from Birch Gold Group:
Your News to Know rounds up the most important stories about precious metals and the overall economy. This week, we’ll cover:
- Why $100,000 bitcoin is a clear signal to buy gold
- Silver prices gained an average of 332% in rate cut cycles…
- …and experts think this cycle will see the end of many asset bubbles
- Why I’m concerned about the growth of India’s gold loans industry
TRUTH LIVES on at https://sgtreport.tv/
The bitcoin price driver nobody’s talking about (and how it ties into gold)
Bitcoin’s historic price surge over $100,000 has been the talk of the town lately. And just like with gold, nobody can quite seem to figure out the story.
Just like gold, it has been gaining steadily, although the price of gold’s rise to $2,800 was slightly more abrupt last year.
But what pushed bitcoin to this immense psychological level, from which it has immediately and slightly pulled back, also like gold? Trump’s crypto-friendly appointee? …really?
Ever since last summer, we have been highlighting how there is nothing mysterious about gold’s rise. If anything, we should wonder why it hasn’t gone up more, and many do.
Bitcoin’s case is more complex, but there is a tether here (not to be mistaken with the digital dollar Tether) connecting gold and bitcoin. You might have heard of that great old beast called inflation.
As some will recall, the multi-trillion-dollar Bidenomics stimulus pushed bitcoin to a new all-time high seemingly out of nowhere, and the market pulled back in correspondence with the reported inflation rate.
In other words, people didn’t want to be in cash.
While we have pointed to multiple fundamentals as driving gold’s price move over the last 18 months, none have been more important than inflation. I, like many others, have come to understand that inflation is deliberately miscalculated, carelessly under-reported and a far bigger problem than the Fed or the federal government can possibly admit. (You’ve heard my take on this before, so I won’t go into it today.)
It’s hard to argue this point when we’re hearing about the normalization of a 4% inflation rate in the future. Wait a minute, when did we accept a 2% per year destruction of our purchasing power?
In recent months, we have seen inflation increase despite interest rates higher than we’ve seen for decades. But that wasn’t enough, so the Fed gave up – now cutting interest rates, which anyone can tell you is massively bullish for gold.
Similarly, it’s hard to pinpoint why crypto is currently in a bull market, but there is a very likely culprit if we simply look to what powered the previous one.
If we accept inflation, especially that of the sneaky, stealthy kind as the driver of Bitcoin, then we must also accept that it is possibly, in some ways, worse than it has been in the wake of the multi-trillion dollar stimulus.
The link between bitcoin and inflation is quite well-documented, so we won’t discuss it in detail. What we’re instead interested in its connection to gold gold.
Gold has had a few weeks that have either been tedious or awesome, depending on who you ask.
Yes, it has pulled back from the $2,800 level, but it remains above $2,600, a 58% increase over the $1,650 price we saw last summer.
No big forecasters are shying away from their $3,000 targets for next year, and corrections like these are to be expected. Psychologically, though, some currently feel as if they don’t know what exactly is going on with the metal.
Those who rank among that group would do well to pay attention to bitcoin’s rise, as we have seen inflationary spikes consistently push the crypto market up.
If we had to throw out a guess, we’d say that crypto investors are seeing the kind of wealth erosion they don’t want to be in and have been looking for refuge just as gold investors have.
