While You Weren't Watching: Negative Yielding Bonds At Record; Bitcoin's Demise; Silver, Gold Gashed

Focused on the glorious Dow 30,000 meme the past few days, along with post-election foibles and coronavirus circumstances, little notice was paid to a number of developments that may eventually have more to do with a "Great Reset" economy than the rise and fall of old standard stocks and bonds.

Since nobody bothers to keep score on the amount of negative interest rate debt in play throughout the world, Barclay's and Bloomberg try to keep abreast. Via coindesk, a premier purveyor of all news concerning cryptocurrencies, noted on November 16, the amount of negative-yielding debt set a new record, at $17.05 trillion (in US$).

Rising dramatically from around $6 trillion to the prior high mark of $17.04 trillion in 2019, low issuance of new negative debt and the retiring of some older maturities had brought the amount of below-zero interest-bearing debt to less than $8 trillion earlier this year. The global pandemic thrust upon the world stage changed all that as governments scrambled to shore up damaged economies and the amount of new negative-interest debt instruments soared.

Massive emergency funding in the negative space seemed a perfect set-up for investments without counterparty risk, such as gold, silver, and cryptocurrencies like Bitcoin. That theorm held sway early in the pandemic phase, with gold notching a record high, silver and Bitcoin up sharply. Until recently, these alternate investment currencies had held up relatively well, especially Bitcoin, which rocketed within a few dollars of its all-time peak (2017), sailing past the $19,000 mark on Tuesday of this week and hitting a three-year high at 19,488.81 on Wednesday.

It was there that Bitcoin met with distressing news to holders and speculators, as Treasury Secretary Steven Mnuchin was reported to be considering plans to introduce fresh rules for "self-custody wallets" by the end of his term. Bitcoin bottomed out at $16,270.37 on Thursday, Thanksgiving Day in the United States, but began rallying late Thursday into Friday.

Current speculation sees the impact of the Treasury's rumored regulation overblown and credits the decline more to simple overbought conditions. Bitcoin has rallied sharply, nearly doubling in just October and November. A move beyond $20,000 is still seen as a probability by the end of 2020. Considering the volatility of the crypto space, a record high seems a given and further gains are forecast for 2021 and beyond as fiat currencies continue to deprecate and lose purchasing power while Bitcoin and other major cryptos gain new users and advanced spending capabilities.

Despite efforts by governments (Bitcoin is banned in six countries) to regulate the holding and taxation of cryptocurrencies as investments, the Bitcoin bandwagon appears only to be slowed temporarily by efforts to contain its growth.

Precious metals have painted a similar, if not as spectacular a story. Gold, which had rallied from a low of $1167.10 in the summer of 2018 to an intraday high of $2089.20 in August, 2020, was never able to hold that level, falling below $2000 an ounce later that month, commencing a slow decline that has accelerated in recent days.

The world's recognized greatest store of value was punched down nearly $100 just three weeks ago and knocked lower the past two weeks to just above $1800 per ounce. Silver suffered a similar fate, testing $30 an ounce in August, only to be beaten down to current levels around $23 an ounce.

Cries of foul have been loudly sounded by the goldbug community, since manipulation of the precious metals market has been proven by the criminal convictions against JP Morgan and fines paid by other banks, particularly HSBC and Citigroup, and seems not to have deterred the practices of spoofing and naked shorting in the futures markets to facilitate price suppression.

Until real price discovery is attained via a smashing of the closed loop LMBA and standing for physical delivery on the COMEX, gold and silver will continue to frustrate honest investors, subject to the worst criminal behavior that serves only the interests of the central bank counterfeiters who are openly strip-mining the great economies of the world.

As Captain Bligh in the film Mutiny on the Bounty may have accurately surmised, "The beatings will continue until morale improves."

At the Close, Wednesday, November 25, 2020:
Dow: 29,872.47, -173.77 (-0.58%)
NASDAQ: 12,094.40, +57.62 (+0.48%)
S&P 500: 3,629.65, -5.76 (-0.16%)
NYSE: 14,191.58, -57.92 (-0.41%)