Top Stories This Week: Gold Price Trapped Until This Happens, Grayscale's Bitcoin ETF Victory
Don Durrett of GoldStockData.com shared his thought on how a gold price breakout could happen. Meanwhile, Grayscale Investments won a Bitcoin ETF lawsuit against the US Securities and Exchange Commission.
The gold price was on the move this week, rising from about US$1,915 per ounce at the beginning of the period to just under US$1,940 by the end of Friday (September 1). It closed August about US$10 under where it began.
Investors received the latest Personal Consumption Expenditures (PCE) price index data on Thursday (August 31), and it shows that prices rose 0.2 percent on a monthly basis and 3.3 percent year-on-year.
The PCE price index is the US Federal Reserve's preferred gauge for inflation, and experts now think there is a greater likelihood that the central bank will not hike rates again when it meets from September 19 to 20.
Looking at where gold may be headed in the fall, I recently heard from Don Durrett of GoldStockData.com, who said the metal has been trapped for the last 18 months and won't be set free until the stock market capitulates and Wall Street realizes that the US is heading for a hard landing. In his view, gold will face a final correction as this starts to play out, but will then break away from the stock market and bounce upward. Here's how Durrett explained it:
"Why will gold bounce? I think it will bounce because of fear — the fear trade will reignite, and once that fear trade reignites, gold's going to start trading higher and it will decouple from the stock market. (For) that decoupling, for me the important number that I'm watching is US$1,800 to US$1,825 on gold — I expect US$1,825 to get tested, but I want US$1,800 to hold" — Don Durrett, GoldStockData.com
Watch the full interview for more of Durrett's thoughts on gold and silver.
Grayscale wins Bitcoin ETF lawsuit against SEC
Outside the resource sector, this week brought what many experts believe is a major development for Bitcoin and other cryptocurrencies. On Tuesday (August 29), the US Court of Appeals for the DC Circuit ruled in favor of Grayscale Investments in its lawsuit against the Securities and Exchange Commission (SEC).
Grayscale is a digital currency asset management firm, and it sued the SEC in June of last year after the agency denied its request to convert the Grayscale Bitcoin Trust (OTCQX:GBTC) into an exchange-traded fund (ETF). At the time, the SEC said Grayscale's proposal didn't meet anti-fraud and investor protection standards.
Grayscale's rebuttal was that the SEC has already approved surveillance agreements geared at preventing fraud among Bitcoin futures ETFs. Although its proposed ETF would track the Bitcoin spot price, Grayscale believes the same setup should work.
As mentioned, the Court of Appeals agrees — in its ruling, it states that the SEC has not explained why it doesn't agree with Grayscale's correlation between Bitcoin spot and futures prices.
"The denial of Grayscale’s proposal was arbitrary and capricious because the Commission failed to explain its different treatment of similar products" — US Court of Appeals for the DC Circuit
That doesn't mean Grayscale will be able to launch its Bitcoin ETF right away. The SEC now has 45 days to appeal the ruling, and is currently reviewing the decision in order to determine its next steps.
Of course, that hasn't stopped Bitcoin enthusiasts from celebrating. Grayscale believes it's a matter of "when" not "if" the ETF is approved, and prices for Bitcoin and other cryptocurrencies spiked when the Court of Appeals decision came out. Our team will be watching closely to keep you informed about what happens next in the sector.
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
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