Balancing Act: Gold Eases, Bitcoin Squeezes!

How will you hedge against global de-dollarization in 2025? Regardless of how you protect your wealth, you'll definitely want to limit your exposure to American government debt notes as central banks around the world put the "cash in the trash," so to speak.
 
BRICS member nations are eager to reduce their dependence on the U.S. dollar, and for years, President Trump has fought to weaken the dollar to make it easier to pay down the nation's dollar-denominated debt. With all of this in mind, it makes perfect sense that Trump would support cryptocurrency as a viable alternative to government money.

Another type of government debt note is U.S. Treasury bonds, which recently lost value as 10-year bond yields rose to 4.5%. Federal Reserve Chairman Jerome Powell could take action to reduce bond yields and raise their value, of course, but currently he's in "watch, wait, and do nothing" mode.

The Federal Reserve's inaction might surprise you and certainly isn't what President Trump wants, but investors will have to contend with a do-nothing central bank for a while. The next Fed meeting is in June, but some odds makers don't expect an interest rate cut until July or even later than that.

Lower interest rates could ease the financial burden on millions of American families. Many of them struggle to pay the interest rates on their debt - and household debt in the U.S. just hit a new record high, unfortunately.

Courtesy: @kurtsaltrichter

 
Interestingly, Powell is getting what said he wanted during the previous presidential administration: an easing of inflation. Somehow, the Fed chairman doesn't seem to be moved to action with inflation going down in 2025.

Here's the rundown. April's Consumer Price Index (CPI) eased to 2.3% from 2.4% in March; this print is better than the economists' estimate of 2.4% CPI for April. Plus, the Producer Price Index (PPI) for April declined to 2.4%, coming in below the consensus estimate of 2.5%. The inflation problem certainly isn't "solved," but it's progress.

But as Bank of America analysts wrote in a note, April's inflation print didn't "move the needle for the Fed." What exactly would "move the needle," then? Would a full-on recession inspire Powell and his colleagues at the Fed to take action?

Powell's excuse is basically that he's worried about a massive inflation spike stemming from the China-U.S. trade war. On Thursday, Powell warned of "more frequent, and potentially more persistent, supply shocks," which is undoubtedly a reference to trade tensions and consumer price inflation. Bear in mind, the U.S. and China are already hammering out a deal and most tariffs on China are paused for 90 days.

Courtesy: ZeroHedge

The talking heads on television expected chaos and blood in the streets, and they're in a state of confusion because the world didn't collapse under the current administration's watch. Consequently, analysts at JPMorgan and other financial firms are now scrambling to reverse their recession calls from earlier this year.

It's funny to see them "turn tail" and walk back their worst-case scenario warnings which didn't pan out. At the same time, it's frustrating to know that some investors probably sold at the wrong time on those analysts' recommendations.

In any case, smart-money investors continue to diversify their holdings since as the dollar loses its purchasing power and bond values drop. Dollar hedges are in demand but it's a shifting landscape, with a short-term rotation underway between gold and Bitcoin.

But then, if Bitcoin is up for the moment and gold pulls back a little bit, this only suggests that investors can buy more gold and ease up on crypto purchases in May. It's not a major portfolio shift but only a slight rebalancing as Powell sits on his hands and wealth-building opportunities change but never really disappear.

Prosperous Regards,
Kenneth Ameduri
Chief Editor, CrushTheStreet.com