The Silver Frenzy Is Over, But Silver Has More Supporters Than Ever

The Silver Frenzy Is Over, But Silver Has More Supporters Than Ever

Reuters reports that February’s social-media driven rush to the paper silver market might not have lived up to expectations, but it nonetheless shone a light on a metal that has no shortage of tailwinds going for it. The frenzied army of day traders who hoped to bring silver’s price to three or four-digit figures came and went. But some of them have stuck around, bolstering a growing and diverse congregation of silver investors.

Who’s holding silver now?

New fans of silver include retail buyers who see plenty of appeal in the metal past any short-term buy signals. Holdings in the largest silver fund rose by 45% last year to reach more than 1 billion ounces, the highest amount on record. Individual investors and money managers alike were quick to jump on the silver wagon amid unprecedented panic and concerns over currency debasement after a historic monetary stimulus.

Most of these investors have held onto their silver, joining the ranks of Wall Street giants who have been stockpiling silver due to its abundant uses. Goldman Sachs’ hoard has continuously emerged as the most prominent one, with its analysts calling it their favorite metal for both economic and industrial reasons.

Where are silver prices going?

While silver hit an 11-year low of $11.62 as industrial activity slowed to a crawl in March, it appears the course is being reversed. Besides the recovery from the manufacturing sector, silver’s industrial case continues to be bolstered by a push towards green infrastructure. While this might not do much for silver’s outlook in the short-term, both the U.S. and China have committed to reaching carbon neutrality over the next few decades, with the Asian nation sporting a five-year green infrastructure plan that has captured the attention of many.

This leaves short-term price predictions which could swing either way, but are nonetheless very much aligned in silver’s favor at the moment. The Silver Institute forecasts an average silver price of $30 for 2021, just short of its current $28 valuation. Given silver’s known volatility and taking into account that the year has only begun, this could very well translate to some explosive price action to the upside over the coming quarters.

The latest Commitments of Traders Report shows that money managers, by and large, remain bullish on silver’s prospects. For the most part, retail investors are quick to buy into silver dips and far more reluctant to take profits. Combined with the influx of new investors and lots of favor from old ones, February’s frenzy may turn out to be the first of many interesting developments in the silver market.

Silver Demand at 8-Year High; Solar Industry Expects 11% Price Gain in 2021

Silver Demand at 8-Year High; Solar Industry Expects 11 Percent Price Gain in 2021

With so much focus on the surge in investment demand for silver and the surrounding bullion shortages, it’s easy to forget that the metal remains a key component of a rapidly-expanding industry. A recent forecast by The Silver Institute placed the average annual target for silver at $30, a 46% climb compared to last year that will be driven not only by investment and jewelry demand but also the growth of the photovoltaics (PV) industry.

In a statement, the institute said that this year’s demand for silver is expected to reach 1.025 billion ounces, and that the metal will therefore shed any losses sustained last year. Talking to the magazine, The Silver Institute’s executive director Michael DiRienzo expanded upon some of the industry’s underpinnings, along with what it would take for the sector to create a supply glut similar to the one happening in the investment sphere.

How solar panel “thrifting” influences demand

The institute, as well as other experts in the field, have continuously singled out thrifting as one of the most important parts of industrial silver demand. The process refers to manufacturers’ efforts to reduce the amount of silver necessary in each solar cell due to the metal’s high price. This form of cost-cutting has brought the silver contents in an individual solar cell to an average of 111mg in 2019, and The Silver Institute expects the trend to lower the per-cell silver content to 80mg by 2030.

However, it has been repeatedly stated that thrifting is a process which peaked out in 2016, and that the sector can only spread the silver in a given cell so thin. On the flip side, DiRienzo noted that a growing number of countries are turning to solar panels, adding to a broader bid by global governments to look for green energy solutions.

With current technologies, silver accounts for about 6% of the total cost to produce a photovoltaic panel.

Despite thrifting, solar demand for silver grows

Keeping this in mind, DiRienzo said that the institute expects the PV industry to purchase 105 million ounces of silver this year, a significant increase compared to the 88 million ounces last year and 93 million ounces in 2019. As for price changes, DiRienzo said that silver could once again outperform gold due to its smaller market and higher volatility. The director went on to say that an average annual price of $40, or peak prices of $45, would create a problematic environment where the silver industry begins facing supply issues, especially due to the absence of further cost-cutting methods.

