Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

Gold, Bitcoin Rally: Is US Debt Surge A Key Driver?

Published 01/03/2024, 16:46
Updated 01/03/2024, 18:10
© Reuters.  Gold, Bitcoin Rally: Is US Debt Surge A Key Driver?
GC
-
GLD
-
BTC/USD
-

Benzinga - by Piero Cingari, Benzinga Staff Writer.

A leading Wall Street investment strategist highlighted the exponential increase in the U.S. government debt as the primary cause for the continued rise of assets with finite supplies, such as gold and Bitcoin (CRYPTO: BTC), which appear to be on track to reach their all-time highs.

This insight was shared by Michael Hartnett, chief strategist of Bank of America, in his regular weekly note, “The Flow Show.”

Hartnett has laid bare a stark reality surrounding the surge in U.S. debt. “The U.S. national debt is rising by $1 trillion every 100 days,” Hartnett wrote.

He illustrated how the debt level has now surpassed $34 trillion, up from $33 trillion 106 days earlier, and approximately $32 trillion 90 days before that.

Following Hartnett’s projections, the debt is now expected to exceed $35 trillion by April 2024.

He claimed “financing domestic bliss and overseas wars U.S. budget deficits” over the last four years have equated to 9.3% of GDP.

Debt-Debasement Assets Thrive In This Context Therefore, Hartnett noted there is “little wonder why debt debasement” trades are nearing their all-time highs, referencing gold and Bitcoin, which are currently valued at $2,070 per ounce and $62,000, respectively.

Gold and Bitcoin are considered “debasement hedges” in times of monetary or fiscal policies that might cause significant currency devaluation.

Like gold, Bitcoin’s supply is capped, and both are considered stores of value, appreciating in value against currencies that may lack supply control due to central banks’ ability to print money indefinitely, at least in principle.

Since mid-February, the cryptocurrency price increased from about $50,000 to $61,600, a 22% rise, amid rising inflows towards Bitcoin-related ETFs. In February only, Blackrock’s iShares Bitcoin Trust (NASDAQ:IBIT) attracted nearly $5 billion of flows.

During the same timeframe, the precious metal, as tracked by the SPDR Gold Trust ETF (NYSE:GLD), climbed from $1,985 per ounce to its current price of $2,063 per ounce, an increase of 4%.

Read Now: Pro-Bitcoin President Nayib Bukele Trolls ‘Gold Bug’ Peter Schiff As El Salvador’s BTC Profit Soars 40%: ‘Cry Harder’

Photo: Shutterstock

© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

Read the original article on Benzinga

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.