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Precious Metals

Bitcoin: Welcome To The Big Leagues

Bitcoin: Welcome To The Big Leagues

Submitted by bithedge

If there was still anyone left shouting that Bitcoin is an uncorrelated asset they…

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This article was originally published by Zero Hedge

Bitcoin: Welcome To The Big Leagues

Submitted by bithedge

If there was still anyone left shouting that Bitcoin is an uncorrelated asset they were put to rest in recent days. And what was once confined to obscure corners of the internet has obviously left them a long time ago, but it truly feels like this was the week that cranked things to 100…

In moments of major stress Bitcoin has followed risk assets for years – hardly much of a ‘digital gold’ but crisis is crisis, and recall during the March 2020 puke that even the precious metal was dumped indiscriminately alongside bonds and everything else as confused traders and algos were either forced or scared into dumping it all for cash. There is a saying that in real volatility “all correlations go to 1.”

What is more concerning is the strengthening connection between Bitcoin (and thus Ethereum, and thus altcoins) and greater financial assets when equities are 3% off all time highs. This speaks to either 1) a greater integration of Bitcoin into the wider risk-on/risk-off framework that both traders and computers are programmed to buy or sell out of depending on mostly whether or not rate hike expectations are up that day, 2) a market that is under increasing stress despite being just off all time highs and up 23% YTD, or 3) both…

Of course nothing is really as simple as just risk-on or risk-off, and Bitcoin, on top of being long beta / long momentum, is a great beneficiary of inflation both realized and expected. 

That’s certainly one of the reasons why it’s up 160% over the past year (at this point anyone with an internet connection knows that no doubt about it – this is the highest inflation the U.S. has seen in 50 years). Even Powell ditched ‘transitory’…

AND a third factor in Bitcoin’s favor may be establishment distrust, which is obviously higher following two years of Americans being told their lives are now vastly different because the bat coronavirus that first emerged blocks away from an NIH-funded lab that studied bat coronaviruses actually was just an unfortunate development in a cave somewhere. BofA has dubbed it an “anarchy hedge” – record wealth inequality and soaring inflation seem to set the stage for taking out some insurance.

So since the three things that drive bond yields higher are conveniently risk-on, higher inflation expectations, and higher credit risk, it’s no surprise that Bitcoin trades even tighter alongside the 10 year: 

Which begs the question of why not just go short the 10 year in size and avoid the regulatory and custody risks that come with holding crypto? If this trend holds for another year, that’ll be a question many are hoping you don’t ask. But for the average person buying Bitcoin is easier than short selling bonds – and in a market where passive > active flows and retail is a prominent force that may be all it takes for the coin to remain in fashion. 

Recent developments are undoubtedly a thorn in the side of the once-isolated crypto trading community, filled with many who after spending years mastering their specific market are now essentially in competition with firms backed by billions in capex and decades of experience. Because unless it’s also a coincidence that Tesla and Bitcoin have hit their high or low for the month on the same day 8 out of the last 15 months, it really appears that Bitcoin trades only as a composite of long ‘the next big thing’ FOMO and short U.S debt. There’s nothing wrong with that – the trade has done well. But it’s a slap in the face to the uncorrelated/digital gold/reserve asset narrative. And it’s a major blow to those who were looking for an ‘alternative’ investment. Increasing correlation with bonds and equities is the biggest threat to Bitcoin right now. 

It’s possible and maybe even likely that this is temporary – but whatever needs to happen for Bitcoin to again decouple from greater markets hasn’t happened yet. In light of the past two weeks, can anybody seriously say right now that they think Bitcoin will end the year higher than where it is currently if the S&P 500 doesn’t?

But to be fair, long term hodlers really don’t have anything to worry about since if the world post-GFC is any guide, the current pullback in equities will bottom out soon and if it doesn’t – the Fed will just announce a pause in their tapering plans and at that point everyone should go even more all in because rest assured it will give way to new all time highs for the Nasdaq, home prices, inequality, and the newest member of the liquidity-firehose winners club, Bitcoin. 

Tyler Durden
Sun, 12/05/2021 – 21:30






Author: Tyler Durden

Precious Metals

Alamos Gold: Haywood Lowers Target To $12.75 Following 2022 Guidance

Last week, Alamos Gold Inc. (TSX: AGI) reported its fourth quarter and full-year production results, as well as their 2022
The post Alamos Gold: Haywood…

Last week, Alamos Gold Inc. (TSX: AGI) reported its fourth quarter and full-year production results, as well as their 2022 to 2024 production estimates.

