Last year proved to be a gold speculator and investor’s dream after gold prices rallied hard to hit historical highs thanks to a perfect storm of a global pandemic, massive government stimulus packages, weakening dollar and a stock market bull run that had finally run out of gas. The torrid rally represented the sharpest gain the metal has mustered in more than a decade, with gold prices nearly doubling between August 2018 and August 2020.
Unfortunately, the rally has lately run out of steam, with gold prices pulling back 15% since their all-time high of $2,066 per ounce about eight months ago.
This has come as a major disappointment for gold bulls, with some Wall Street hedge funds having been extremely bullish on gold, with some eyeing prices of $3,000 and even $5,000 per ounce.
The gold downtrend begs the question: Why has gold suddenly fallen out of favor after such a spectacular run? And more importantly, is there a way back for the yellow metal?
Bitcoin Safe Haven
But even more devastating for the bulls is that investors appear to be turning to bitcoin as the new safe haven.
Back in September, alternative investment firm iTrustCapital reported doing brisk business at a time when the stock markets were floundering. iTrustCapital, the leading investment platform for alternative assets including cryptocurrencies and gold, said it had completed more than 10,000 transactions so far in the year with the majority coming from investors moving their 401(k) and IRA retirement accounts from traditional securities such as stocks and bonds to alternative investments like Bitcoin.
Over the past few years, the digital currency has become a hot favorite for a motley crew of exotic quants, speculative pros and retail players, while traditional investors have tended to remain on the sidelines. But that appears to be changing with institutional investors such as Guggenheim Partners LLC, Paul Tudor Jones and Stan Druckenmiller lately jumping into the Bitcoin bandwagon.
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