Latest / Merryn Talks Money / Gold vs. Bitcoin: What’s Driving the Safe-Haven Rally in 2025

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Gold vs. Bitcoin: What’s Driving the Safe-Haven Rally in 2025 · Merryn Talks Money

• 0:02
  Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News. Welcome to the Marin
• 0:17
  Speaker 1: Doalgs Money Market Rap, where we talk about the biggest
• 0:19
  Speaker 1: moves in markets this week and what's driving them, or
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  Speaker 1: rather what we think might be driving them. I'm Maren Sumsep,
• 0:24
  Speaker 1: web Editor at Large for Bloomberg UK Wealth, and this
• 0:27
  Speaker 1: week joining me from the Bloomberg Markets Live team is
• 0:30
  Speaker 1: now Al Ali. Welcome, Nor Thank you so much for
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  Speaker 1: joining us today.
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  Speaker 2: I really appreciate it. Thank you for having me.
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  Speaker 1: Okay, the thing I really wanted to talk about today
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  Speaker 1: is gold.
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  Speaker 2: Anyone who listens.
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  Speaker 1: To the podcast will know that John and I are
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  Speaker 1: not quite goldbugs, but very keen on gold and have
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  Speaker 1: been suggested kind of for decades. Now that everyone has
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  Speaker 1: a little in their portfolio of his insurance against absolutely everything. Anyway,
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  Speaker 1: it finally looks like gold is having its moment, very
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  Speaker 1: much in the spotlight. When you look at it. What
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  Speaker 1: do you see? Why is gold suddenly the flavor of
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  Speaker 1: the month.
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  Speaker 3: Well, look, it's a cocktail of politics, policy and positioning.
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  Speaker 3: You have President Donald Trump's policies on tax cut and
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  Speaker 3: trade wars that have really stoked deficit worries globally and also,
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  Speaker 3: his attempts to pressure the FED have also shaken faith
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  Speaker 3: in the concept of independence for the central bank, which
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  Speaker 3: you know very much dictates sentiment broadly. So with markets
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  Speaker 3: now pricing and rate cuts which typically weaken the dollar
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  Speaker 3: and boost the gold's appeal against bonds. And then also
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  Speaker 3: you have central banks globally, led by China aggressively buying
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  Speaker 3: gold to diversify away from the dollar. Because if you're
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  Speaker 3: expecting the FED to cut rates as aggressively as markets
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  Speaker 3: see them now, you'd probably also expect the dollar to
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  Speaker 3: fall in relation to that. So keep in mind as
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  Speaker 3: well that do you just a couple of years ago
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  Speaker 3: when Russia's reserves were frozen when it comes to affects holdings,
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  Speaker 3: So that whole concept of diversifying a way into a
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  Speaker 3: physical hard asset has been at the heart of central
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  Speaker 3: bank policy in the past year. And then you also
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  Speaker 3: have that retailer interest right ETFs have been pulling in
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  Speaker 3: steady flows. Put it all together, gold is being treated
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  Speaker 3: as both a safe haven asset and a structural reserve.
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  Speaker 3: You know, the concept is like, why what's actually fueling
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  Speaker 3: it right now? So gold has broken through both its
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  Speaker 3: nominal record and it's the inflation adjusted peak from nineteen
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  Speaker 3: eighty spot prices, I'm looking at them right now, up
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  Speaker 3: about eighteen dollars, breaking through the three thousand, six hundred
• 2:45
  Speaker 3: and seventy four barrier, which is basically long seen as
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  Speaker 3: like a watershed moment in real terms. So back in
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  Speaker 3: nineteen eighty, and listen to this, the world was facing
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  Speaker 3: a collapsing dollar, double digit inflation the around hostage crist
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  Speaker 3: and gold spiked really fast, and then it kind of
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  Speaker 3: was also very short lived. It took about two months
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  Speaker 3: for it to kind of fizzle out. But this time
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  Speaker 3: looks really different. So gold is up about forty percent
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  Speaker 3: this year. The rally has been much steadier, spread across
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  Speaker 3: two years, and there's a lot of structural demand, as
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  Speaker 3: we've just said, so put together central banks, ETFs, investors
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  Speaker 3: altogether treating gold as that hedge against policy and political uncertainty.