For the fourth quarter, Alamos Gold produced 112,500 ounces of gold, bringing the full year 2021 production to 457,200 ounces, which was the lower range of guidance. Costs have not yet been finalized but the company says that it is expected to be consistent with their guidance.

The company also provided 2022 guidance, which included expected gold production of 440,000 to 480,000 ounces. Cash costs are expected to be between $875 to $925 per ounce and all-in sustaining costs are to be between $1,190 to $1,240 per ounce. Total capital expenditures will be between $305 and $345 million, while exploration is expected to cost $27 million for 2022.

For the longer run, the company expects these numbers to grow to 460,000 to 500,000 ounces of gold in 2024, with cash costs of $650 to $750 per ounce and $950 to $1,050 of all-in sustaining costs per ounce.

Currently Alamos Gold currently has 13 analysts covering the stock with an average 12-month price target of C$12.46, or a 36% upside to the current stock price. Out of the 13 analysts, 1 has a strong buy rating, 6 have buy ratings, 5 have holds and 1 analyst has a sell rating. The street high sits at C$17.50 or a 91% upside to the current stock. While the lowest price target sits at C$9.98.

In Haywood Capital Markets’ note, they reiterate their buy rating but lower their 12-month price target from C$15 to C$12.75, saying, “lower production and higher costs for 2022,” and that inflation is finally starting to impact the production costs.

For the fourth quarter and full-year production numbers, they came in line with Haywood’s estimates although they note that the full-year production numbers came in the lower half of guidance.

For the companies three-year guidance, Haywood expected 2022 production to be 485,000 ounces, below their high-end figure. While cash costs were expected to be $785 per ounce, lower than their guided number. This is the same for all-in sustaining costs as Haywood expected it to be $1,055 per ounce. Haywood says that this cost increase in 2022, “is due to industry-wide cost inflation as well as temporary higher costs at Mulatos.”

Below you can see Haywood’s estimates versus the company’s guidance.


Information for this briefing was found via Sedar and Refinitiv. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

The post Alamos Gold: Haywood Lowers Target To $12.75 Following 2022 Guidance appeared first on the deep dive.



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Author: Justin Young

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Economics

S&P Suffers Worst Start To A Year Since 1939 As Yield Curve Yells ‘Recession’

S&P Suffers Worst Start To A Year Since 1939 As Yield Curve Yells ‘Recession’

Before we start, let’s make this clear right from the start…

S&P Suffers Worst Start To A Year Since 1939 As Yield Curve Yells ‘Recession’

Before we start, let’s make this clear right from the start – despite today’s panic-buying, this is the worst start to a year for the S&P 500 since 1939 (and on course for its worst January ever)…

Nasdaq is down 5 straight weeks (16% from its highs) – the longest losing streak since 2012 – while Small Caps are down 22% from their highs (in a bear market)

Source: Bloomberg

Everything was going so well too… “smooth sailing” they said! “Fed Put” they said! “Transitory inflation” they said…

Today was just a little bit turbo as it seems ugly sentiment data (10 year lows) and plunging growth expectations (Q1 GDP forecasts collapsed), was the ‘bad news’ the dip-buyers needed to reassure themselves that uber-hawkish Powell wouldn’t execte on his plan to crush inflation into a recessionary environment. We have one word for them – stagflation, and it leave Powell in an ugly box.

Atlanta Fed GDP expectations crashed to zero for Q1…

Source: Bloomberg

And as that happened, rate-hike expectations shifted dovishly lower (modestly at the time)…

Source: Bloomberg

Which helped send stocks soaring (particularly hyper-growth, long duration stocks). But that all came to an abrupt end at 1400ET today (for no obvious reason)… which was immediately met with a wall of dip-buyers amid the total lack of liquidity. Then all the majors just went vertical into the last 10 minutes as a significant buy-imbalance appeared (all helped by AAPL’s explosive gains today). Nasdaq was up a shocking 3% today (from down 1% pre-open). The S&P was up 2.5% today (from down 1% pre-open). Russell 2000 closed up almost 2% today from down 2% pre-open…

As one veteran trader noted, “today was a shitshow, no liquidity, gamma-driven gappy jumps everywhere… it was all algos and no average joes.”

Well that idiotic rampage managed to get the Dow, S&P, and Nasdaq unchanged on the week (which appears to be all that mattered to the machines)…

Just look at the volatility (but Monday’s puke lows held… and so did Wednesday’s pre-Fed highs).

