Bitcoin Beats Gold Despite Central Bank Buys
In 2024, central banks around the world have been significantly increasing their gold reserves as they shift towards store of value assets.
A September 2 post from the macroeconomics platform, The Kobeissi Letter, reported that global net gold purchases by central banks reached a record 483 tonnes in the first half of 2024, marking the highest level ever recorded.
This amount is 5% higher than the previous record of 460 tonnes set in the first half of 2023.
In the second quarter of 2024 alone, central banks purchased 183 tonnes of gold, reflecting a 6% year-over-year increase.
The National Bank of Poland, the Reserve Bank of India, and the Central Bank of Turkey were the leading buyers of gold during this period.
In late August, National Bank of Poland President Adam Glapinski revealed plans to continue increasing gold purchases, aiming to have gold account for 20% of the bank’s reserves.
Spencer Hakimian, founder of Tolou Capital Management, remarked that nations such as China, India, Russia, and Saudi Arabia "no longer trust owning Western reserve assets," further stating that "Gold is the only neutral and non-volatile reserve asset."
On September 1, tech entrepreneur Kim Dotcom predicted that a new gold-backed stablecoin from BRICS nations (Brazil, Russia, India, China, South Africa, Iran, Egypt, Ethiopia, and the UAE) would boost demand for gold and create instability for the U.S. dollar.
He commented:
“When the BRICS gold-backed stablecoin comes out trade in USD will drop hard, central banks will exit USD and the US money printing Ponzi scheme will burn. 14% of global GDP will shift from the US to other nations by 2030.”
Additionally, "Global Markets Investor" noted that gold is experiencing one of its best performances in history, with a 23% rise year-to-date, outpacing the S&P 500's 18% gain.
In comparison, Bitcoin has risen by 35% in 2024, despite a sharp drop from its March all-time high.
However, gold advocate and crypto critic Peter Schiff pointed out that Bitcoin’s gains were mostly limited to the first two months of 2024 and have since decreased, even as spot BTC exchange-traded funds launched in the U.S.
Gold reached a record price of $2,525 per ounce on August 27, prompting Schiff to claim that "The momentum has turned." Nonetheless, Bitcoin has still outperformed gold overall this year.
Despite these trends, central banks remain cautious about the relatively new asset class of cryptocurrencies.
Sources:
https://cointelegraph.com/news/central-banks-buying-gold-record-levels-2024
https://x.com/KobeissiLetter/status/1830305336365875205
https://x.com/KobeissiLetter/status/1830305336365875205
https://x.com/SpencerHakimian/status/1830306121518608619
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