(Jan 21, 2021)

A New Year and a new President in the White House. On a personal note, I prefer Biden to Trump as a human and am probably not alone in this. In terms of the markets, I still prefer Biden. His policies will almost certainly be: lockdown the economy because of the pandemic and finance this by money printing, equality as an outcome – financed by money printing and a Green New Deal – financed by money printing. 

Currency Markets

I have finally turned bearish on the Dollar. Whether one supports the above policies or not, it appears that this US administration and the Federal Reserve is even more determined to debase its currency faster than its competitors in the UK, Europe and Japan. For a year or so, I was swayed by Brent Johnson’s Dollar Milkshake Theory which opined that a global recession would cause a squeeze in the Euro Dollar market causing USD to appreciate. Nevertheless, EUR/USD has broken to the upside and Western government debt loads have simply turned vertical. 


Silver is up 45% from June to December 2020 (the first seven months since SCF’s inception.) It will most likely outperform the reflation years of 2009 -11 because of the aforementioned Green New Deal and the inevitable supply disruptions caused by de-globalization and ESG mandates. Silver bullion continues to provide a nice blend of risk diversification, positive returns and a near zero correlation to our long term track record.


In crypto land, the million dollar question is – how much is Bitcoin worth? My best guess is ‘yes.’ As a former gold bug, I have largely thought in terms of Bitcoin being a form of digital gold. In order to reach gold’s current market capitalization, Bitcoin would need to be $500k per coin. Recently, Citibank put out the remarkably precise estimate of BTC/USD at $317k by the end of 2021. However, I am most convinced by ‘Plan B’s ‘Stock to Flow’ valuation model. As a quantitative analyst for a Dutch bank, he used ‘S2F’ to model precious metals: 

Stock (Above ground quantity) / Flow (New Mining Supply) = 62 for Gold. 

Alternatively, it would take 62 years of current mining to replace the existing gold supply. 

It was this valuation model that prompted Micro Strategy’s CEO Micheal Saylor to put his corporate treasury into BTC and he has been handsomely rewarded both financially and reputationally. It seems that he is the vanguard of corporate thought on the matter. 

We are currently in the process of Bitcoin’s Stock to Flow ratio rapidly accelerating toward that of gold’s later this year, and this is being reflected in the price of BTC. My ball park figure for BTC by the end of 2021 is $200k. The 2024 halving of BTC supply will take us to a S2F ratio of 100 by 2025 – and a price of one million USD.  

However, BTC will not go to one million dollars in a straight line nor without government interference. For these reasons we have been rather cautious over the last few weeks in terms of trading and have opened a bank account with SEBA in Switzerland.

BTC rocketed to $42k this month and has overshot the S2F model. It is hard to know whether this will be a repeat of 2013 in which there was a two part spike separated by an almighty crash or a more smooth parabola as seen in 2017. It is also hard to know whether Ethereum’s 2.0 upgrade and the DeFi boom will allow ETH/USD to outcompete for a while and for that matter whether XRP will survive. I remain optimistic that both will have individual months of outperformance. 

My task is to chart this course as smoothly and profitably as possible by attempting to dodge the almighty slam downs in BTC’s price action as well as capture the outsized moves in BTC, ETH and XRP.