Gold buying boom mirrors Bitcoin’s momentum: Deutsche Bank
News Summary
A Deutsche Bank report indicates that global central banks have been increasing their gold reserves, with gold's share of central bank reserves reaching 24% in Q2 this year, its highest since the 1990s. Official gold demand is double the 2011-2021 average, leading Deutsche Bank strategists to draw parallels between gold's momentum and Bitcoin's (BTC) record-breaking performance in 2025. The report highlights that gold has only recently surpassed its inflation-adjusted all-time highs from 1980, largely due to decades of central bank selling, forced institutional sell-offs, and the rise of the fiat currency era. Deutsche Bank macro strategist Marion Laboure identifies similarities between gold and Bitcoin in their performance trajectories, periods of high volatility and underperformance, and low correlation with traditional assets. Despite concerns over Bitcoin's volatility, limited usage, cyber vulnerabilities, and liquidity constraints, Laboure predicts that both gold and Bitcoin "may both feature on central bank balance sheets by 2030." This outlook comes amidst growing institutional BTC adoption and increasing interest from some governments in holding Bitcoin as part of their strategic reserves.
Background
Historically, gold served as a crucial currency and reserve asset, but its formal role as a reserve asset ended in 1979 when the International Monetary Fund (IMF) prohibited member states from pegging exchange rates to gold. This occurred eight years after the collapse of the Bretton Woods system, leading to decades of central bank selling and forced institutional gold sell-offs. Bitcoin, a decentralized digital currency, was created in 2009 to offer an alternative store of value and medium of exchange free from government and financial institution control. Despite its historical volatility, institutional acceptance has been steadily growing.
In-Depth AI Insights
What are the deeper motivations behind central banks' renewed interest in gold, and what does this signify beyond simple diversification? - The resurgence of gold accumulation by central banks, especially in 2025 amidst persistent inflation and heightened geopolitical uncertainties, likely reflects a deeper distrust in the prevailing fiat currency system and sovereign credit risks. This transcends mere diversification, acting as a strategic hedge against potential systemic risks within the global financial architecture. - This trend could foreshadow a long-term shift in global reserve asset composition, moving away from a singular fiat currency dominance (particularly the USD) towards a more resilient 'basket' approach that includes tangible assets. The Trump administration's 'America First' policies might inadvertently accelerate this, pushing nations to seek reserve assets independent of specific political agendas. How credible is Deutsche Bank's prediction that Bitcoin could be a central bank reserve asset by 2030, considering the Trump administration's likely skepticism towards cryptocurrencies? - While Bitcoin's volatility has reportedly decreased, its 'backed by nothing' characteristic and cyber security risks remain core concerns for central banks. Under President Trump, his administration might favor traditional assets and tighter financial controls, potentially slowing the adoption of Bitcoin as a reserve asset by major economies like the US. - However, the article mentions increasing interest from other nations in holding Bitcoin as strategic reserves. This suggests that if a few significant economies move forward, it could create 'first-mover advantage' pressure, compelling more central banks to re-evaluate Bitcoin. Deutsche Bank's prediction is more of a trend outlook, and its realization path might be complex and varied due to political and regulatory landscapes. What are the strategic implications of the 'low correlation' between gold and Bitcoin for institutional investors and sovereign wealth funds in asset allocation? - The low correlation highlighted by Deutsche Bank positions both gold and Bitcoin as effective hedging instruments against traditional equity and bond portfolios, especially during periods of market stress or increased macroeconomic uncertainty. This presents new opportunities for sovereign wealth funds pursuing absolute returns and robust risk management. - Institutions could utilize these assets as 'tail risk' hedges against extreme events in conventional markets. Furthermore, Bitcoin's digital-native nature could offer potential advantages for sovereign wealth funds seeking 'digital sovereignty' and mitigating geopolitical risks, albeit still in an early stage.