This is especially important considering the slow decline in global silver production over the last four years. Because nearly 75% of newly-mined silver comes from projects where it’s a by-product of the primary metal being mined (usually copper, lead, or zinc), silver supply isn’t elastic. If demand does reach a critical level, supply can’t be expected to increase quickly or at an equivalent magnitude.

The End of the Gold Standard and the Explosion of Federal Debt

The End of the Gold Standard and the Explosion of Federal Debt

2021 marks the 50th anniversary of the U.S. dollar going off the gold standard. This is a timely if sordid occasion. In response to the crisis, last year saw the Federal Reserve issue an unprecedented multi-trillion dollar stimulus in what seems to be a precursor of things to come. The influx of free-floating money has brought on inflationary concerns ranging from those depicting a late 1970s scenario all the way to a Weimar worst-case.

The separation of gold from the dollar in 1971 did much for both in the decades to come. The loss of the dollar’s purchasing power was expedited in force, and governments learned that they could respond to any crisis or even need by simply printing more money. Officials were also far less compelled to think about the consequences of government spending, and the comparison of federal debt now versus 70 years ago shows exactly that.

Federal debt growth over the last 60 years

In 1960, the federal debt amounted to just over half the size of the U.S. economy. Today, it sits at 130% of the U.S. economy, paired with a $28 trillion national debt figure that seemed unfathomable decades prior. The rise of the Modern Monetary Theory (MMT) shows just how unfathomable the debt is, along with any solution to it. Proponents of MMT say that governments should freely print more money whenever needed, and in many ways, it’s difficult to argue that MMT hasn’t already been implemented.

The M1 money supply, or the amount of currently available liquidity, rose in December by a record 67% year-on-year. And with plans for a $1.9 trillion stimulus package to be issued in the short-term, the path to inflation appears to be unavoidable.

Gold as a store of value

Gold’s tale is one of sharp contrast. The metal became available for purchase and trading in the U.S. in 1974, and by 1980, an ounce of gold was worth $850, representing a 385% increase. Many are quick to point out that this was a high inflation period for the U.S., yet gold’s value over the coming years and decades continued to grow exponentially whereas the dollar eroded.

Today’s gold price of above $1,800 attests to that, as the metal has posted a compound annual growth rate (CAGR) of about 8%. Its scarcity, liquidity, popularity and unquestionable value have made the 50-year anniversary a particularly notable one. At no point over the past 50 years were calls for a return to the gold standard louder, as it becomes clear that faith and reassurances won’t be enough to back the dollar for much longer.

How much longer can record debt last?

Whether the Federal Reserve and the Treasury Department are considering any sort of return to money backed by gold is a matter of hot debate. The enormous difficulty of returning to the gold standard stems from, and highlights, the sheer amount of money that has been printed in the meantime.

With official gold reserves at around 261 million ounces or $493 billion, the government would need to fix the price of an ounce of gold to about $100,000 to keep the economy afloat. However implausible a return to the gold standard might seem, Americans who own gold can get just as much reassurance in their investment from the inflationary policies of MMT.

In a clear example of cause and effect, each newly-printed U.S. dollar bill makes gold more valuable and the greenback less valuable. Gold’s value increases most visibly when compared to the decreasing value of the dollar.

2021: Deficits, Inflation, Overvalued Stocks Drive Gold Higher

In 2021 Deficits, Inflation, Overvalued Stocks Drive Gold Higher

The factors that drove gold to a new all-time high of $2,067 last year are well-known. The unprecedented amount of global panic caused a flock towards precious metals, one that had just as much to do with reactionary government policies as the crisis itself. Over the span of 12 months, gold gained around 25% while silver topped a seven-year high and became the main item on many a watchlist. In their Gold Outlook report for 2021, the World Gold Council (WGC) stated that it expects gold to post an almost as strong of a performance this year due to a combination of new and existing tailwinds.

Inflated stock valuations are a boon for gold

According to the report, the stock market is again shaping up to be a massive red flag. Long before the crisis hit, many experts were warning that equities’ valuations are overblown and that the longest bull run in the market’s history is slated for a correction, if not an altogether crash. The WGC points out that the S&P 500 price-to-sales ratio is at historic highs, yet also likely to expand further.

Near-zero bond yields send investors to gold as a safe haven

With the effective elimination of most sovereign bonds from portfolios, investors will now look to take on a more risk-on approach in search of gains, said the WGC. The renewed appetite for risk will also be powered by optimism in regards to a rapid global economic recovery after one of the worst slowdowns over the past century. The increased reliance on dubiously-valued stocks is likely to bring on strong pullbacks and market swings. While this turbulence alone is beneficial to gold, the metal is likely to receive even more support as higher risk will place more emphasis on hedging, especially in the absence of bonds that formerly fulfilled this role.

