Should You Buy Gold or Bitcoin? Here's How to Think About It

At this point, pretty much everyone understands the debasement trade.

Debt is compounding faster than growth. US federal debt is north of $36 trillion and rising by roughly $1 trillion every 100 days. Deficits are running at 6-7% of GDP outside of recession. Interest expense is on pace to overtake defense spending within the next two years. Japan is monetizing quietly. Europe is boxed in politically. Emerging markets are behaving more conservatively than the developed world, which should tell you something.

This is a structural problem. 

Once you accept that, the question is no longer whether fiat is being diluted. The question is which assets actually outperform when dilution is the baseline, not the tail risk.

Historically, the answer is boring and uncomfortable: Gold. Metals. Hard assets.

Gold, which for the first time surpassed the price of $4,600/oz this week, outperforms in this environment for reasons that have nothing to do with narratives and everything to do with plumbing. 

It is politically neutral. It has no counterparty risk. It sits directly on central bank balance sheets. The gold market is roughly $20 trillion to $30 trillion in size depending on how you measure it, which means it can absorb sovereign scale flows without breaking.

That is why central banks have been buying it aggressively. Over the last three years, net purchases have exceeded⁵ 1,000 tons per year. That is the fastest pace since the early 1970s. 

So gold keeps winning, and that part of the story is not complicated.

What is more interesting is what that implies for bitcoin.

This article is about three things:

1. Why gold keeps winning, plus price targets (yes, they are bullish)

2. Whether bitcoin can catch up (I’ll list SEVEN catalysts you should be aware of)

3. And also importantly, how you treat bitcoin and gold in your portfolio

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