The gold market is inefficient

what does this mean for Bitcoin?

“The oldest, shortest words - 'yes' and 'no' - are those which require the most thought.” – Pythagoras ||

Hi everyone, I hope you all had a good weekend! It seems there was no market-shaking drama which makes a nice change.

Below, I look at the building turmoil in the global gold market, and what that implies for Bitcoin demand – it’s not just about the relative convenience and reliability.

Programming note: this newsletter has to skip publication on Thursday, apologies.

IN THIS NEWSLETTER:

• The gold run

• Hard to get

• What this means for Bitcoin

If you’re not a premium subscriber, I hope you’ll consider becoming one! You get ~daily commentary on markets, tokenization, regulation and other signs that crypto IS impacting the macro landscape. As well as audio, relevant links and music recommendations ‘cos why not.

WHAT I’M WATCHING:

The gold run

Since the beginning of the year, gold has outperformed BTC. You read that right. Since Jan 1, gold is up more than 10%, while BTC has managed less than half that.

(chart via TradingView)

What’s more, over the past couple of weeks, gold has been smashing one all-time high after another, while BTC struggles to regain momentum.

(chart via TradingView)

This is extraordinary given that, unlike its digital counterpart, gold is not enjoying the tailwinds of a regulatory thaw around the world, and of broadening awareness amongst investors of all types.

Its price is, however, supported by growth in interest from central banks and institutions, eager to both diversify away from US treasuries, and to boost reserves that could help hedge currency turmoil.

Last week, the World Gold Council published a report that shows continued strong demand from global central banks. Net accumulation in 2024 was above 1,000 tonnes for the third consecutive year. And data released on Friday showed that China’s central bank added to gold reserves in January for the third consecutive month, after pausing for most of last year.

(chart via the World Gold Council)

What’s more, this morning, China announced a pilot program to allow insurance companies to buy gold for the first time. As of last Friday, ten of the country’s largest insurance firms will be able to invest up to 1% of their assets in bullion, potentially funnelling as much as 200 billion yuan (~$27 billion) into the market. For context, this could buy as much as almost 300 tonnes at current prices – last year, China’s central bank reported buying 44 tonnes.

Given gold’s role as a global hedge against geopolitical and currency turmoil, we can expect strategic accumulation to continue at strong levels.

But strong demand is only part of the story. Other forces behind the gold price surge include supply frictions, and Trump’s tariff promises.

Hard to get