During the 2023 New York Times DealBook Summit in New York, Dimon expressed concern about various inflationary factors, urging preparedness. He warned of the potential for rising interest rates, which could contribute to an economic downturn.
Dimon emphasized the global need for increased funds to support initiatives like the green economy, remilitarization, and addressing energy crises. However, he cautioned that these measures could further contribute to inflationary pressures.
As inflationary concerns remain, Gold and other commodities have shown strong gains in recent weeks. Bloomberg’s senior commodity strategist Mike McGlone states that Gold is most likely to outperform other commodities.
McGlone stated gold has exhibited superior performance compared to most commodities since the beginning of the millennium. The recent rebound in material prices might have rejuvenated the established trend favoring the metal. However, as spot commodity prices approach the conclusion of 2023, they are experiencing a decline after reaching the most extended levels compared to gold since 2008.
Bitcoin vs Gold
Amid the high-interest rates environment this year, Bitcoin has delivered a solid recovery in 2023. The Bitcoin price is up 150% year-to-date shooting past $40,000. On the other hand, Gold has given 16% returns since the beginning of the year showing a clear gap in BTC outperformance once again. The bigger question remains will this outperformance continue going into 2024, and at all if recession sets in?
As we know, Gold is a major hedge against recession while Bitcoin has performed like a risk-ON asset. Popular Bitcoin critic Peter Schiff writes: “Gold trading above $2,100 tonight, for the first time in history, is far more significant than @Bitcoin trading above $40K. Gold has completely broken out. It’s in uncharted territory, while Bitcoin still needs to rally more than 60% from here just to make a new high”.
Blockstream CEO Adam Back expressed his belief that digital gold, represented by Bitcoin, is poised to surpass physical gold in value sooner or later, potentially within the current halving cycle, which spans approximately four years. Back estimates that at the moment, it would take around $700,000 per Bitcoin for this transition to occur. He suggests that Bitcoin could become a partial substitute for gold, with some individuals selling their gold holdings to invest in Bitcoin, potentially leading to market cap crossovers.
He also expects major capital inflows into Bitcoin amid the transfer of wealth from baby boomers to the next generations (Generation X and millennials) will result in the liquidation of assets like stocks, bonds, and pension funds to acquire Bitcoin.
Bitcoin as an Inflation Antidote
Coinbase CEO Brian Armstrong contemplates Bitcoin as a key to extending Western civilization. In light of potential U.S. inflation, he sees cryptocurrency as an alternative that people might turn to, acting as a natural check and balance.
Armstrong envisions crypto and fiat coexisting, with stable coins like USDC playing a significant role in bridging the two worlds. He views this transition as complementary to the dollar and beneficial for long-term American interests. The idea is still under consideration, and Armstrong seeks diverse perspectives on the matter.