Gold has just climbed to $4,620 per ounce, its highest level in three months. Bitcoin is moving around $78,000 after an increase of around 20% since the US Treasury’s announcement on August 19. Both assets benefit from the same movement: the dollar falls and investors start looking for alternatives again.
In brief
- Gold gained around 5% over the week and reached $4,620.
- Bitcoin is trading near $78,000 after its recent rally.
- The dollar index fell to 98.723 after the US Treasury’s announcement.
Bitcoin and gold benefit from dollar decline
The move contrasts with the start of the year, when the strength of the dollar still weighed heavily on Bitcoin and the crypto market. This time, the greenback is falling. The DXY index fell to 98.723 on August 19, its lowest level since May 14. A few days later, gold exceeds $4,600 and Bitcoin hovers around $78,000.
The yellow metal gained around 5% over a week. Futures contracts even approached $4,650. Saxo Bank strategist Ole Hansen is now monitoring the $4,770 area. A move above could open the way to $5,000 an ounce.
Bitcoin follows a different rhythm. BTC gained nearly 20% in the days following the Treasury’s announcement. He was still having trouble holding on to the $65,000 a few days before. Gold and Bitcoin therefore go back together. The dollar is heading in the opposite direction.
The US Treasury started the movement
Everything starts from the bond market. The yield on 30-year US bonds had reached 5.337%, a 19-year high. The Treasury responded by doubling its long-term bond buyback program between September and November. Yields then returned to around 5.198%. The dollar has fallen.
These buybacks allow the Treasury to remove certain old bonds from the market and replace them with new issues. This is not quantitative easing from the Fed. The difference matters. For the markets, however, the immediate effect looks like an easing of financial conditions.
Robert Kiyosaki even sees it as a new form of monetary creation. He has long recommended gold and Bitcoin when US debt rises. The debate between the two assets is not new. Gold and Bitcoin still divide analysts on their ability to serve as a safe haven.
Buyers do not always come from the same place. Central banks remain very present in gold. Bitcoin is attracting more private investors, companies and listed funds. This week, both camps are buying.
The “debasing trade” returns to the markets
The term is circulating again on Wall Street: “debasement trade”. The principle remains quite simple. When investors fear a lasting decline in the value of currencies, they look for assets whose supply is not directly dependent on governments.
Gold has served this role for centuries. Bitcoin is trying to take some of that place. Mohamed El-Erian also simultaneously cited BTC close to $79,000 and gold above $4,600 among the most notable movements of the moment.
However, not everyone puts them in the same category. Former Goldman Sachs strategist Robin Brooks prefers gold and silver. He believes that Bitcoin does not yet enjoy the same status when investors actually seek protection against the currency.
The market will decide. Bitcoin has at least one very visible advantage in this debate: its ceiling of 21 million BTC. Gold, for its part, has a much longer history and remains massively held by central banks. Even Robert Kiyosaki continues to place the two in the same basket. It still presents gold and Bitcoin among the assets capable of withstanding a monetary crisis. For now, the market’s message is in three numbers. Gold: $4,620. Bitcoin: $78,000. Dollar index: 98.723. The greenback is found in the middle.
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