Is Gold Still a “Boomer Rock” Next to Bitcoin? Not This Year, Says Bloomberg Analyst

Gold may finally be poised to break $2,000/oz resistance and shatter its reputation among the crypto brethren for being the “Boomer Rock” in 2023, according to macro strategist Mike McGlone of Bloomberg Intelligence.

The analyst believes that with the worsening macroeconomic environment, investors are once again turning to gold as a safe haven – along with US Treasuries and Bitcoin.

Return the gold to the form

In an excerpt shared from McGlone’s Bloomberg Terminal report, the analyst claimed that the global banking crisis and commodity deflation could re-energize gold’s bull run since 2001.

“Baby boomers have been doing well in the stock market, but they are finding strong alternatives in US Treasuries, gold and, very cautiously, bitcoin,” he wrote. linkedin.

Both gold and bitcoin rose After the Federal Reserve promised to bail out depositors of the Silicon Valley Bank (SVB) earlier this month. The first bounced off resistance at $2,000 on both March 17 and 24, a consolidation level just below it since 2020.

In the same period, bitcoin rose from under $4,000 in March 2020 to an all-time high of $69,000 in 2021, prompting major investors to regard the latter as a superior asset. The two are often compared on the basis of their “sound money” attributes – that is, they are fixed in supply and can therefore theoretically act as a hedge against inflation.

Neither has technically played that role, with both assets dropping to multi-year lows amid rising inflation and resigning interest rates. However, the banking crisis – which injected billions of dollars of new liquidity into the economy – may have finally lived up to their designation.

“This is our base case for the metal, against the backdrop of what is shaping up as a harsh economic reset,” McGlone wrote. Federal Reserve Raising the rate by 25 basis points On March 22nd, despite the deflationary effects of falling commodity and housing prices, and the bank’s run-down partly because of the rapid pace of rising interest rates, we have the idea of ​​1929 in our view.”

Loss of confidence in the banking business

The analyst also noted the record pace with which deposits are fleeing the banking system, as the liabilities of US commercial banks have not fallen so quickly since 1971 – when the US abandoned its gold standard.

Besides SVB, institutions such as Signature Bank faced billions of dollars in outflows of their deposits this month, while stocks in others collapsed at record rates. Swiss credit I eventually fell into such stress weeks ago when a banking scare crossed the Atlantic that anxiety began to surround the likes Deutsche Bank.