The Battle For The New Monetary Order
These notes were generated by AI and may contain inaccuracies.
There is a battle for the new monetary order between gold and Bitcoin. Right now, it's not looking good for Bitcoin. If Bitcoin falls 90% for the next four years, we'll refinance the debt by rolling it forward. Banks would lend because of that.
For the past several decades, the world worked with a specific monetary structure. To grow the economy and expand GDP, debt had to expand. To expand debt, money had to grow. Most of the world's capital flowed through the US dollar into financial assets like the US stock market, which is why stocks have outperformed almost every other investment. Bitcoin was born into this expansionary period of endless money printing.
Now the system is reaching a breaking point because debt has exploded and is outgrowing the economies that support it. The global rules-based order is coming to an end. The international order based on rights and rules no longer exists.
Throughout history, when this happens, money looks for the safest neutral asset, something not tied to a specific country or government, outside the system, with a finite supply. Historically, that was gold. In the modern era, many believed Bitcoin was the digital equivalent.
The world thought that if uncertainty persists about the new system, the hardest asset is the safest bet. Bitcoin, being digital, portable, and finite, was expected to outperform everything, including gold. But gold is breaking out to new highs. Central banks are buying physical gold at the fastest pace in decades. Bitcoin has lost value relative to gold.
In this new multipolar world, with countries and people losing confidence in US treasuries, the dollar, and stock markets, why is gold leading? Why is the asset meant to represent the future monetary standard getting left behind? If this continues, how low will Bitcoin go? Is this temporary or the start of a capital rotation event lasting over a decade?
Hi, my name is Andre Jick. Come for the finance and stay for the gold and Bitcoin.
Explain gold and Bitcoin through two forces: macro force and technical force. Analogy to physics: general relativity explains gravity and movements of big objects like planets and galaxies (slow, guides long-term direction) = macro force. Quantum mechanics explains tiny particles (chaotic, unpredictable) = technical force, like short-term investment markets.
Macro force: big picture like monetary order, sovereign debt levels, geopolitical changes (Ray Dalio's economics). Technical force: moving averages, support levels, Bitcoin vs gold ratio (Benjamin Cowen, Northstar Charts).
Gold explained by macro force. Gold has gone up significantly. Evidence: US government debt to GDP higher than almost any point in history outside World War II. Global sovereign debt exploded faster than economic growth. Central banks buying physical gold at fastest pace in modern history. In many countries, gold makes up a bigger share of official reserves than in years, meaning sovereigns (tier one nations with nuclear weapons) choosing gold over US treasuries.
Structural gravity pulling money toward gold as neutral hard asset outside any government or currency. Gold should be strong, and it is. But Bitcoin should also go up based on this force, yet it isn't.
Bitcoin better explained by technical force. One force says hard assets should win (gold is winning). Technical force says Bitcoin might not be done correcting. Outcomes: Bitcoin super cycle to new high following gold, or early stages of bigger capital rotation most aren't ready for.
Not exact science; look at multiple charts. Chart from Northstar Charts (credit Natalie Brunell podcast; links below) measures CRA (capital rotation evidence) for gold: compares economic metrics to gold price. Everything in bear market relative to gold (all red = favorable for gold).
- S&P 500 vs gold: gold winning
- NASDAQ vs gold: gold winning
- Dollar vs gold: gold winning
- M2 money supply vs gold: gold winning
- CPI (inflation) vs gold: gold winning
- Russell, Wilshire vs gold: gold winning
Gold rising faster than these indexes. Many coincidences (all red) mean likely in major capital rotation event: stock markets go down, potentially 10+ years to recover prior levels.
Historical examples:
- Early 1930s: stock market collapsed, dollar unstable, FDR gold revaluation/confiscation. Gold repriced higher, outperformed 5-7 years. Stocks recovered 1929 high by 1954.
- 1970s: huge inflation, stocks flat in real terms for decade, gold up over 2,000% (1971-1980, ~9 years).
- 2002: .com bust, gold from mid-$200s (2001) to over $1,900 (2011), >10 years; commodities super cycle.
Rotations last 5-10 years: stocks collapse or sideways in real terms, hard assets get real returns. Every major financial metric down relative to gold simultaneously signals big change in investor confidence. Investors prefer neutrality over productive assets (stocks) amid debt, inflation, currency debasement, geopolitical fragmentation.
Markets can rise nominally but struggle with real returns (purchasing power). Example: 10% nominal raise but 11% inflation = -1% real income. Same for markets: 10% up but lose real purchasing power.
If rotation continues, no necessary stock crash, but real returns compressed vs hard/scarce assets. Eras alternate: stocks win some, hard assets others.
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Gold strong via macro, so why not Bitcoin? Technical force explains. Framework from Benjamin Cowen (Into the Cryptoverse, links below).
Bitcoin peaks in Q4 of post-halving year (every 4 years):
- 2013 cycle: November
- 2017: December
- 2021: November
Year after Q4 peak overlaps US midterm elections, starts bear market.
Last two cycles: ~1,050-1,060 days from cycle low to high (2015 low to 2017 high: ~1,050 days; 2018 low to 2021 high: ~1,060 days). Bear markets last ~1 year (2017 high to 2018 low: 364 days; 2021 high to 2022 low: 371 days). 3 years up, 1 year down.
Key indicators: 50-week moving average (bull market above; closes below several times = bear market start) and 200-week moving average (long-term baseline, ~4 years).
This cycle peaked ~$126,000. Key support: 50-week MA at $102,000-$103,000. Below it for weeks = bear market. Then compresses to 200-week MA ~$58,000 (could go to 40s or high 30s).
Using prior cycles (1 year peak to bottom): bottom around October this year, or as early as May.
Drop percentages decrease each cycle. If 7% less than prior (70% from $126,000 ATH): ~$37,800, aligns with other metrics.
Capital rotation real possibility: hard assets (gold, eventually commodities like oil) outperform stocks for 5-10 years (like 1970s, early 2000s). Bitcoin more financialized/securitized now (ETFs, collateral, derivatives, products on ETFs, miners financing): price discovery via paper products, not scarcity; short-term suppression.
Gold securitized post-2004 (ETFs) but suppressed only temporarily; eventually breaks out (geopolitics, banks accumulating, technicals). Same for Bitcoin eventually, but timing unknown. Bull cycle over; leverage flushing, may go sideways rest of year.
Bull markets make everyone a genius. Bear markets make fools of both bears and bulls. (Ben)
Possible: Bitcoin up to 50-week MA (~six figures), bears look silly; then Q4 reversal down, bulls look silly.
Don't sell everything into gold despite rotation: rotations not straight line (1970s/2000s had violent counter rallies, fake breakdowns, whipsaws). If Bitcoin in long-term adoption (ETFs, sovereign interest, bank custody expanding), selling technical weakness repeats past mistakes.
Better: invest to survive any outcome. Diversified: hold Bitcoin, S&P 500, dividend stocks (good sideways), want more tech. Sold rental (no debt/headache/liability). More cash than comfortable, dollar cost average undervalued assets, reinvest dividends. Full portfolio at funvest.com (link below). No right answer; sources below. Subscribe, like, bell.
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