Inflation fears and inflation-resistant assets

Though not yet materialized in substantial form, inflation has been on the mind of every market participant ever since the government decided to expand the money supply with an unseen multi-trillion dollar stimulus. With the Federal Reserve and the European Central bank both stating their willingness to allow inflation to run past the targeted rate of 2%, the WGC’s report notes that gold prices increased by 15% on average during years where the inflation rate exceeded 3%. Of course, inflationary policies are just one of gold’s government-backed tailwinds, with ballooning budget deficits and the aforementioned normative of low to negative-yielding debt acting as pillars of support on their own.

Overseas gold demand increases

While last year’s demand for physical gold reached sky-high levels on one side, it was subdued from another as economic activity from the world’s top gold consumers slowed. The WGC expects this to change in 2021, projecting that consumer demand for gold from both China and India will return to form. The report cites data from the Indian Dhanteras festival in November as evidence that jewelry demand is already well on the track to recovery, having bounced back from the Q2 lows.

Central banks influence gold’s price

In contrast to 2018 and 2019, two record years in terms of central bank purchases, the WGC’s report forecasts a change in dynamic. With gold prices being near all-time highs, central banks could alternate between buying and selling, along with purchases no longer being widely spearheaded by Russia. Nonetheless, the WGC says that the official sector will continue to offer strong support for gold in the ever-growing bid to diversify foreign reserves, especially during a time of questionable fiat.

Investor Survey: Silver to Outperform in 2021

As part of its 2021 Outlook feature, Kitco surveyed a total of 1,015 analysts and investors regarding their outlook for precious metals heading into the new year. While the participants were bullish on commodities across the board, silver emerged as the standout forecast as has been the case for much of the previous year.

Why silver looks bright in 2021

56% of the participants, or 568 Main Street investors, named silver as their top metals investment and said that they expect it to outperform gold. Both gold and silver have done exceptionally well over the past 12 months, but certain nuances to the silver market have caused some forecasters to call for a price of as high as $50, up from current levels of around $24. A major part of this bullish sentiment has to do with an economic recovery and an overall push towards green infrastructure, one that was already prominent in Europe and Asia but should now gain traction in the U.S. as well.

The reinvigorated manufacturing sector, boosted by trillions of dollars of monetary stimulus, should help spur a bid for silver that could strain supply as the metal’s production is more complex than that of gold. Besides demand for silver in hydrogen power cells and other green technologies, silver’s investment component will also keep the metal on the same track that has seen prices more than double from their March lows, said the participants. The aforementioned stimulus has made inflationary expectations as high as they have been in recent memory, and few market watchers aren’t bracing for a significant rise in inflation over the next few years.

The many reasons gold will continue to shine

The same inflationary concerns should likewise help gold reclaim the $2,000 level sometime next year, up from its current level of around $1,900. Over the past year, there have been plenty of big banks and top names in finance who predicted that 2021 would see gold posting a new all-time high, above the current one of $2,070 set in August.

Besides inflationary concerns, a persistent low interest rate environment should also remain a major driver of gold prices. Interest rate slices started pushing gold prices up in the summer of 2019, and the surveyed participants expect low or negative interest rates around the globe to stick around until at least 2023. The dire straits that the sovereign bond market has found itself in has caused portfolio managers to reassess their stance, with many now beginning to view gold as a better alternative to hedge against stocks. While silver took the center stage of the survey, 10% of participants, or 140, nonetheless stated they expect gold to be the best performing asset this year.

Promising prospects for platinum and palladium

As for other precious metals, participants in the survey said they see platinum outperforming palladium by a slight margin in 2021, despite the latter’s shrinking supply and recent climb to all-time highs. Like silver, platinum has a strong industrial component and its price ties heavily into economic strength.

Gold’s 2021 Price Rises on Firm Footing

Gold's 2021 Price Rise on Firm Footing

The flow of institutional gold in November may have caused some market watchers to reminisce of gold’s run between 2008 and 2013, one that saw the yellow metal reach a new all-time high in 2011 before a fairly sharp decline. After a lengthy absence, institutions jumped into the gold market with record purchases this year due to unprecedented uncertainty, only to reduce their holdings by a substantial margin on what looks to be improved sentiment (the release of a COVID-19 vaccine and an anticipated surge in customer spending).

