Bitcoin is flirting with the price of 60,000 dollars, while its arch rival gold is at a new all-time high. It seems that gold and digital gold are back in demand. But how is it possible that gold is currently performing so well?
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Gold is booming
Normally, gold is a relatively boring asset, rising about 5-7% per year.
This year, gold is anything but boring, even coming close to Bitcoin in terms of returns. Even in a year that saw Bitcoin ETFs hit the market and the digital currency reach an all-time high earlier than ever in the cycle.
Bitcoin has been in decline for the past few months and at exactly that moment gold also started to run, see mid-March.
Why are gold and Bitcoin doing so well?
In itself, it is strange that gold (and to a lesser extent Bitcoin) are currently performing so well. Gold is traditionally an asset that has problems when real interest rates rise. That is, when the interest on government bonds rises relative to inflation, or when inflation falls relative to interest rates.
After all, if interest rates are 5% and inflation is 2%, investors can earn 3% (the difference) by simply buying government bonds.
This situation has been going on for a while now. Normally this is not the climate in which gold, but also assets like Bitcoin perform well.
One possible explanation for the “phenomenon” we are seeing now is that people are starting to lose confidence in the US dollar. America has a huge national debt and interest payments on it have increased dramatically.
It could be that the market sees a problem there and is less interested in government bonds for that reason. Either way, gold is doing great at the moment (and we can’t complain about Bitcoin either).
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Source: https://newsbit.nl/bitcoin-stijgt-en-goud-op-een-all-time-high/
