The dollar is so strong currently, with US bond yields rising to touch 3% and good numbers in this weeks data, it's causing Gold and precious metals to come under heavy pressure. With CTFC net futures short positions reaching a record high, not seen since 2014.
Bitcoin Holds $6,000 with a strong dominance of over 50%
With a strong dollar hitting year highs, a level not seen since the trump trade rocketing the currency, after the US presidential election. Turkey felt the brunt of the pain this week with the Lira shedding 10% against the green back.
Bitcoin stood firm and didn't get down past $6000, although alts took a serious head wound, bleeding out in some cases to new year lows.
Investors holding a diverse crypto portfolio, hedging across several cryptocurrency alt-coins have possibly had a change of strategy this week, after seeing BTC dominance ramp to pass 50% - a level that previously was seen at the run for 20k in november. Changing heart and deciding to switch bags to buy BTC, has possibly added to the kings' buoyancy.
The long squeeze
Prior to this we have been monitoring the increasingly long positioned order book on oanda, which was sitting at over 80% for the past 3 months. Now those positions are getting squeezed out and closing out, as traders cut their losses or in the worst case are liquidated.
Gold is still hugely popular amongst investors and fund managers, albeit with some controversy this year. As one of the worlds most reputed mutual funds Vanguard, declared it was dropping 'precious metals' from it's name. Renaming it's $2.3 billion Vanguard Precious Metals and Mining Fund to "Vanguard Global Capital Cycles Fund." although in contrast Hedge fund giants Bridgewater Associates with $160 billion under management continues to keep large holdings in two gold backed ETFs the iShares Gold Trust (IAU) and SPDR Gold Trust (GLDW)
The CEO of U.S Global Investors, Mr Frank Holmes - commented that Vanguard's decision in reducing it's holding of mining stocks from 80% to 25% is part of a much larger trend that makes it more complex for investors to passively invest in the gold market.
Gold dived through $1,200/oz this week, bringing some analysts to call bottom, and start to build longs. Holmes went further to say that a rebound for bullion is still on the cards as the U.S dollar remains the fundamental cause.
“The money is consistently in price reversals. We are now down 2-3 standard deviations, and many companies [have] great fundamentals. Bullion down, silver down, I think we’re due, mathematically, for a great rally,” he said.