrency. Find me at my Markethive Profile Page | My Twitter Account | and my LinkedIn Profile.

 

 

 

 

Tim Moseley

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Fed will raise rates to 6 in 2023 gold could hit 10k by 2025 – Tom Luongo

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Fed will raise rates to 6% in 2023, gold could hit $10k by 2025 – Tom Luongo

The Federal Reserve will hike interest rates to 6 percent in 2023, according to Tom Luongo, Publisher of Gold, Goats 'n Guns.

Luongo had correctly forecast in 2022 that Fed Chair Jerome Powell would continue to hike into the 4.5 to 6 percent territory in 2023, when many analysts were forecasting a pivot or pause.

"I think he [Powell] will raise again, and possibly even raise multiple times before the end of the year," Luongo told Michelle Makori, Lead Anchor and Editor-in-Chief at Kitco News. "We'll wind up somewhere around 6 percent by the end of the year."

Since March of 2022, the Federal Reserve has raised interest rates by 500 basis points in an effort to reduce inflation, which reached a peak of 9.1 percent in June of 2022.

The Federal Funds Rate is currently in a range of between 5 and 5.25 percent.

The Fed had previously slashed rates to zero in 2020 to help the U.S. government facilitate COVID-related relief. This, analysts claim, led to high inflation in 2022.

Luongo said that Powell was "forced" into a loose monetary policy, even though he personally was against it.

"Powell has always been a hard money guy," Luongo explained. "I think that COVID forced him into policy he didn't want."

To find out why Luongo thinks that high inflation will return, and what the Fed will do about it, watch the video above

Banking 'Implosion'

As the Fed tightens monetary policy, Luongo expects more bank failures across the United States.

"I just see the entire banking system imploding, detonating like a nuclear bomb," he said.

The U.S. banking system faced uncertainty following the failures of four major banks early this year. The latest bank to fail, First Republic, had over $200 billion in assets under management, making its collapse the second-largest in American history.

Luongo sees commercial real estate loans, which many regional banks are exposed to, as a catalyst for the next series of bank failures.

"You've got 20 percent vacancy rates in hot markets like Dallas and Miami," he observed. "[Regional banks] are exposed to a lot of commercial real estate… all credit-based assets are going to deflate."

To find out whether Luongo believes that another bank collapse would cause Powell to pivot, watch the video above

Gold

As the banking system collapses and the economy enters a recession, Luongo is forecasting that hard assets like gold will benefit.

"If we look at the 1970s as a model, we are looking at $8,000 to $10,000 in gold minimum, over the next couple of years," he forecast. "If the dollar collapses on the other side of Jerome Powell, then things could get very interesting for gold and gold investors."

To find out Luongo's outlook for gold miners, watch the video above

By

Cornelius Christian

For Kitco News

Time to Buy Gold and silver

Tim Moseley

The Artist that came out of the Winter