Bitcoin at new heights!
Gold already in the ground?
The sentiment in the gold scene is currently extremely negative. Even people who almost religiously believe in gold are convinced that “gold is dead”. Has gold not fulfilled its three main roles as a hedge against inflation, a hedge against recession and a hedge against equity volatility? Gold is a long-term proposition and so just because things are not looking so good at the moment doesn’t mean you should lose your nerve. Gold has shown us many things over the last few years. Like an early warning sensor, it showed us already in 2019 that a recession was around the corner. Gold thus acts as an early warning system for recessions, but also for financial markets and fiscal stimulus. The current lull in gold can be attributed to the fact that markets still believe that inflation is only a temporary phenomenon.
Bitcoin reaching for the stars soon?
As most of our readers know, we are very open to cryptocurrencies and Bitcoin. Not for nothing, we manage two funds that contain cryptocurrencies. Of course, Bitcoin is kind of a superstar compared to gold. The volatility also makes it much easier for the media to report on it. Gold is much less in the spotlight. There are many similarities between gold and Bitcoin. One is the stock-to-flow model. Both are scarce commodities. Bitcoin is even scarcer in the long term. If Bitcoin really becomes established and is still around in 10 years, then prices are possible that we cannot even imagine at the moment.
The progressive central bank
The modern central bank is currently looking around for new professions. It is smiling at the all-too-popular class of activists. The European Central Bank, for example, has recently joined the category of climate activists. However, this is very far from its mission. For the American Fed, on the other hand, it is social injustice that is the new hobbyhorse. The main reason is that it would be a good justification to maintain the current aggressive and expansionary central bank policy. In addition, there is more and more infiltration of central banks by politicians.
Inflation only temporary?
The former maximum of 2%, now represents the minimum. Current central bank policy represents the classic rule book when it comes to paying off debt. Low interest rates and inflation that is deliberately kept above that. Combine this with financial repression and control of the interest rate structure, and we are getting closer and closer to the goal. After all, somehow the monumental mountains of debt that we have accumulated over the past decades have to be reduced. This is one of the big reasons why inflation will probably not simply be a very short-term phenomenon, and will stay with us for some time to come.
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