Oil pops, gold tumbles, bitcoin is back

Gold and silver retreat

Gold got hit with a trifecta of bad news: US stocks are surging again, gold ETF holdings have dropped for a fifth straight day as the scramble towards silver continues, and as the dollar rally accelerates against the euro.  It’s been a bloodbath for commodities apart from iron ore and crude prices.  The silver retail streak appears to be unraveling and despite all the strong fundamental reasons to hold it, momentum selling is winning out.  Silver will benefit from tremendous industrial demand later in the year and as many retail traders will likely hold onto their silver coins that have yet to be delivered.

Today’s selloff in the precious metals is not the beginning of a new trend, but a stronger dollar and a booming stock market spells trouble in the short-term.

Oil prices rally

Crude prices are rallying as the US has turned a critical corner in the fight against COVID and as OPEC+ seems to be following through on their gradual increase in production.  The Biden administration appears well on the way to hitting their goal of a 100 million vaccination in 100 days.  US COVID new cases and hospitalizations are both declining, while vaccinations have eclipsed the total number of coronavirus cases.

Ahead of tomorrow’s OPEC+ JMMC meeting, it seems everyone in OPEC+ is playing nice.  Russia increased output 1% on a monthly basis in January, which was in line with their quota.  The gradual increase of crude production will likely be affirmed by OPEC+ as more vaccines become available.  The demand outlook continues to improve alongside the global economic recovery.  The biggest risk remains a setback in Chinese crude demand and so far that does not seem to be happening.

WTI crude tentatively broke above the USD55 level, a one-year high but seems poised to consolidate until further confirmation that global inventories are easing.

Bitcoin

Casualties from the last couple of weeks of retail trading madness are slowly going back to their bread-and-butter way of buying and holding cryptocurrencies.  Many social media traders are dumbstruck and don’t know if they need to get out.  Panic selling across GameStop, AMC and silver is triggering a nice bid on cryptocurrencies.

Also providing some interest in the cryptoverse is the Winklevoss’ Gemini savings accounts that is providing potential additional interest on top of your appreciating cryptocurrencies.  Annual rates from 3-12% are hitting the interest-bearing market and that is exciting many crypto-traders that believe long-term on digital coins.

Bitcoin remains trapped in the USD30,000-40,000 range, but it seems fears of a meltdown from lost retail interest is ebbing.

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