Nolan Watson, president and CEO of Sandstorm Gold, says central banks are buying gold, not Bitcoin. Saying that the yellow metal has nothing to fear from Bitcoin, Watson is hopeful about the future of gold.
Central banks and governments buy gold
Sandstorm Gold is a royalty and streaming company headquartered in Vancouver, BC. In 2023, the company projects production of 95,000 ounces. Watson also serves as an executive at the World Gold Council. When Watson looks at the gold market, he says that the metal is profitable, but miners are not. In this context, Watson said, “Central banks and governments around the world are buying gold. But they don’t buy gold stocks,” he says. Watson states that this causes metal prices to rise, but miners’ stock prices do not increase.
According to Watson, it is necessary to pay attention to gold ETFs to follow what is happening in this space. He says there has been net liquidation from gold ETFs in the last 18 months as institutional investors sold due to the high interest rate environment. But Watson expects the trend to change in the next month or two. In this regard, “This situation is about to reverse. “In fact, if you look at the net liquidation trend of gold ETFs, it is getting smaller every month,” he says.
Gold has nothing to fear from Bitcoin!
cryptokoin.comAs you follow from , gold prices reached an all-time high in early December. However, cryptocurrencies have had their periods, with Bitcoin doubling its lows at the start of the year. However, Watson says gold has nothing to fear from Bitcoin. In this context, Watson makes the following statement:
Gold is rising because governments and central banks are buying gold. Governments and central banks are not buying Bitcoin. The fundamental thing driving the gold price is separate from what’s happening in crypto. There used to be thousands of cryptocurrencies, and the total cumulative market cap was approaching a trillion dollars in crypto. All of that has evaporated except for a few basic things like Bitcoin and Ethereum. Crypto as an asset class has lost major ground to gold even as Bitcoin prices rise.
Dovish Fed made the gold price soar
Gold prices skyrocketed yesterday when the Fed signaled that it would cut interest rates in 2024. The shiny metal is up more than 1% on the day, climbing above $2,000. It continued its rise today and is trading at $2030 levels. In line with expectations, the Fed kept interest rates between 5.25% and 5.50%. However, the Fed made a slight change to its previous statement, emphasizing slowing growth and easing inflation. The Fed emphasized the following points in its policy statement:
Latest indicators point to growth in economic activity slowing down from its strong pace in the third quarter. Employment growth has remained strong, albeit moderate, since the beginning of the year. Additionally, the unemployment rate remained low. Inflation decreased over the past year but remained high.
In addition to its more neutral outlook, the Fed also signaled that it expects to cut interest rates more than it had anticipated in the summer. The latest economic projections, also known as a “dot plot,” show the central bank sees the Federal Funds rate at 4.6% by the end of 2024, down from a 5.1% forecast in September. Markets see interest rates closer to 4% by the end of next year, according to the CME FedWatch Tool.
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