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  Speaker 1: And it's interesting, isn't it, Because for a long time
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  Speaker 1: I'm done. I've been writing about there for a few
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  Speaker 1: years now, watching the central banks gradually buy more and
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  Speaker 1: more and more gold, and it's very under the radar
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  Speaker 1: and press rising a little, and you can see the
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  Speaker 1: volumes going into the central banks, but the retail investor,
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  Speaker 1: of the ordinary investor, and as the institutional investors as well,
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  Speaker 1: really didn't pick it up at all. And it's only
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  Speaker 1: relatively recently that we've seen the drive from retail investors
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  Speaker 1: to start getting into gold to hedge their portfolios. That's
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  Speaker 1: that's a shift really at the last six six to
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  Speaker 1: eight months, right.
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  Speaker 3: Yeah, absolutely, So. You know, historically, if you just take
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  Speaker 3: a big step back with gold, ETF demand is a
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  Speaker 3: really good sentiment barometer. So when I used to write
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  Speaker 3: about gold about two three years ago, when I see
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  Speaker 3: ETF demand rising, it kind of was a signal that
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  Speaker 3: gold prices will probably rise as well. Right, But what
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  Speaker 3: we've seen in relation to that that ETF demand hasn't
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  Speaker 3: really shown up in its rally in the past two years.
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  Speaker 3: I mean, sometimes it would pick up, sometimes it would fall.
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  Speaker 3: ETF holdings weren't really that, you know, that trusted barometer
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  Speaker 3: that I would typically look at and even its relationship
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  Speaker 3: with fundamentals.
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  Speaker 2: Right.
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  Speaker 3: So the logic's very simple. So gold doesn't pay interest,
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  Speaker 3: so when real yields are high, it looks expensive to hold.
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  Speaker 3: But then when yields fall and the dollar weekends, gold
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  Speaker 3: rallies and that's really worked for decades. But then gold
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  Speaker 3: has also blown out through those fundamentals as well. Real
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  Speaker 3: yields have stayed elevated this year because the FED has
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  Speaker 3: held rates at a high, you know, at a high
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  Speaker 3: for longer mantra. But you still have the precious metal
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  Speaker 3: surge in past three thousand, six hundred.
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  Speaker 2: You know, the question is.
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  Speaker 3: Why, because it's not just about that fundamental relationship anymore.
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  Speaker 3: It's also about what's happening or the concern for tomorrow. Right,
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  Speaker 3: So markets have been betting for a while now that
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  Speaker 3: the FAT will cut rates soon, so that means cheaper
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  Speaker 3: borrowing a software dollar and lower yields. So the fundamentals
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  Speaker 3: will ultimately catch up to gold. But what's interesting about
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  Speaker 3: this cycle is that instead of gold catching up to them,
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  Speaker 3: it's sort of doing its own thing.
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  Speaker 2: And so that's quite interesting. Well, that reflects, doesn't it.
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  Speaker 1: I'm going to reflects the point when the fear about
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  Speaker 1: the future is so intense that the yales dynamic becomes
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  Speaker 1: less relevant. So at the moment when people are thinking
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  Speaker 1: about emerting in gold, obviously they're hedging against your politics,
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  Speaker 1: et cetera. But what they're really doing is looking at
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  Speaker 1: the massive levels of debt across the Western world, which
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  Speaker 1: you've been on the front of the papers over and
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  Speaker 1: over as the solver and bond markets have been moving
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  Speaker 1: around the And so people look at that and they
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  Speaker 1: can see that at this point, these huge debts relative
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  Speaker 1: to GDP are something that call be fixed by cutting
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  Speaker 1: a little spending here, cutting a little spending that. And
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  Speaker 1: of course there's no appetite for that either. So the
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  Speaker 1: rational person looks at that and they say, well, it
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  Speaker 1: doesn't really matter what the inflation numbers look like right now.
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  Speaker 1: We know we know that over the medium to long
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  Speaker 1: term those debts have to be inflated away, and that
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  Speaker 1: means that you have to hold gold. And that's a
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  Speaker 1: dynamic that overtakes the normal times one of the relationship
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  Speaker 1: between dollar and real interest rates. No.
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  Speaker 3: Absolutely, And I'll give you an example of some research
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  Speaker 3: that I did earlier this this week. So if you
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  Speaker 3: look at twenty eleven, that was a very good year.
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  Speaker 3: I would want to say a good comparative year, because
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  Speaker 3: obviously it's quite different, but a good.
