Gold and Bitcoin rose together but dollar may have upper hand

In August, gold and Bitcoin were doing something unusual. Both were rising in value at the same time.

Typically, the two asset classes behave in different ways. Gold is the ultimate safe haven. It climbs when investors are fearful. When they are feeling greedy, Bitcoin is often the beneficiary, as bullish investors pile in.

So for the two to rise in lockstep is rare. Yet they appear to be telling investors the same thing: something is wrong with money.

In the US, government debt has passed $40 trillion, inflation is rising and investors have been worried about the outlook for the US dollar.

Many have been looking to protect their wealth by shifting it into assets that governments cannot print at will, reducing its value.

Andreas Anthis, head of multi-asset and absolute return at Mashreq Capital, says that when confidence in the purchasing power of a currency erodes, scarce assets are repriced upwards. “The supply of gold expands only at the pace of mine production, while Bitcoin’s supply is limited by design.”

Both started attracting money as investors worried about inflation, government debt and the long-term value of conventional currencies. The gold price climbed above $4,600, while Bitcoin topped $80,000 for the first time since May.