Topic: [2024-10-04] JPMorgan: Gold and Bitcoin Surge as Debasement Trade Gains Momentum (Read 76 times)

Or a Kamala victory in 2024 could further support the "debasement trade" by increasing geopolitical tensions and stimulating expansionary fiscal policies.  This seems more likely since Putin et al waited until after Biden was in to invade, ditto the attack on Israel nearly a year ago. Ditto the Iran attack in the last week.  Geopolitical are much higher now than when Trump was in office because people know Biden will talk, but not act whereas they knew Trump would do something and weren't often sure how strong a reaction it would be.

Peace through strength is what Trump's policy seemed to be.  War through weakness seems to be the Biden/Harris policy - perhaps not stated but that is the impact of things like "red lines" that are meaningless. 

Likewise, when you have something as Orwellianly named as the "Inflation Reduction Act" which spent money like drunken sailors you will have much more expansionary fiscal policies vs the Trump policies.  You have the difference between attempting to grow the pie under Trump and attempting to freeze or decrease the size of the pie while handing out pieces to favored groups at the expense of unfavored groups. 

JPMorgan: Gold and Bitcoin Surge as Debasement Trade Gains Momentum

Global investment bank JPMorgan’s analysts have highlighted the growing impact of the “debasement trade” in boosting gold and bitcoin prices. Gold’s rise is linked to inflation, geopolitical instability, and waning trust in fiat currencies. Both institutional and retail investors are viewing gold and bitcoin as safe havens amid global economic uncertainty, with future trends depending on geopolitical events and fiscal policies.

JPMorgan Discusses How the ‘Debasement Trade’ Is Fueling Gold and Bitcoin Gains

JPMorgan’s analysts have highlighted how the “debasement trade” is driving gains in both gold and bitcoin. Led by global strategist Nikolaos Panigirtzoglou, the analysts noted that gold has surged beyond what could be explained by dollar and real bond yield movements alone. Instead, they attribute the increase to a range of factors, including geopolitical uncertainty, inflation concerns, and declining confidence in fiat currencies.

They explained: “The ‘debasement trade’ is a term that reflects a combination of gold demand factors which in our client conversations range from structurally higher geopolitical uncertainty since 2022, to persistent high uncertainty about the longer-term inflation backdrop, to concerns about ‘debt debasement’ due to persistently high government deficits across major economies, to waning confidence in fiat currencies in certain emerging markets, and to a broader diversification away from the dollar.”

The analysts also emphasized that gold’s price, around $2,700 per ounce, and bitcoin, near $60,000, have given them new currency, so to speak. They pointed to the falling share of the U.S. dollar in global currency reserves, noting that the dollar now accounts for just 57% of reserves, according to International Monetary Fund (IMF) data. Despite China pausing its gold purchases since April, JPMorgan said:


The JPMorgan analysts also examined institutional investor behavior, stating:


Furthermore, they observed that retail investors seem to view gold and bitcoin similarly, given inflows into bitcoin exchange-traded funds (ETFs) after August. A potential Donald Trump victory in 2024 could further support the “debasement trade” by increasing geopolitical tensions and stimulating expansionary fiscal policies, according to JPMorgan. The analysts remarked: “This is because investors have been rather occupied in recent months with the recession trade.”

Source: https://news.bitcoin.com/jpmorgan-gold-and-bitcoin-surge-as-debasement-trade-gains-momentum/