Yet little has changed in terms of gold’s fundamentals and, as Friday’s trading session showed, in terms of gold’s price movement. Despite the large institutional outflows, gold hit a high of $1,890 on Friday, not too far off from the $2,070 peak set in August. According to State Street Global Advisors’ George Milling-Stanley, there aren’t too many reasons to compare gold’s current run to that of a decade prior, aside from the bullish prospects themselves.

Why is gold’s bull run different this time?

In a web seminar hosted by the firm, the chief gold strategist elaborated upon the differences between the two bull runs and why gold investors have more cause for optimism than concern heading into 2021. Milling-Stanley described gold’s last run as frothy in regards to investors chasing gains, though he nonetheless noted that it helped establish a new price range for gold, moving the metal from around $250 to $1,000.

Adam Perlaky, manager of investment research at the World Gold Council who also participated in the seminar, outlined a key point to look out for when anticipating gold’s movement over the coming years. Previously, portfolio managers have held steadfastly to the 60/40 stock/bond allocation while paying minimal attention to gold.

The safety that bonds once offered, however, is now highly questionable at best if not gone altogether. Sovereign bonds around the world are now yielding zero to negative interest, and with increasingly loose monetary policies accompanied by debasement of fiat currencies and mounting debt, the bond market is only expected to worsen. We simply can’t expect government bonds to keep pace with inflation in this interest rate environment.

Gold shines brightest at 10% allocation

This ties into Milling-Stanley’s separation of gold’s current bull run to that of 2011, as gold began truly gaining traction last year long before the pandemic was even mentioned, being given a massive push by worldwide slicing of interest rates and a subsequent dearth of safe-haven assets.

Whereas most institutions previously held a 1%-2% gold portfolio allocation at most, analysts are now expecting fund managers to increase this allocation to 4%-5%. Milling-Stanley believes institutions could look to increase their portfolio allocation to gold to as high as 10% in what will turn out to be a broad reassessment of hedging. According to State Street’s research, a 10% allocation to gold offers the optimum advantage against inflation risk and market volatility while still showing the greatest returns.

Needless to say, even the more conservative prediction of a +2%-3% increase in institutional gold holdings bodes extremely well for gold prices considering the trillions of dollars of investment capital involved.

While both experts note that vaccine developments have given way to some risk-on sentiment, the latter is expected to remain subdued considering the broader economic picture. Perlaky notes that the global economy has never encountered anything resembling this year’s pandemic, the full effects of which are still to be revealed.

To Milling-Stanley, gold’s pullback from August’s levels represents a healthy correction from what were at the time perhaps overbought levels. This should help the metal better prepare for the next leg of a lengthy bull run that could see it push to $2,300 sometime next year.

Despite Comparisons, Gold and Bitcoin “Fundamentally Different” Stores of Value

Despite Comparisons, Gold and Bitcoin Fundamentally Different Stores of Value
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Both gold and Bitcoin offer a way for savers to preserve wealth from inflation. Despite the recent Bitcoin frenzy that generated many comparisons between Bitcoin and gold, see why only one of these assets lets its owners sleep well…

The unprecedented levels of panic and uncertainty this year have brought forth a push for safe-haven assets that is likewise difficult to match. Gold posted consecutive all-time highs, pulling other precious metals along the way, as it climbed to $2,070 in August amid risk aversion and red flags from all corners.

The drive to find a safe-haven to not only store wealth but also protect one from various downturns has also reinvigorated the cryptocurrency market, bringing Bitcoin not too far off from its peak of nearly $20,000, last seen in December 2017. Three years ago, the comparisons with Bitcoin and gold were just as present as today. Writing on FoxBusiness, Jonathan Garber speaks with many analysts who argue that both assets hold no counterparty risk and offer investors a unique diversification opportunity.

Gold and Bitcoin “fundamentally different”

Yet as tempting as it may be to compare the two, they remain fundamentally different and will continue to fulfill different roles. As Peter Schiff, CEO of Euro Pacific Capital notes, Bitcoin’s primary purpose remains that of a currency, or rather an alternative to fiat ones. The token was created in the wake of the 2008 financial crisis to offer people a method of exchange that would be free from money printing and other forms of central bank manipulation.

Although many have since grown to view it as a store of value, Schiff points out that Bitcoin remains fundamentally tied to its currency status. Unlike gold, it doesn’t play an important part in jewelry and manufacturing, and its flexibility and utility are largely tied to the virtual sphere. In contrast, gold requires no internet connection or validation to either be used as payment, purchased or traded.