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  Speaker 2: Year for gold.
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  Speaker 3: Right So gold said about fifty three record closes in
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  Speaker 3: that single carendar year, and it was obviously during the
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  Speaker 3: year of debt crisis, and there was also a US
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  Speaker 3: credit downgrade that year if you recall, so that surge
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  Speaker 3: in gold, if you want to look back now, we
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  Speaker 3: would say is about sovereign risk, right, so doubts over
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  Speaker 3: European stability, even the US's credit worthiness. But again it
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  Speaker 3: proved fleeting one central bank stepped into calm markets. So
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  Speaker 3: it's that's what's making this rally very interesting because it
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  Speaker 3: makes it very different. So the look at what I've
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  Speaker 3: done is in the research, I just looked at how
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  Speaker 3: many record closers that gold has had throughout the year,
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  Speaker 3: and now we're at what more than thirty But if
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  Speaker 3: you combine that with twenty twenty four, this record run
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  Speaker 3: in the past two calendar years, for including this one,
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  Speaker 3: has superseded the eurodet crisis year, which is twenty eleven,
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  Speaker 3: and it's also superseded the nineteen eighty one, which was,
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  Speaker 3: as we've said, kind of like a blit but also
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  Speaker 3: very similar conditions. And so it's showing that the rally
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  Speaker 3: is much broader, dirty and there are structural forces that
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  Speaker 3: are anchoring. So, as you've said, central banks have actually
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  Speaker 3: been net buyers for three straight years purchasing Now purchases
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  Speaker 3: topked about like a thousand tons annually, and China has
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  Speaker 3: built up its reserve reserves in a stunning manner. And
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  Speaker 3: the vaults in London hold over one trillion dollars in billion,
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  Speaker 3: and even if we think about retailers, ETFs have drawn
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  Speaker 3: in nearly four hundred tons in just for the first
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  Speaker 3: half of this year. So you know, it's if you
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  Speaker 3: look at all the drivers that a it's going on.
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  Speaker 3: The question is is gold being treated as a alternative
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  Speaker 3: for a reserve currency. We've talked about how the Euro
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  Speaker 3: could be that, but obviously the ECB has had concerns
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  Speaker 3: about that.
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  Speaker 2: We've talked about how other.
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  Speaker 3: Currencies like the yen, which is usually a haven asset,
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  Speaker 3: but obviously you've got all that political trouble that's currently
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  Speaker 3: happening in Japan and also the question of the Bank
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  Speaker 3: of Japan and whether or not they'll raise rates again.
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  Speaker 3: So obviously it just creates this vacuum where gold has
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  Speaker 3: just become that much more appealing.
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  Speaker 1: So when do we look at gold and say, well,
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  Speaker 1: that's enough, it's overpriced. Now, how do you ever value
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  Speaker 1: something like gold? I mean, there's all sorts of attempts
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  Speaker 1: to use different methods to say, well, this is the
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  Speaker 1: correct price for gold et cetera. But that's very hard
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  Speaker 1: to do. So when do we say, actually, maybe enough,
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  Speaker 1: it's too expensive.
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  Speaker 3: Well, it depends what you compare it to, right, So
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  Speaker 3: I guess it's a historical average. Obviously it looks quite
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  Speaker 3: stretched compared to US stocks, for instance, it looks pretty cheap,
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  Speaker 3: right So investors, Yeah, of course that's a whole different conversation,
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  Speaker 3: isn't it. Investors are paying a premium for what they
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  Speaker 3: see insurance, and how can you put a price on insurance? Right,
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  Speaker 3: So they're willing to keep paying for it if it
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  Speaker 3: protects them from what they would assume to be a
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  Speaker 3: policy misstep, uncertainty, or a downturn. Right. So, we haven't
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  Speaker 3: even talked about what would happen in a scenario where
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  Speaker 3: a potential US procession will come in. That's why some
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  Speaker 3: banks like Goldman Sachs think that like five thousand dollars
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  Speaker 3: isn't even out of reach. The real test will come
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  Speaker 3: when the feedt starts cutting rates, right, and markets are
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  Speaker 3: betting that's going to happen as soon as this month.
