Stock Market Eases Off of Record Highs, Gold & Silver Rally on Weak Dollar, Crypto to ‘Gain More Respect’
2021 has started on a volatile note with some asset classes making corrections following new peaks and others recording gains.
On the first day of its opening in 2021, Wall Street slid from the all-time highs as risk appetite ebbed amidst the surge in coronavirus cases and upcoming runoff elections in Georgia.
The Dow touched a record high only to be dragged down by over a 4% fall in Boeing Co’s shares. The S&P 500 also opened the year at a new peak of 3,756 only to drop 2.3%, currently it stands at 3,700.
Investing legend Byron Wien forecasts an almost 20% tumble in the first half of 2021 for the benchmark index but only for it to climb to 4,500 afterwards. At the beginning of 2020, he predicted the S&P 500 would pass 3,500 at some point.
Bitcoin has been making several new ATHs every other day and is already up 10% this year. However, BTC did see a 20% retracement on Monday, the biggest once since March sell-off. Ethereum ETH 15.16% Ethereum / USD ETHUSD $ 1,419.37
$215.1815.16% Volume 41.08 b Change $215.18 Open $1,419.37 Circulating 114.32 m Market Cap 162.26 b 2 h Ethereum 'Undervalued' as New ETH Options with $20k Strike Price Added on Deribit 3 h ETH Ready for Bitcoin-like Price Discovery with New ATH; Blockchain Activity Goes Parabolic 21 h Nvidia Looks to Fire Up Its Crypto Mining GPU Production; If Demand is Good Enough and the broad crypto market also saw some pullback.
“Hot Nasdaq stocks, Chinese internet plays and promising biotechs all of a sudden seem dull compared to the action unfolding in the crypto-currency space,” said Louis Gave, co-founder of Gavekal Research.
Meanwhile, gold climbed to an eight-week high, topping $1,900 an ounce on the back of a weaker dollar and lower US real yields. Today, the precious metal is aiming for $1,950.
However, it is silver enjoying an uptrend of 4.5%, going to $27.5.
More to Come
Real yields, that one gets on US government bonds after compensating for inflation, fell nearly to last year’s lows, driven by a rise in inflation expectations. As WSJ notes,
“with President-elect Joe Biden now making it clear that the recent $900 billion stimulus will ‘at best only be a down payment' and the now $3.3 trillion of total stimulus spending “is just the beginning,” it sounds like America is headed into a program of permanent stimulus.”
The money is obviously fueling the risk of inflation fires and continuing to push USD down, which has been keeping under 90 for over a week now.
And this weaker dollar is also playing a role in Bitcoin’s furious ascent.
Paul Hickey Bespoke Investment Group
“The last time the dollar saw a larger six-month decline was in the second half of 2017. That’s also the same time that Bitcoin first started to go mainstream.”