Fed’s Powell opens door to potential rate cuts at Jackson Hole
By Senad Karaahmetovic
Bernstein analysts offered their thoughts on the Gold vs Bitcoin discussion during periods of crisis.
Gold prices are up ~11% over the last month as they trade near record highs. Bank of America commodity analysts warned last week that gold prices could trade around $2500 in the coming years.
“When we speak to investors, we often hear people expecting a hard landing and the markets have started positioning for a U.S. dollar debasement and U.S. rate cuts, thus there is a rising preference for Gold as a hedge,” Bernstein said in a client note.
For the same reasons that investors see gold attractive in this type of environment, the analysts make a case to like Bitcoin “even more.”
“Despite Bitcoin being the best performing asset this year (up ~71% YTD), there is limited belief that this is structurally a new Bitcoin cycle, and that Bitcoin will see fresh allocations.”
For them, this is “irrational.” Below, the analysts explain why.
“When there is a massive monetary debasement event, while both Bitcoin and Gold rally, Bitcoin outperforms Gold. For example, post-Covid monetary printing, Bitcoin outperformed Gold (2.9x over ~3.5 years). In fact, even this year, since the banking crisis fears have escalated, Bitcoin rallied ~71% YTD vs. Gold rallying ~10% YTD.”
“In our view, liking Gold, but not liking Bitcoin is like hating on a faster horse,” the analysts concluded.