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  Speaker 3: In September. So if freight cuts do weaken the dollar
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  Speaker 3: but also spark on a risk on rally in stocks,
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  Speaker 3: so continuing to fuel that momentum we've seen in stocks
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  Speaker 3: where there hasn't been really an alternative them, especially to
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  Speaker 3: US stocks that have been fueled by AI and all
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  Speaker 3: these other factors. The question here becomes, could gold lose
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  Speaker 3: its momentum. It's been incredibly interesting because this has been
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  Speaker 3: one of those rare years where you see both gold
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  Speaker 3: and stocks actually hitting records repeatedly this year. And I'm
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  Speaker 3: thinking looking at like the NAZAQ one hundred and the
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  Speaker 3: SMP five hundred, So normally you would think one of
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  Speaker 3: them would have to be doing the opposite, right, So
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  Speaker 3: if gold is a haven asset, stocks are risk assets,
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  Speaker 3: you would think, why would they move in the same direction. Well,
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  Speaker 3: it's potentially. It's part of the story of diversification, right.
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  Speaker 3: So if you want to hedge against trade tensions, deficits,
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  Speaker 3: and fed uncertainty and then also write out the AI
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  Speaker 3: fueled stock boom, you're gonna want both. But then the
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  Speaker 3: performance gaps shows that there's a very strong bid for safety.
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  Speaker 3: So gold has actually outpaced the SMP five hundred so
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  Speaker 3: far this decade. And this has actually been some research
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  Speaker 3: that our colleague John Authors has done this week, so
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  Speaker 3: something few would have predicted just about two years ago. Right, So,
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  Speaker 3: if you look globally, gold's rally has even left the
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  Speaker 3: MSAI World Index.
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  Speaker 2: Excluding the US.
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  Speaker 3: Also far behind, so in that diverse has continued to
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  Speaker 3: widen since the US election, So it's not really a
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  Speaker 3: zero sum game, right, So we're were doubling down on
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  Speaker 3: both equities for growth and gold for protection. And that's
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  Speaker 3: why this rally feels very different from nineteen eighty or
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  Speaker 3: even the euro crisis in twenty eleven. So when gold
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  Speaker 3: at both times surged but stocks faltered.
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  Speaker 1: And feels very strange, doesn't it, saying think stock markets
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  Speaker 1: and gold at recordized. It's not a dynamic we're used to.
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  Speaker 1: Now a lot of people listening to this podcast will say, well,
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  Speaker 1: everything you said about gold that holds good for bitcoin
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  Speaker 1: as well. It does all the same things. Do you
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  Speaker 1: feel like that about bitcoin? Do you feel that it's
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  Speaker 1: not the same thing, because you know, you can't really
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  Speaker 1: price either of them. But at least gold has history.
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  Speaker 1: You know, it's got thousands of years worth of history
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  Speaker 1: of protecting us against everything under the sun, and bitcoin
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  Speaker 1: is interesting but new.
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  Speaker 3: I've covered bitcoin since it was sub one thousand, so
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  Speaker 3: I'm one of those people that I've seen early adopters
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  Speaker 3: and that kind of profile, and it's been quite very
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  Speaker 3: interesting for me to see the change in profile of
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  Speaker 3: the type of holders and the types of uses for cryptocurrencies.
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  Speaker 2: So whereas I used to know, I used to have.
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  Speaker 3: Contacts that would spend bitcoin or cryptocurrencies on pizza or
• 13:19
  Speaker 3: buying stuff online, now they wouldn't be cut dead selling
• 13:23
  Speaker 3: right because they maintained that hold or hotal mentality. So
• 13:28
  Speaker 3: you do have it's how you view cryptocurrency. We're back
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  Speaker 3: to like one of those original questions about or you know,
• 13:36
  Speaker 3: debates about cryptocurrencies, And one of those questions that I
• 13:38
  Speaker 3: would always ask on panels is that like what do
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  Speaker 3: you view it as?
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  Speaker 2: Is it a store of value? Is it a use
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  Speaker 2: of for exchange?
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  Speaker 3: So do you use it the way you use the
• 13:48
  Speaker 3: US dollar or do you use it as a commodity
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  Speaker 3: like gold? And so it's a big question I think
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  Speaker 3: for bitcoin. Though it's rally this year has been for
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  Speaker 3: a lot of reasons. A lot of it is tied
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  Speaker 3: to obviously Trump's pro cryptopolicies. We've seen a lot of
• 14:07
  Speaker 3: progress on that this year as well, and we've also
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  Speaker 3: seen its gains along with the risk rally as well.
