VanEck Associates’ CEO, Jan van Eck, participated in “Closing Bell Overtime” on July 11 to address the cryptocurrency market’s recent changes, the performance of small-cap equities, and other topics.
Market Reaction and Government Spending: Van Eck initiated his commentary by discussing the Russell 2000’s substantial increase, which achieved its highest level since December, with a gain of over 3%. He highlighted the uncertainty surrounding whether this increase signifies the start of a prolonged trend or merely a one-day reversal.
The considerable government spending has been a significant factor in the U.S. economy and markets, as Van Eck noted. He is of the opinion that this expenditure, in conjunction with the exceptionally low unemployment rate, has averted a recession this year and has prevented the decline in interest rates. He expressed the conviction that these factors are increasing the pressure on the Federal Reserve to implement stimulative policies.
He also acknowledged the forthcoming fiscal challenges, particularly the potential modifications in tax policies that may result from the election results. The destiny of the tax cuts implemented during the Trump administration is contingent upon the actions of the elected officials. He suggested that this scenario could be advantageous for small-cap equities, as it places additional pressure on the Federal Reserve to relax monetary policy.
Van Eck addressed the recently observed fluctuations in the Bitcoin market, emphasizing its inherent volatility. He noted that the unexpected surge and subsequent decline in Bitcoin’s value on the same day were comprehensible in light of its status as a risk asset. He continues to be optimistic about Bitcoin, despite these fluctuations, and attributes his optimism to long-term fundamentals, including the Federal Reserve’s easing policies and the halving event.
The German government’s decision to sell Bitcoin and the closing of Mt. Gox were two short-term factors he mentioned. However, he regards this as typical behavior during a bull market, despite the recent 20% correction. Van Eck stated that VanEck Associates adheres to a long-term investment strategy and noted that retail investors have continued to contribute to all US-based spot Bitcoin ETFs.
Gold prices have been trading at record highs, and the conversation also encompassed geopolitical tensions. Van Eck attributed this to the trend of central banks purchasing gold instead of bonds or treasuries, as well as geopolitical tensions. He observed that the majority of the inflows into gold ETFs located in the United States have been from foreign central banks, and there have been no substantial inflows.
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