Bitcoin (BTC) bulls will keenly watch talk of the need for “a new, neutral global reserve asset” at the heart of the traditional financial sphere.
2020 will bring some volatility and growth and already know that. Decentralized economy #XRP Blockchain Banking https://t.co/Vdi1pUNj1h — Albert Miller (@K2Investing) November 30, 2019
On November 25, it has been published by Rana Foroohar, the Business Columnist and Associate Editor of Financial Times, that half-justified “paranoia” of the “gold bugs” has only been compounded by comments from investors and central bankers in recent weeks.
“You have to really believe the sky is falling in order to hoard physical bars in a digital age.” Rana Foroohar
However, Foroohar points to the Dutch Central Bank’s (DCB) October warning that one shocked many — that in the event of a monetary reset and “if the system collapses”:
“The gold stock can serve as a basis to build it up again. Gold bolsters confidence in the stability of the central bank’s balance sheet and creates a sense of security.”
Wow Dutch National Bank goes 'Big Reset': 'Aandelen, obligaties en ander waardepapier: aan alles zit een risico [..] Als het hele systeem instort, biedt de goudvoorraad een onderpand om opnieuw te beginnen. Goud geeft vertrouwen in de kracht van de balans van de centrale bank'. pic.twitter.com/Oi9n7bnAdi — willem middelkoop (@wmiddelkoop) October 12, 2019
Likewise, the world’s 58th wealthiest person, Ray Dalio, the Billionaire Investor, and Hedge Fund Manager, echoed this at the Institute for International Finance conference this fall by raising the possibility of a potential flight to gold should America’s global creditors betray any signs of jitteriness.
As early as 2016, Foroohar notes that prominent voices like JPMorgan chief Jamie Dimon and hedge fund manager Stanley Druckenmiller have alleged that there is an “unsustainable” fiscal situation, pointing to unfunded pension and healthcare entitlements in the United States.
However, to offset the fiscal imbalance, Foroohar notes that the U.S. remains locked into inflating its own balance sheet, keeping interest rates low, or even negative. In this view, pushed to the extreme, this could depreciate the dollar, creating a situation in which investors no longer want to hold federal debt nor the currency itself.
In Dalio’s words, the need for an asset “that’s not somebody else’s liability” points to gold or something else altogether.
As Foroohar writes, with China recently issuing its first euro-denominated bonds in 15 years, deepening ties with European firms and edging away from the petrodollar, the gradual de-dollarization of Eurasia is another unfolding factor that could force America to sell dollars in order to settle its balance of payments “in a new, neutral reserve asset.”
Similarly, parallel to Dalio and the DCB this October, Cameron Winklevoss, one half of the eponymous family office Winklevoss Capital and Co-founder of the Gemini crypto exchange, argued that, in serving as a “Source of Truth,” Bitcoin can offer benefits that aren’t confined to being a safe-haven asset or mere “digital gold.”
Thus, the twins have also previously forecast the cryptocurrency will ultimately surpass the ~$7 trillion market cap of the precious metal.