Ray Dalio, founder of the $98.9 billion Bridgewater Associates fund whose frequent outperformance has much to do with its big bets on gold, also hesitates to make comparisons between the two assets. In a recent tweet, Dalio highlighted Bitcoin’s infamous volatility and said that it makes the case for the token’s preservation of purchasing power more difficult to make.

Bitcoin’s volatility vs. gold’s stability

Bitcoin’s price swings may have brought gains to many, but its tendency to have abrupt downturns has caused just as much worry. While the top crypto has posted a nearly full recovery from its 2018 low of $3,200, such falls have and continue to trouble investors with a long-term outlook.

On the other hand, gold’s stability has always been one of its hallmarks, if not the most important one. Whereas 10% oscillations in the price of Bitcoin are a frequent overnight phenomenon, gold is exceptionally resilient to sharp downturns, yet also able to post massive gains during times of crisis. Even in its most bearish periods, gold continues to be an asset no investor would mind owning. Particularly in the case of physical gold, one can liquidate the asset at any moment and in any corner of the world without issue and receive most of their initial investment, if not more. This has been the case for centuries, and it’s difficult to envision a different scenario.

With a little over a decade under its belt, Bitcoin has plenty of miles to walk before it can offer its holders anything close to the sense of safety and security that gold does.

Citi Makes an Extraordinarily Bullish Case for Silver

Overvalued stocks, negative-yielding bonds, and higher prospects for inflation are just some of the reasons why the bank thinks prices could rise by 60%.

As Forbes contributor Tim Treadgold notes, for some investors, the silver market can be a difficult one to get excited about. The Hunt brothers’ scheme, which boiled over in 1980, left many wary of sudden upsurges in silver and what foundations they may rest on. Yet experts have been pointing out that the silver market is long overdue for exactly this kind of surge, and now, Citi has come forth with a price forecast that very much concurs.

With the gold/silver ratio still around 80, Treadgold argues that silver has plenty of catching up to do even after hitting a seven-year high earlier this year. Despite its roughly 40% gain so far, Citi’s team of analysts expects silver to do just that by climbing to $40 within the next 12 months. The climb would represent a more than 60% gain from current prices of around $24.

The team, whose members are well-versed in the metal’s dealings, cited numerous reasons for their decidedly bullish view. These should come in the form of heightened investor demand combining with a rising need for silver in industrial uses.

As Citi noted, many investors who can’t afford substantial positions in gold are looking towards silver as shelter from an increasingly troublesome global economic backdrop. Perhaps the most important among these is the trend of currency debasement, as Citi’s forex team said that $50 is another highly plausible target for the metal with $100 likewise emerging as a distinct possibility. Furthermore, both the equity and bond markets are urging investors to question their exposure. Whereas the issue of stock valuations being severely overblown is once again coming to the forefront, the persistent negative-yielding bond market has made individual and institutional investors alike reluctant to hold any sovereign debt. The overarching theme of inflation after historic monetary stimulus and promises of more of the same being on the way should likewise act as a powerful driver.

To Citi, the case for silver from an industrial demand standpoint looks to be just as strong. While a Biden presidential victory is often cited as being pro-silver due to the candidate’s green infrastructure plans, the trend of green energy is far from localized and has been gaining traction on the global stage.

A post-pandemic economic recovery would almost certainly play heavily into silver’s favor, as the team noted that around 80% of silver consumption is tied to GDP fluctuations, with 50% of it coming from manufacturing. On the flip side, the team said that there isn’t much downside to silver, listing $20 as a worst-case scenario. Noting that the metal is more eager to post gains than gold in the wake of bullish developments, Citi added that a surge in silver would be a far cry from that of 1980 and would instead more closely resemble the sustained gains seen between 2009 and 2011.

How President Biden Could Send Gold Soaring

Phot​​o by Gage Skidmore​ | CC BY 

While the metal will likely prosper no matter who is in office, Ole Hansen of Saxo Bank explains why a Biden administration could be particularly bullish.

Analysts appear to be in unison when it comes to the coming U.S. election’s ability to shake the markets one way or the other. Given this year’s events, both candidates have shifted the focus of their presidential run to one that almost entirely revolves around revitalizing the nation’s economy.

Ole Hansen, head of commodity strategy at Saxo Bank, is among the pundits who expect gold prices to show strong sensitivity heading up to November 3 in regards to the buildup and the outcome. Hansen believes that a Biden victory in particular, including an early leg up in the run, would be bullish for gold given the candidate’s restructuring plan.