Growth stocks were flat on the week as Value was bid (mostly benefitting on Thursday)…

Source: Bloomberg

Both Defensive and Cyclical stocks were hammered equally this week (while obviously cyclicals were more volatile)…

Source: Bloomberg

Today’s bounce was not really triggered by a short-squeeze as the size of the swing higher is very modest and unsustained…

Source: Bloomberg

The energy sector is the only one up in January while Tech and Consumer Discretionary are down hard MTD…

Source: Bloomberg

Real yields continue to rise (to their highest since June 2020 – but still negative), and have recoupled with gold…

Source: Bloomberg

…but have completely decoupled from stocks (Nasdaq should be significantly lower relative to Russell 2000)…

Source: Bloomberg

Notably, if real yields keep rising, then valuations are going to come under significant pressure…

Credit markets saw very little of the chaotic chop in stocks this week as they just fell with HYG (HY Corporate Bond ETF) at its lowest since Nov 2020…

Source: Bloomberg

Treasury yields were extremely mixed on the week with the short-end exploding higher and long-end actually coming all the way back to unchanged…

Source: Bloomberg

This week saw 2Y yields jump most since Oct 2019 (up for the 6th week in a row to the highest since Feb 2020).

Source: Bloomberg

The yield curve was crushed this week, triggered by The Fed’s hawkish tilt…

Source: Bloomberg

…with 7s10s at almost record flats, 20s30s still inverted, and 2s30s at its flattest since March 2020… all screaming The Fed is about to make a big mistake and hinting strongly at recessionary risks rising fast…

Source: Bloomberg

Short-term markets are now fully pricing in 5 rate-hikes by year-end (and a 25% chance of 50bps hike in March)

Source: Bloomberg

Perhaps even more notably, the forward OIS market is pricing in rate-cuts between 2024 and 2025…

Source: Bloomberg

The dollar soared higher for the 5th straight week (best week since June 2021), closing at its highest since July 2020. NOTE, the dollar took out the December USD spike highs and faded…

Source: Bloomberg

Cryptos had a nasty drop on Monday, along with stocks, and another puke after The Fed, but bitcoin ended the week modestly higher, while Ether was down around 5%…

Source: Bloomberg

Commodities were very mixed this week with most lower by hawkish tilts (Silver slammed 8% on the week) while crude rallied on geopolitical tensions…

Source: Bloomberg

Silver dropped back below $23…

WTI came very close to $89 intraday during the week, its highest since Oct 2014 (up for the 6th straight week in a row)…

NatGas went supersonic this week amid chaotic settlement and a new cold front, breaking above the early Jan highs (and up 19%, its best week since Aug 2020)…

Finally, just in case you think the market can handle all this vol, think again – liquidity in the most-liquid global equity futures contract (ES) is at its lowest since the COVID crash in 2020…

Simply put, a moderate-sized order moves ES 10 ticks so how do you think it’s going to handle all the fintwit/tiktokkers “paper hands” puking out of their Robinhood accounts?

The good news is that US COVID cases are following the same trajectories at UK and South Africa and tumbling…

Source: Bloomberg

Nevertheless, as we noted above, GDP in Q1 could well print contractionary.

Tyler Durden
Fri, 01/28/2022 – 16:02









Author: Tyler Durden

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Precious Metals

Gold Continues Descent Following Powell’s Hawkish Stance

Gold prices continued their downward slide on Thursday, after plummeting by the most in over two months following the Fed’s
The post Gold Continues Descent…

Gold prices continued their downward slide on Thursday, after plummeting by the most in over two months following the Fed’s hawkish comments on taming inflation.

Spot gold fell below $1,800 per ounce at the time of writing, continuing its sharp descent from Wednesday’s FOMC meeting, which heeded an unexpectedly more aggressive stance on raising borrowing costs. A rebound in the US dollar was largely responsible for the market’s pressure on the bullion, after Fed Chair Jerome Powell announced the possibility of raising rates at each consecutive meeting starting in March.

The latest slump in gold prices wiped out all gains accumulated since the beginning of the year, many of which were initially driven by the market’s anticipation of price pressures surpassing bond yields, even amid a rate-tightening environment. However, Powell’s latest hawkish comments decimated such expectations, with the 10-year bond yield soaring to the highest in nearly 19 months on Wednesday.

This prompted Goldman Sachs to revisit its 12-month gold price forecasts, upgrading the bullion’s price from $2,000 to $2,150 per ounce following Powell’s speech.


Information for this briefing was found via Reuters. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

The post Gold Continues Descent Following Powell’s Hawkish Stance appeared first on the deep dive.





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