Bitcoin and gold recouple

I was already wondering here why Bitcoin went up, while gold didn't. And I already told people to diversify out of Bitcoin in silver here. Now we get the recoupling. Bitcoin dropped 50% and there is still a long way to go down.

Now who believes Bitcoin is a risk-free safe haven now?

P.S.: the Bitcoin site is crashing from the high traffic/hacking.

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Correlation: Bitcoin Vs. Silver

Since the crisis in Cyprus erupted a few weeks ago, Bitcoin has made new highs on fear of the deposit debacle in Cypriot banking system. Now that Bitcoin has made new all time highs, I'm suggesting to diversify these gains into silver (SLV).

Max Keiser points out that there is a relationship between silver and bitcoin. Bitcoin and silver are a natural hedge against each other, because both are hard currencies. If one of them goes up too much, the other will eventually follow. So if Bitcoin goes up too much (which is happening right now), you should switch some of that Bitcoin money into silver as Max suggests.

Max Keiser: "Silver is the natural hedge of Bitcoin." (Starts at 3:18)

To read on, go here.

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Bitcoin and gold decouple

Speaking about decoupling. 

Bitcoin and gold were coupled in the beginning, but they have now completely and utterly decoupled. I wonder how this is possible. Nobody can give me an answer.

Chart 1: Bitcoin Price

Chart 2: Gold Price

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Bitcoin Exploding on Cyprus

And if you hadn't noticed, bitcoin just exploded 20% to the upside on the Cyprus news, which bodes well for gold obviously.

Chart 1: Bitcoin

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Bitcoin Hits All Time High

Just to remind you that the bitcoin price has hit new all time highs at $35.

Chart 1: Bitcoin Price

With the high correlation between bitcoin and gold, there is no way that gold won't go higher.

Chart 2: Gold Price

As a matter of fact, Shanghai silver premiums hit a high of 4.36% today.

Chart 3: Shanghai Silver Premium

And even better, lease rates are hitting new highs.

Chart 4: Gold Lease Rate

While stress is still building up with record low GOFO rates.

Chart 5: Gold Forward Rate

People say I try to time the market, I say knowledge is power.

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Huge Divergence Between Bitcoin and Gold Price

How can the bitcoin chart (Chart 1) keep going up, while the gold chart goes down (Chart 2)? Apparently it can, but not for long, that is my take.

Chart 1: Bitcoin Chart

Chart 2: Gold Price

Premiums on Shanghai are hitting new highs so stress is building up:

Chart 3: Silver Premium Shanghai/London

And U.S. Mint silver sales are hitting a record for this part of February.

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Gold cannot be suppressed for long

Have you seen the bitcoin chart recently?
http://bitcoincharts.com/charts/mtgoxUSD#tgSzm1g10zm2g25zv

Have you seen the lease rate chart recently?
http://www.kitco.com/lease.chart.html

Have you seen the commercial short chart recently?
http://snalaska.com/cot/current/charts/GC.png

Have you seen the China gold import chart recently?
http://seekingalpha.com/instablog/839735-katchum/1522571-december-2012-china-gold-imports-from-hong-kong-hit-record-high

Have you seen the M1 chart recently?
http://research.stlouisfed.org/fred2/series/M1


=> Gold will not be kept down for long.

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Correlation: Bitcoin Vs. Gold

I just recently heard about this alternative currency: Bitcoin. Apparently this is a digital currency that is standing on its own and has a total market value of $150 million. It came into existence in 2009 with the creator Satoshi Nakamoto.

I don't advocate using this digital currency as it is nothing you can really hold in your hands. But it's interesting to analyze it. 

If bitcoin is really a currency that is existing out of the "system", then it should follow the price of gold closely.

And looking at charts 1 and 2, you can clearly see that the tops in July 2011, January 2012 and September 2012 are found in both charts. 

Chart 1: Value of Bitcoin

Chart 2: Gold Price

The weird part though is what is happening from October 2012 onwards. As the value of bitcoin soared to $20, the gold price didn't keep up with the trend.

So we now have a disparity between the two charts and it points to an either lower bitcoin price or a higher gold price. If we extrapolate the trends, we see a gold price of $1800/ounce compared to the price of a bitcoin.

It also points to the overall trend, namely higher gold prices. The rising bitcoin trend is holding itself up very well, so I believe gold should follow closely in the next few months.

And the most important thing to see is the following. If you have very good eyes, you will see that the bitcoin price is a leading indicator. The peak of bitcoin prices is always first and then we see a peak in the gold price a few weeks later.

So actually, we have here another tool to predict the gold price. Just follow the bitcoin price and buy gold when it goes up.

I'm sure as hell saving this bitcoin chart to my favorites.

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