Biden’s team hasn’t hesitated to unveil plans for a multi-trillion stimulus program that would go into action within the first three months of the Democratic nominee’s presidency. With trillions of dollars already being printed this year and desires by officials to stay the course despite President Trump’s disagreements, Hansen sees this as perhaps the deciding factor that would keep pushing gold prices forward. The promise of another historic fiscal stimulus would not only meet sky-high inflationary expectations, but also ensure that the Federal Reserve gets its wish when it comes to keeping interest rates around zero until 2023 at the very least.

Hansen also expects gold to continue to display an uncharacteristic amount of volatility, though few could argue this hasn’t been a good thing for holders of the metal. After soaring to a new all-time high of above $2,000 in August, gold inched down slower amid various uncertainties, appearing to find strong support around the $1,850 level. However, the metal has shot back up once again, hitting $1,931 on Friday and therefore once again passing its 2011 high.

While Hansen hesitated to make predictions when it comes to gold returning to the $2,000 level, he took full note of September’s exceedingly strong price action. Throughout the month, investors across the board continued to pile into gold as a hedge against inflation, buoying prices even amid high volatility. This has perhaps best been exemplified by what looks to be a persistent interest in the metal among institutions. Asset managers, especially those of pension funds, have grown to view gold as a necessity in their portfolios and have helped propel demand for the metal to a record of 111 million ounces so far this year.

The driving force behind this has largely been singled out as an environment of plummeting negative real yields and rising inflation, one that is unlikely to change irrespective of the outcome. And though Hansen tethers more bouts of explosive price action in the gold market to a Biden presidential win, it’s worth noting that gold reversed its bearish course during the incumbent’s stay in the office in 2018, along with Trump and some of his key personnel being vocal proponents of a return to the gold standard.

Correlation Between Gold and Bitcoin Hits All-Time High

With institutions increasingly buying gold and cryptocurrency in recent months, the two assets are shining as decentralized hedges. Here’s what has changed.

The parallels between gold and Bitcoin have been there all along. Although both assets provide a decentralized hedge, the two have not often been directly compared due to Bitcoin’s extreme volatility and gold’s famous stability. Yet, much has changed since March. The unprecedented blow to the global economy has driven many to question stocks and even major currencies, as stimulative measures threaten to weaken the latter.

The biggest factor in the two assets becoming correlated has been the entrance of institutional money. Previously, institutions were reluctant to even consider exposing themselves to Bitcoin, in large part due to the nascency of the asset class. On the other hand, many fund managers either avoided gold or held a minimal allocation as they sought safe returns elsewhere, often in the form of bonds.

Now that most bonds offer a negative return, with the state and the currencies behind them looking shaky, institutions can hardly ignore gold’s outperformance this year, one that saw the metal rushing to a new all-time high and sticking around it ever since. In the current environment, the absence of havens and gold’s price appreciation has greatly expanded the scope of investors. With estimates that institutions will double their gold holdings in the near future, there is plenty of solid ground to expect more of this appreciation.

For Bitcoin, the entrance of institutional money has not only legitimized the asset, but also offered some much-desired stability. Now that institutions are essentially holding the reins of the crypto market, investors have less reason to fear massive price drops that linger for a prolonged period of time.

This has likely played a key role in the correlation between gold and Bitcoin steadily climbing over the past months to reach the highest-ever one-month point of 76.3% on September 19. A risk-off and risk-on asset are now close to moving in tandem, and there aren’t many indicators that this will change any time soon.

The uncertainty that the global economy faces has compelled institutions to review their course of action. The lack of counterparty risk that both assets boast has come into prominence as several countries have already experienced currency depreciation eerily reminiscent to that of Venezuela, while most nations are now asking their bond holders to pay a monthly fee, painting quite a bizarre picture. In fact, prominent funds like the Grayscale Bitcoin Trust are increasing both their gold and Bitcoin allocations, highlighting the shifting view of what makes a good safe-haven.

Bitcoin’s biggest benefit from these developments will likely come in the form of the aforementioned price stabilization, making investors across the board less hesitant to allocate some of their money to it. For gold, however, the story appears to be one of price gains. The metal’s outperformance this year cast a shadow on the 2008-2011 stretch, and its plunge during March’s broad selloff still left it above most assets. The growing distaste for risk and the sheer amount of money that institutional investors are set to pour in has driven many notable forecasters to expect new highs for gold’s price, both over the short and long-term.