Gold, Bitcoin, & the Dollar Are Surging Ahead of Retail Sales—Markets Betting on a Trump Victory

EDITOR'S NOTES

Markets are bracing for uncertainty as gold, bitcoin, and the dollar rise while volatility remains high, with the VIX spiking to its highest level since last year. Key factors driving this nervousness include upcoming retail sales data, the U.S. election, and the Fed’s next move. Investors are betting on a Trump victory, reflected in the rally of bank stocks and cryptocurrencies. While small caps outperform tech stocks, Treasury yields slip, signaling potential rate cuts in 2025. Both gold and bitcoin are strengthening as safe-haven assets, indicating investor concern over market volatility and political uncertainty. Diversifying with hard assets like gold and bitcoin may be a smart defensive move.

Frank Balm Oct 18, 24

By Frank Balm, Dedollarize News

There’s a lot happening in the markets today—gold, bitcoin, and the dollar are all on the rise. Meanwhile, stocks are staying steady, but the fear gauge (VIX) isn’t backing down. What’s driving all this? Well, the upcoming retail sales numbers, the election, and the Fed’s next move are all adding a lot of suspense. Oh, and if you believe the market chatter, investors seem pretty convinced Trump will win the election.

Here’s what’s going on—and more importantly, what it could mean for your money.

VIX Stays Elevated—Markets Brace for Impact

Even though stocks are managing to stay in the green, VIX, the volatility index, spiked to 20.97 this morning—the highest settlement we’ve seen since last November. That tells us that markets are on edge. Volatility traders are bracing for big movement, especially with tomorrow’s retail sales numbers expected to be strong. Bank of America is calling it a “blowout.”

But it’s not just the data investors are sweating over. The election outcome and the next FOMC meeting are casting long shadows over the market. The Trump vs. Harris showdown is driving a lot of speculation about what’s coming next for both stocks and the economy.

Markets Betting on Trump—Bank Stocks & Crypto Show It

According to Stanley Druckenmiller, the market is acting like Trump is going to win. You can see the shift in bank stocks and crypto prices, both of which have been rallying hard over the past 12 days.

Druckenmiller thinks it’s “extremely unlikely” that Democrats will gain control of Congress, even if Harris wins. But if there’s a blue sweep—where Democrats take both the White House and Congress—he’s predicting a rocky 3-6 months for equities. On the flip side, he believes a Republican sweep is the most likely scenario, which could give markets a short-term boost.

Stocks Favor Trump—Small Caps Lead the Way

You can see the market’s mood shift in today’s stock action. Small caps (Russell 2000) are outperforming again, with another big short squeeze giving financial stocks a lift. Meanwhile, Nasdaq’s struggling, weighed down by concerns about ASML—a major tech player.

This trend—small caps beating tech stocks—has been building for a while now, and it’s signaling that investors are moving their chips into areas that might benefit more from a Trump victory. The Russell-to-Nasdaq ratio is now at the lower end of its channel, reflecting how tech’s lost some steam while smaller financial stocks are gaining ground.

Treasury Yields Slip, Rate Cuts on the Horizon

On the bond side, yields dropped slightly across the curve today, with the 10-year yield finding support at 4.00%. Expectations for 2025 rate cuts are climbing again—back to where they were before the latest jobs report—while 2024 remains more hawkish. In other words, the market’s pricing in lower rates down the line but not just yet.

Meanwhile, credit spreads are still tight—almost too tight. That could be a sign that investors are underestimating risks, so it’s something to keep an eye on.

Dollar Strengthens—But Gold Isn’t Backing Down

Despite the dollar’s rally—now at its highest since early August—gold is marching higher too. Normally, gold and the dollar move in opposite directions, but today they’re both heading up. That’s a big signal that investors are seeking safety in both hard assets and cash.

Gold’s new closing high shows just how much confidence people are losing in traditional financial assets. Bitcoin is adding to the story, smashing through $68,000 for the first time since July. This crypto surge looks tied to the growing belief in a Trump win—markets might be anticipating less regulation and more favorable policies if he takes office.

Oil Pauses, But Sovereign Risk Spikes

Crude oil stayed mostly flat today, with WTI holding just above $70 a barrel as traders wait for tonight’s API inventory report. But here’s where it gets interesting—U.S. sovereign risk just hit its highest level in a year.

What’s the market worried about? It could be the uncertainty surrounding the election, fears over geopolitical tensions, or doubts about the Fed’s ability to navigate a soft landing. Either way, investors are hedging their bets with gold and bitcoin, signaling that they expect more volatility ahead.

What Does This Mean for You?

The markets are telling us that uncertainty is far from over. Investors are bracing for a bumpy ride with key events like retail sales, the election, and the Fed’s next move all coming up fast.

Here’s my advice:

Gold and Bitcoin are both looking strong—good assets to own when the road gets rough.
The dollar may stay elevated in the short term, but don’t count on it for long-term stability.
Stock volatility isn’t going away, so it’s smart to diversify beyond just equities.

It’s a good time to review your financial game plan and make sure you’ve got some hard assets in your portfolio. If you need a place to start, grab my Seven Steps to Protect Yourself from Bank Failure guide here. You can also get the latest updates in Bill’s Innercircle NEWSROOM here.

Stay sharp, folks. This ride isn’t over yet, and when uncertainty is high, preparation is key. Gold, bitcoin, and cash are all good shields for what’s coming next.