Free Preview
You’ve probably heard a lot of people talking about how Bitcoin will replace Gold one day. But why would the world’s most valuable metal suddenly stop being relevant just because there’s a digital analogue that produces a similar store of value result? In this newsletter I’ll laid out my likely scenario for Gold in the near term within this business cycle as well as it’s relation to Bitcoin as the market caps of each asset class continue to rise over time.
When people make the argument that Bitcoin will reach x percentage of Gold’s market cap they don’t factor in that Gold will keep rising too.
While XAUBTC does heavily lean in favor of BTC that doesn’t mean that Fiat dollars won’t continue flowing into Gold passively as always.
While the Real Estate market is still holding on and Gold is already rising it likely won’t peak until the proper bottom of Real Estate.
This many potentially several more years of Gold running when you factor in the China/US narrative as well and the reduce of dollar demand in the global economy that will shift to stablecoin users.
How much money is in Gold TODAY?
Gold has more than $31 Trillion market cap as of writing and is showing no signs of slowing down any time soon.
While China, Russia and the rest of the BRICS nations continue to reduce their demand on the US Dollar - those countries will increase their Gold reserves to maintain the value of their currencies relative to whatever they would have spent on buying US dollars or US debt. The US is counteracting that with the Stablecoins Acts that will shift people around the globe to the primary customers of US debt without them even realizing that the switch was made.
Gold is primed to continue rising as it has in the past until the full business cycle has completed with a top of both the Stock and Real Estate market. If the price of Gold behaves similarly to how it did 2007-2011 then we can assume it will continue to rise regardless of whether or not Bitcoin will one day replace it.
MY Perspective
I’ve never been “Pro” Gold personally but am shifting my opinion based on necessity more than idealism. It makes zero sense to me that the most wealthy individuals on the planet - most of whom have exposure to assets like Gold, Stocks and Real Estate - would suddenly allow the value of their prized assets to plummet indefinitely. It’s much more likely they will continue to use the capital markets to pump the price up over time.
As I’ll cover in the rest of this newsletter - the performance of Gold during the peaks of the last business cycle and throughout the Great Recession for Stocks and Real Estate 2008-2011 was positive while most of the rest of the market struggled. Therefore it makes sense to consider exposure to this asset class during a time when other assets will drop.
While I do believe Bitcoin will continue to eat up a larger percentage of the overall market cap of Gold over time - Bitcoin is currently only 5.7% of Gold’s overall market cap and the swing to 10% or more will take the better part of a decade. And any meaningful swing toward 50% or more is more likely to take several decades or even a full century to occur.
Subscribe to our premium content to read the rest.
Become a paying subscriber to get access to this post and other subscriber-only content.
Upgrade