Bitcoin and Gold, Same Battle: The Wild Race Towards Historical Highs

In a context where Bitcoin has surpassed its previous 2021 record, the price of gold has also reached an unprecedented level on March 5, hitting $2,140 an ounce. This rise of 4.97% in a week for the global safe haven rings the alarm about a possible excessively loose monetary policy.

After Bitcoin, gold reaches historical peaks

On Tuesday, March 5, an ounce of fine gold reached $2,140, setting a new historical record, thus marking a significant increase of nearly 5% from the previous week. Over the last six months, gold’s progress has risen by more than 11% against the US dollar.

Despite this new peak, the fluctuations of gold remain modest compared to the spectacular surge of Bitcoin in 2024. Since January, BTC has climbed by 48% while gold has only increased by 3.2%.

For Peter Schiff, a pro-gold investment stalwart, this spike sends a warning signal to central banks. “When gold hits a record level, it means that monetary policy is too loose,” he has reiterated.

Schiff predicts that far from tightening rates, Jerome Powell could even discuss new reductions before Congress. A prospect which, according to him, will only fuel the rise of gold prices and inflation.

Supremacy of Gold over BTC… For how long?

In a detailed analysis, Jim Bianco highlighted a record divergence between the price of physical gold and the flows of major dedicated ETFs such as SPDR Gold Shares (GLD) or the Ishares Gold Trust (IAU).

“The demand from non-ETF investors is stronger than the sales of these index funds,” points out the macroeconomics specialist. A rare dynamic that had not been seen for 20 years according to Bianco.

Indeed, gold remains entrenched in its centuries-old status as the ultimate safe haven. But the precious metal can also boast an XXL market capitalization of more than $14 trillion. A level much higher than that of Bitcoin, valued at $1.23 trillion.

On the long term, however, the balance of power could well be reversed. While an ounce of gold has “only” increased by 65% in 5 years against the US dollar, Bitcoin soared by 1,496% over the same period! Enough to fuel the heated debate between advocates of “new” and “old” safe haven assets.