After yesterday’s article on Bitcoin, I thought I’d expand a little more on its current divergence from gold. Since the US election on November 5, 2024, Gold prices declined by 4.7%, while Bitcoin surged by 29%. Historically, both assets have been considered alternatives to the US dollar and have often moved in tandem. However, this shift underscores market sentiment that the Republican Party’s victory will negatively impact gold while benefiting bitcoin and other cryptocurrencies. Let’s look into that.
Factors Driving Gold’s Decline
Republican Policy Agenda
The election of Donald Trump and a Republican-controlled Congress has set the stage for a policy shift expected to stimulate growth and inflation. Key aspects include:
- Tax Cuts and Larger Deficits: A fiscal policy likely to loosen significantly in 2025.
- Higher Tariffs and Reduced Domestic Red Tape: Measures aimed at bolstering domestic economic activity.
Implications for Monetary Policy
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