In the face of mounting fiscal problems in the United States, two completely different assets – bitcoin and gold – are finding unexpected common ground in the perspective of veteran macro-investor Luke Gromen. In a recent interview, Gromen stressed that the two assets currently have conditions for growth.
Bitcoin again juxtaposed with gold
Underpinning Gromen’s argument is the belief that both gold and Bitcoin are “fixed-supply assets” with the potential to rise in nominal value. The difficult times of US public finances, he believes, are supposed to be the time when both of the aforementioned assets will shine.
With mounting fiscal problems in the United States associated with continued quantitative easing and potential changes in Federal Reserve policy, Gromen believes this environment will create favorable ground for gold, oil and Bitcoin to grow.
“Gold and BTC are doing well because they are fixed-supply assets whose nominal value has the potential to grow,” Gromen said. “They thrive best when a nation has fiscal problems. When the issuance of the world’s reserve currency and its allies is in question, and their situation is no better than anyone else’s – even Europe’s – it’s a really favorable time for gold and Bitcoin.”
BRICS and the transformation of the global currency market
Gromen also delved into the potential consequences of the BRICS (Brazil, Russia, India, China and South Africa) countries introducing a gold-based currency. Such a move could undermine the long-standing position of the U.S. dollar as the world’s main reserve currency. The growing popularity of gold-backed currency in these key economies could undermine the dollar’s dominance in international trade and finance.
Meanwhile, the cryptocurrency sector is experiencing gentle rises, with Bitcoin being the main beneficiary. The crossing of a key psychological level at $28,000, despite strong rejection of technical resistance, has sparked optimism among investors. Stay tuned as we will soon publish the latest analysis on what to expect from BTC’s behavior in the near future.
Scarce goods and economic crises
The primary and most important scarce good in the world today is malt. For many decades, it has been regarded as one of the most solid shelters during American economic crises. During the Great Depression, which took place in the 1930s, the price of gold soared as investors sought a safe haven from the falling value of the dollar and general economic uncertainty.
The same happened during the 2008 financial crisis. The price of gold gained in value as a result of bankruptcies of financial institutions and a decline in confidence in traditional financial systems. Investors once again turned to gold as an asset that could protect their capital from market volatility.
Given that Bitcoin manifests many of the characteristics of gold bullion, its fate may be similar. They may certainly be influenced by the dwindling supply of BTC, which will be particularly low after next year’s halving.
