Monetary Inflation

Apr 08, 2024

I am not the only one who has written recently on how closely certain assets track global liquidity. The brilliant

had an interesting take on the same topic with the following chart and accompanying quote.

How good have cryptocurrencies been at hedging monetary inflation? The scatter diagrams below show, respectively, the weekly responses of gold bullion, Bitcoin and Ethereum to changes in Global Liquidity. Their estimated sensitivities to liquidity, or regression loadings, are positive and statistically significant, averaging 1.49x, 8.95x and 15.15x. This tells us that over the 2017-2024 period, each 10% increase in Global Liquidity was associated with a 14.9% rise in gold prices and, similar and dramatic, rises of nearly 90% and 150% in the prices of Bitcoin and Ethereum. These crypto-units act like ‘exponential gold’.

Check out the post here and make sure to read more of his stuff. His substack is one of my favorites.

Capital Wars

Bitcoin…North of Richmond

Could cryptocurrencies help trigger a massive wealth transfer to Generation Z? Consider the iron law of capitalism whereby, at least in relative terms, the rich get richer and the poor get poorer. The chart below fudges together different data sets to make the point that the median American family income has been eclipsed ten-fold by soaring World wealth levels over the past half century, even when measured in US dollars. [Without a recently strong US dollar, the gap would be far wider…

6 months ago · 79 likes · 27 comments · Michael Howell

Inflation

Wednesday is the CPI print. I don’t have any particular alpha but I will say that Truflation was pretty good directionally at calling inflation in 2022. In general when I did some analysis I found it to be directionally correct but around 2 months ahead of CPI.

According to Truflation we saw a slight uptick in March but given that Truflation tends to lead CPI… I’d say we are in for a pretty good print. Even despite what Gold and Oil are telling us.

It will be interesting to see how Gold reacts to a good print. If my suspicions about why it is going up are correct (it’s reacting to monetary inflation) then it should go up.

Let’s watch.

All’s Quiet

Today might well end up being a pretty quiet day, with the exception of that big crypto pump which is welcome. It sucks in a way because I had planned to allocate more to crypto today but now I’m not dying to do it. Will watch and consider.

Watching oil today. If oil turns back down that will be good for risk, and I’m expecting it to.

I’ll write a note or a chat message if anything interesting happens.

Good luck out there.

Please also always remember... none of this is financial advice. I’m not a professional. I quite literally don’t know what I’m doing.

Mind The Tape

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