The thing about those that are bullish on Bitcoin and those that like gold is that they are essentially soul mates in terms of the rational for their bullishness. There is an anti central bank mentality, disrespect for how fiat currencies have been treated and certainly now worries about inflation.

You’ve heard me rant plenty over the years on my criticism of Fed and other central bank policy and I’ve been yelling this inflation story since last year and both with a positive stance on gold. While some of our clients own Bitcoin of their own choosing, I do not, yet. Yet because maybe I will at some point. I instead have chosen to play my above macro beliefs with gold instead, for better or worse. Obviously worse in terms of performance which I guess is all what matters right now in the eyes of many.

I do have to say though that when I hear from some that Bitcoin is replacing gold where both are trading off the same macro fundamentals, I think it’s complete nonsense. Yes, Bitcoin has sucked the oxygen out of the gold room over the past year but something that is 13 years old is not replacing something with 5000 years of history. They can though coexist and complement each other. 

I will also say this, gold and Bitcoin are not the only two assets that are essentially finite in nature with very little supply coming in the many years to come. They are also not making anymore 1962 Mickey Mantle baseball cards or more number 1 Superman comic books. I don’t hear about Mickey Mantle maximalists, although prices of his cards, along with comic books, have skyrocked too. 

I bring this all up because there was a story from Bloomberg News yesterday titled “Venezuelans break off flakes of gold to pay for meals, haircuts.” They barely have access to the internet so Bitcoin does them no good. “A one night stay at a hotel? That’ll be half a gram. Lunch for two at a Chinese restaurant? A quarter of a gram. A haircut? An eighth of a gram, please.” They interviewed a 20 yr old kid Jorge Pena who said “You can pay for everything with gold.” How do people get flakes? “They use hand tools to break shards off nuggets and then carry them in their pockets, often wrapped in bolivar bills, one of the few remaining uses for the currency.”

 

 

Gold is money, it’s been so for thousands of years, is proving itself once again and the macro backdrop for it has never been better and no amount of made up competition from an asset that is benefiting from that same positive backdrop is going to stop it from going where it will ultimately go and that is likely higher, along with maybe Bitcoin.