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  Speaker 3: So I would say, as far as I've been looking
• 14:16
  Speaker 3: at cryptocurrencies, the moves have really mimicked stocks more than
• 14:21
  Speaker 3: they have with gold, just because it's if you look
• 14:25
  Speaker 3: at the just the day to day diuration, So if
• 14:28
  Speaker 3: you just put two charts against each other, you'll see
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  Speaker 3: that it's really followed that stock story a little bit more,
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  Speaker 3: or that risk one story a little bit more, whereas
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  Speaker 3: on days where gold was hitting your record or surging,
• 14:42
  Speaker 3: bitcoin hasn't really done the same. But that doesn't mean
• 14:45
  Speaker 3: that you don't have a wider user base of cryptocurrencies
• 14:49
  Speaker 3: that believes they are the hedge, they are the futures.
• 14:53
  Speaker 3: So and that's that's what makes bitcoin a lot more
• 14:55
  Speaker 3: interesting as well, because you have diverse users, you have
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  Speaker 3: diverse concepts of why people want to buy and hold it,
• 15:04
  Speaker 3: and so it's quite different, I would say, And that's
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  Speaker 3: what makes the conversation for me about gold and bitcoin
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  Speaker 3: very different. But then you'll find, you know, one of
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  Speaker 3: those early adopters listening to what I'm saying and thinking, well,
• 15:17
  Speaker 3: that's completely crazy, that's not right.
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  Speaker 2: That's bitcoin to the moon, right.
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  Speaker 1: So it's also you know, a long term hold. It
• 15:25
  Speaker 1: will say, well, if you're trying to head you get
• 15:26
  Speaker 1: as inflation that you wish you'd held bitcoin, So you know,
• 15:29
  Speaker 1: fair enough.
• 15:30
  Speaker 2: Right, yeah, absolutely fair enough.
• 15:32
  Speaker 3: I mean bitcoin, you can't really argue against what it
• 15:36
  Speaker 3: has done so far.
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  Speaker 2: Every time it hit a.
• 15:39
  Speaker 3: Mark, and I remember people would talk about it hitting
• 15:41
  Speaker 3: one hundred thousand, ten thousand, when it was at two thousand,
• 15:45
  Speaker 3: when it was at three thousand, and people would laugh, right,
• 15:47
  Speaker 3: And you know, you have.
• 15:48
  Speaker 2: Institutions guilty, and you'd.
• 15:51
  Speaker 3: Have institutional investors who would never look twice at bitcoin.
• 15:55
  Speaker 3: But now you have a lot more institutional coverage, you
• 15:59
  Speaker 3: have a lot more institutional interest. Whether it has reached
• 16:04
  Speaker 3: the central bank holding level, it's something that we're not
• 16:06
  Speaker 3: able to tell just because of the nature of how
• 16:09
  Speaker 3: the blockchain network and cryptocurrencies operate. So unless these unless
• 16:14
  Speaker 3: these central banks report their holdings, it's very hard. But
• 16:18
  Speaker 3: you've had some countries in Latin America for instance, that
• 16:20
  Speaker 3: have been touting their holdings and how great they've been doing. Obviously,
• 16:24
  Speaker 3: some companies are a lot more exposed to cryptocurrencies, like Tesla,
• 16:27
  Speaker 3: for instance, but due to its own idiocentraatic stories this year,
• 16:32
  Speaker 3: it hasn't really performed as well as the other MA
• 16:35
  Speaker 3: seven companies.
• 16:36
  Speaker 2: So really, bitcoin.
• 16:38
  Speaker 3: Is very complicated, but in a good way, right, It's
• 16:41
  Speaker 3: what makes it interesting. It's what makes us want to
• 16:43
  Speaker 3: talk about it in every single conversation.
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  Speaker 1: Yeah, well, gold does at least have the benefits of
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  Speaker 1: simplest to you, right, Yes, just is. No, Thank you
• 16:52
  Speaker 1: so much for joining us today.
• 16:53
  Speaker 2: That was really interesting. Usually appreciated of course, Thanks for
• 16:57
  Speaker 2: having me.
• 17:00
  Speaker 1: Thanks for listening to this week's maryn Talks Money debrief.
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  Speaker 4: nor l Ali n O O R A l A
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  Speaker 2: Super Interesting.
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