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What is driving Gold Price & BTC Gains?

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Hi All

I have been thinking about the price of gold in the context of the following that has happened this year:

- Massive flows out of gold backed ETF’s in 2024

- Massive rise of BTC price since Jan 24

- Both of the above after Bitcoin ETF’s were made available - and making BTC more liquid to a wider group of “investors”

Essentially a lot of ETF holders are liquidating their positions.  Is this money heading into BTC ETF’s?  

At least two things could be happening:

- Investors want physical gold and are therefore ditching ETF’s and buying physical 

- Investors are selling out of Gold ETF’s and into BTC ETF’s to ride the BTC price rises.

There are of course other factors, but for me at least, I cannot see why Gold lags BTC in either physical form or ETF’s in terms of price rises.  

Seasoned investors are predicting BTC will hit USD300k before long.  

But why? BTC in an ETF is not usable as currency it’s just a bet. 

So what is going on with the prices of Gold and BTC and why the disparity?

I doubt central banks are buying BTC - they want gold as a “hard” asset.





Not my circus, not my monkeys

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If the price of gold goes up it becomes profitable to mine more of it so more gets mined.  As the supply increases so the price comes down.

It is VERY different with Bitcoin as the supply is mathematically controlled and there is also a finite limit of 21 million bitcoin.  Miners earn a certain rate in bitcoin for their work validating the blockchain and every four years the rate is halved.  The next "halvening" is not long now in the future and usually triggers a bullrun, though some would argue the bullrun has been here for a while.

The smart money will ride the BTC price up through the bullrun and then sell near the top, probably putting the profits back into something like gold again.  Alternatively, you can hodl BTC for the long term and the returns are much higher than for gold.


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BRICS Announces New Blockchain-Based Crypto Payment System (watcher.guru)

Precious metals markets are roughly 15 times larger than crypto markets. All else being equal, you need greater capital acceleration in metals to get the same price action as in crypto

If the price of BTC continues to rise then it will take more and more capital to get the same kind of price action, assuming no supply shocks, manipulations, squeezes, etc

The dynamic of global capital, gold and BTC is interesting. Never before has it been possible for so much capital ($7.5 trillion+ daily FOREX) to flow around the world in such a short period of time. Crypto waxes and wanes, just as quickly as global capital can pump markets, they can deflate them. Gold is different, more than just a regular commodity or financial asset. Gold is strength and stability, globally recognised, culturally important, a physical asset. The banks are stacking physical gold not ETFs precisely because they never want to sell. Those record capital flows will continue in gold and not reverse due to the nature of physical assets. With digital assets it can go from $70 to $15 in days, it can go from €60K to €48K (23.7%) in seconds, as happened with the BTC/euro flash crash 5 days ago

Mind is primary and mass-energy is derivative

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As an extremely rough guide:

Gold going from $1980 - $2180 = roughly $1.4 trillion

BTC going from $42K - $70K = roughly $700 billion

Those are extremely rough figures and not fully representative of market dynamics. It might look like BTC is attracting more money than gold because the individual unit price is going up faster but in reality twice as much money has flowed into gold than flowed into BTC. That is probably worth considering  @dicker

Mind is primary and mass-energy is derivative

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Part of this is the extensive marketing via social media & similar that Bitcoin has, Bitcoin fits in with the online way people run their lives now and also it is more granular / instant than gold at lower values. Bitcoin is also a lot more volatile and in effect you own something which has nothing to back its value unlike government bonds or a share in a company.

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