So, there was this little event called the election last week. Asset prices have surged in the wake of Donald Trump’s decisive victory in the Presidential election. The Senate was flipped for a Republican majority, and while the House of Representatives is not formally called at present time it appears as though Republicans will hold their majority there as well. This move has shown a profound gain for Bitcoin, but gold is having a harder time.
Many gold forecasts remain in place that gold is likely to hit the magic $3,000 for the first time ever. And the calls for Bitcoin to reach $100,000 are now suddenly not that far away. There is always a question of “IF” these assets can reach such lofty targets. But the bulls for Bitcoin and for gold are both going to stand by their convictions. It’s a case of “When” for them.
Oggonomics wants to see which is more likely. In no way are any figures presented to be interpreted as formal price targets. This is also not a recommendation to buy or sell any of the assets or securities mentioned.
Gold peaked at about $2,785 per ounce a week ahead of the election. It has now pulled back 5.3% to $2,636 per ounce at the time of this reporting. Bitcoin was trading at about $69,000 the day of the election, but since Trump’s victory it rose to over $75,000 on the first day and was seen above $82,000 at the time of this reporting — and that’s an all-time high.
Gold would have to rise about 14% to hit $3,000 and Bitcoin would have to rise about 22% to hit $100,000. So, is gold’s quest for $3,000 over or just seeing a blip? And will the crypto-bros be able to get Bitcoin over the $100,000 mark?
And then there is the case that both could come true. Or both scenarios could flop.
WHAT GOLD BUGS ARE SEEING
Gold bugs have seen interest rates stay firm in the wake of the Fed’s second rate cut. A stronger economy and the hope for less international strife may suck some of the risk premium out of gold since it is the ultimate defensive play.
The key earnings reports from the likes of Newmont Corporation (NYSE: NEM) and Barrick Gold Corporation (NYSE: GOLD) were followed by panic in their stocks, in part as their all-in sustaining costs and other expenses are now through the roof. Barrick was last seen down over 15% from its recent peak, but Newmont has lost a sharp 25% since its recent peak.
There is always a debate about how solid the U.S. credit will be with rising deficits projected to continue after the $36 trillion mark. Debt servicing costs are already over $1 trillion per year now that rates are so high.
China’s first stimulus package might have been deemed as supportive for gold and hard assets, but in the clarification process the more recent stimulus communications from China have disappointed the forecasters. Now we just have to wait and see if China’s central bank (PBOC) decides to resume gold purchases that had been paused earlier in 2024 as prices were getting higher.
The ETF move for SPDR Gold Shares (NYSEArca: GLD) has been fairly dismal over the last week as it was last seen at $243.25. This key gold ETF is down 5.6% from its absolute high ($257.71), and it’s still down about 4% from the election day closing price of $253.40.
AND FOR BITCOIN…
The rise of Bitcoin has been impossible to ignore. For Bitcoin to have hit $82,000 on Monday, November 11, this is up a sharp 18% from the end of election day. The presidential election was deemed to a binary event for the crypto-crowd. Donald Trump had attended crypto events and has backed the notion of keeping a crypto reserve or Bitcoin reserve similar to the Strategic Petroleum Reserve. At what price and to what extent remain up for debate.
Trump has pledged that he wants the U.S. to lead as “the crypto capital of the world.” And crypto-hawk Gary Gensler’s only way out of being immediately relieved of his duties leading the Securities & Exchange Commission under a Trump regime to resign ahead of that time.
Kamala Harris stance was never super positive for crypto. Even though she had talked up the benefits of blockchain, her stance was nowhere near Trump’s backing of Bitcoin and crypto. This made the Presidential election an absolute binary event for Bitcoin. The iShares Bitcoin Trust (NASDAQ: IBIT) is the absolute Bitcoin ETF leader with more than $34.3 billion in assets as of November 8 with a $43.69 closing price. That was last seen up over 6% at $46.65 on Monday morning, and if average volume holds firm at current prices that’s over $1.3 billion trading hands each day.
There is also the ProShares Bitcoin ETF (NYSEArca: BITO), which is backed solely by rolling futures contracts of Bitcoin rather than true Bitcoin ownership. It has more than 10 million shares traded each day, worth over $200 million trading hands each day at the current $20+ share price. And the gains in the Bitcoin miners, traders and similar companies:
- Microstrategy Inc. (NASDAQ: MSTR) just hit a new high of $298.00 on Monday. It’s up 371% YTD and up 500% over the last year.
- HIVE Digital Technologies Ltd. (NASDAQ: HIVE) was last seen up 7% at $5.00, up just 10% YTD but up 55% from a year ago.
- Coinbase Global, Inc. (NASDAQ: COIN) was last seen up 13% at $306.77, up 76% YTD and up 230% from a year ago.
- Bitdeer Technologies Holding Co. (NASDAQ: BTDR) was last seen up above $10.50, up 10% YTD and up 200% from a year ago.
GOLD & BITCOIN CAN DO THEIR OWN THING
There is an old market adage that states “Markets can stay irrational longer than anyone can stay solvent.” It simply means that the market may not act rationally at times, but trying to bet against it can be like standing front of an oncoming freight train.
The harsh reality is that even if Bitcoin is treated as a “digital gold” or a “new reserve currency” it technically has nothing to do with gold. Very few central banks hold Bitcoin at the present time. Every major central bank owns gold to keep a reserve of hard assets to keep a value under their currencies.
Bitcoin is currently owned by individuals of all sorts and by institutional investors. Yes there is the crime element. Yes there is no army and national assets to back up the value. Then again, you can’t exactly eat or drink gold or use it to keep you warm. The reasons that can be laid out against Bitcoin and gold are endless. Their prices have, so far, remained more fruitful.
DISCLAIMER
Oggonomics does not have any formal price targets on gold and bitcoin. Any targets in this report are placeholders and there are no assurances that the current prices will remain firm or rise. The prices could even plummet.
None of the information provided herein is to be interpreted as or considered to be investment advice. This report is also not a recommendation to buy or sell any assets or securities mentioned in the report. All investment decisions are up to each investor and the decision to buy or sell should be made with a financial advisor.
