RJO FuturesCast

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Metals

Gold Rallies as Bitcoin Makes New Highs

Posted 02/23/2017 2:21PM CT | Tarik Husseini

By now, you’ve likely heard of Bitcoin. The crypto-currency has made a new all-time high today, $1,170 last, eclipsing the November 30th high of $1,165.89.  Next month, the Winklevoss Brothers, of Facebook fame, are rolling out the first Bitcoin ETF in the US market.  It is widely expected that the SEC will give it a green light, and this might have something to do with the rally over the last few months.  Almost all commodity-based futures ETFs have capital invested in futures contracts.  So it would make sense that if the Bitcoin ETF, coming up for SEC approval on March 11th, is approved, a futures contract may not be far behind.  The explosive rally in Bitcoin, up 58% in the last 3 months, could continue and even accelerate as it gains legitimacy and more exposure. 

Something interesting of note, is the concurrent rally in gold over the last 2 months.  Although not nearly as prolific as the Bitcoin move, April Gold futures have rallied $125, up to $1250, from a post election low of $1127 on December 15th.  It will be worth watching this budding correlation to see if it persists.  If so, gold has a lot of catching up to do on the upside.  It has also been reported recently that some of the biggest money managers are bullish gold.  With inflation starting to creep into the picture, and uncertainty in the geopolitical arena, it makes sense to have some exposure to the vehicle that does well under those circumstances, and that is gold.  

 

Gold Daily Chart

Tarik Husseini