Gold and Bitcoin prices have been soaring so far this year. Investors tend to flock to these assets during times of market distress or if they fear a blank swan event. Gold prices have shot up over 5.70% year-to-date and closed at $2,190.50 today. Digital currency Bitcoin has rocketed by about 72% and crossed $72,160 today. In the past 1 year Bitcoin is up over 187%.
David P Goldman published an article recently in Asia Times discussing Gold and Bitcoin. According to him, the rise of these two assets show the risk of black swan event is rising. From the piece:
Gold continued to break price records on Friday, trading at US$2,183 an ounce at mid-afternoon, following a more dramatic rally in Bitcoin. Gold led Bitcoin in 2020 and 2021, during the Covid crisis. This time Bitcoin clearly led gold, suggesting that investors have more confidence in the high-tech alternative to the dollar.
Key to understanding how gold gauges geopolitical risk is the longstanding relationship between Treasury Inflation Protected Securities (TIPS) and the precious metal. Both are hedges against unexpected inflation or debasement of the dollar.
