There are many reasons to be bullish on gold, but the recurring argument for a bear market in the precious metal is that it is never actually consumed. Every ounce of gold mined since the beginning of time is still here.
Over the weekend, Bloomberg reported on a flood of customers rushing into a Brooklyn pawn shop with their valuables to take advantage of gold's recent rise to a record high of over $2,400 an ounce. “People are using gold as an ATM they never had,” owner Gene Furman, who has seen three times as many sellers since the metal’s rally began in earnest two months ago, told Bloomberg.
Even at these prices, buyers appear to have struck: the U.S. Mint reported sales of American Eagle gold coins in March that were about 10% of the previous year's level.
There are clear differences between gold and Bitcoin (BTC), but they share many similar characteristics. This includes the fact that Bitcoin is also never actually consumed and everything ever mined is still with us (although some may be unavailable due to lost private keys).
Largely thanks to increased demand from spot ETFs, Bitcoin had risen nearly 70% for 2024 to a new record of over $73,000 by mid-March. The rally has since stalled and the price is now more than 15% below its all-time high. The reasons for the decline are up for debate, but over the last month sellers have overwhelmed a slightly slowed but still rapid ETF buying pace.
While bulls like to point out that only 900 Bitcoins are mined per day (and with this week's Bitcoin halving, that will be reduced to 450 per day), ETF demand often runs into the thousands per day, the math leads not necessarily to “numbers go up.” There are nearly 20 million bitcoins in circulation, and given a high enough price, there were plenty of willing sellers just as willing to make money as those who rushed to Gene Furman's pawn shop.
In fact, just yesterday, an early crypto enthusiast transferred 50 Bitcoins mined in 2010, worth $3 million at current prices, to the crypto exchange Coinbase, likely with the intention of selling. This follows the move in December from an address that had been inactive for 13 years with more than 1,000 Bitcoins worth $40 million to a trading desk.
The final word on gold and possibly Bitcoin goes to Tobina Kahn, president of House of Kahn Estate Jewelers. “It's very busy and we're getting more calls than ever because customers want to bring their jewelry,” she told Bloomberg. “I tell customers to engage them now because we are at unprecedented levels.”
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