#89: How Many Troy Ounces Make a Bitcoin ?

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The talk at the moment is all about inflation. Australia, Canada and the US have reported higher than expected inflation numbers. With that said you would expect gold to continue to track higher as a store of value. The chart below shows the amount of gold required to buy a bitcoin. Currently you will need 26.49 Troy ounces of gold to buy 1 bitcoin. The high so far in late 2021 was 37 ounces. Bitcoin is considered the e-gold of sound money. It is going to be very interesting seeing where this ratio finds equilibrium.

I couldn’t resist looking at the relationship of bitcoin with the S&P 500. I used the SPY ETF for the illustration. You can see here as well that despite the S&P 500 making new highs the performance of bitcoin has been stronger.

S2N Observations

There has been lots of talk about the Japanese yen breaking through a level last set 38 years ago. The BOJ has a real problem on its hands as the Japanese economy no longer runs trade surpluses but in fact runs a trade deficit. Therefore imports are becoming more expensive which is going to add further inflation pressure.

Not quite sure what to make of Amazon breaking out from what has been a heavy level of resistance. While the major indices have been making one new all-time high after another, Amazon has been lagging behind.

I wanted to wrap up today with a link to Ray Dalio’s latest update. Ray is a classic financial market historian with a very clear understanding of what drives the markets and society. He did build the largest hedge fund in the world so must know a thing or two. Ray is super long winded, so this may not be everyone’s cup of tea. Here is summary (quoting with some liberal editing):

I think it is so clear that we are currently experiencing a class war with the cost of living crisis exposing the widening gap between the haves and have nots. I started today’s letter on the subject of inflation and I am going to end with it. Inflation is far from under control. There is stagflation all around, i.e. weak economic growth with inflation. People and countries with too much debt need inflation to continue to grow to help bail them out by cheapening the debt. This is the most likely way forward as it is politically expedient, but paradoxically it is likely to drive the world closer to Dalio’s stage 6.

If you are keeping a diversified portfolio with a fixed income component I would certainly be favouring the short end of the curve, I would stick to the 3 month Treasury yield.

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