What Will Happen To Gold When The US Replaces It With Bitcoin?
Many of you will be starting to slow down now ahead of the Christmas break, or just looking for a break in between bouts of Christmas preparations. If this is you then you might be looking for a distraction, so I wonder if you ever asked yourself what would happen if the US sold all its gold and replaced it with bitcoin? It’s an interesting thought experiment, if a scary one. This is the proposal made by investor Michael Saylor to the US government. Saylor has suggested the US should sell its gold reserves, and replace them with bitcoin. It might not be that much of an unsolicited idea given the pro-cryptocurrency stance of President-elect Trump, but it is a worrying idea. It’s one we look at briefly in today’s YouTube offering.
As we look back through 2024 at all my weekly updates, we are reminded of just quite how extraordinary this year has been for the gold and silver markets, as well as the global economy.
Gold prices have had one of the most bullish years on record, beginning the year at just over $2,000 and breaking several all-time highs, and sitting above $2,600 at the time of writing. Why? This has been the topic of many discussions this year. Statistics as well as conversations with peers in the gold market tell us that the bulk of physical gold demand in 2024 has largely been driven by heightened central bank buying, particularly from emerging markets, alongside strong investment demand.
Of course, silver has also had a standout year. It is up nearly 35% since the start of 2024, outperforming gold's 32% gain. This growth has been driven by strong industrial demand, particularly in the renewable energy sector, with silver being a critical component in solar technology. Several key factors have bolstered silver this year, including persistent supply deficits and increased investment interest amid economic uncertainty. Additionally, investor interest in silver as a store of value during uncertain times has further enhanced its performance.
Globally, 2024 was marked by significant geopolitical and economic events. Inflation remained a central concern, with central banks, including the Federal Reserve, ECB and the bank of England, lowering interest rates to stimulate economic activity and address evolving economic conditions. These rate cuts have supported the resilience of precious metals as a hedge against economic and geopolitical turbulence as well as growing uncertainty. Additionally, market reactions to the U.S. election and ongoing geopolitical tensions underscored the enduring appeal of gold and silver for wealth preservation.
