Gold, 'Good' Volatility, & the Bitcoin Epoch
Gold hit another new all-time high of $2,748 this week, lifting the YTD gain to 32.5%.
You can download the full report here
Gold hit another new all-time high of $2,748 this week, lifting the YTD gain to 32.5%. If gold were to finish the year here, it would be the best YTD gain since gold's largest YTD gain in 1979 of 119.5%.|
But it is not today's absolute price gain for gold that gets our attention, rather it is the similarities in the price and volatility patterns that both gold and bitcoin share that we see as the key insight. See our report on bitcoin's unique volatility and how it can enhance returns in a traditional 60/40 portfolio here.
In the 1970s, gold's volatility increased from 4% to over 80% as its price rose. This 'good' volatility (i.e. more upside 'surprises) occurred as gold entered a period of price discovery in a market unfamiliar with the yellow metal NOT being pegged to the US Dollar. This pattern of upside surprises as measured by 'good' volatility, is something we see today in bitcoin, as discussed in Monday's Wake Up Call' series with Fidelity Digital As-I set's Director of Research, Chris Kuiper, and Onramp ClO, Jesse Myers. Excerpt here, full video here.
Gold has had four major rallies since Nixon broke the USD peg to gold in August 1971:
1970s: The first was the largest, when gold's price rallied from $35 in 1970 to over $550 by the decade's end, up over 1,400%.
2000s: Through the Global Financial Crisis from 2004 to 2011, gold gained over 350%.
2020-2022: Gold rallied over 60% as debt funded stimulus was unleashed globally in reaction to Covid.
2024: Gold is up over 32% YTD, perhaps on debt and deficit concerns as the Congressional Budget Office's (CBO) U.S. deficit estimate for 2024 increased mid-year by 25%.
You can download the full report here