The world situation is more and more uncertain. Coronavirus pandemic far from under control in many countries around the world, including the United States. Already deeply affected by the strict containment that has been applied around the world, the global economy faces complete uncertainty for the months to come. This uncertainty benefits gold, but the precious metal remains reserved for the wealthy. Easily accessible to all, Bitcoin proves to be the store of value for all.
A historic turning point
The world is going through a situation not seen in decades. The global coronavirus pandemic is sweeping away everything in its path. All the certainties of each other are called into question by the coronavirus.
The lockdown in most countries of the world to limit the spread of the coronavirus during the month of March 2020 hit the world economy hard.
Apart from the China, which is expected to remain positive this year, the economies of all other G20 countries will be in recession in 2020. The latest IMF estimates point to a recession of -6 at -15% for G20 countries.
The numbers are clearly catastrophic, but there is even more worrying. The coronavirus pandemic looks set to start a second wave in Asia and Europe. In the United States, or in some South American countries such as Brazil, the first wave has never been brought under control.
The situation is clearly out of the president’s control Donald trump in the USA. The figures reported daily see the main American states breaking records day after day in the number of cases detected and the number of people who have died.
The world is in complete uncertainty for the months to come.
The $ 10 trillion already printed by central banks will not be enough
In order to support the economy, the world’s major central banks have printed more than 10,000 billion dollars since March 2020. The Fed obviously tops the list with more than $ 3,000 billion which were printed and then injected into the monetary and financial system.
All this money has allowed the G20 countries to take on even more debt in order to come up with stimulus plans aimed at cushioning the economic shock posed by this coronavirus pandemic.
The United States has already spent more than 2.5 trillion dollars with its first stimulus package. This brought the debt of the United States to over 26,000 billion dollars. By comparing this debt to the American GDP which will fall sharply in 2020, the United States also posts a debt to GDP ratio greater than 100% from now on.
Have a debt to GDP ratio greater than 100% seems to be becoming the norm for G20 countries.
All this debt will sooner or later have to be repaid. Obviously, it is the people who will have the heavy task of repaying these pharaonic debts with a lot of taxes.
Unfortunately, all that money printed and pumped into the system will not be enough.
Fed and US government to take action again
The economic situation in the United States is still extremely bad with a very high number of job seekers, and bankruptcies increasing at the corporate level.
Worse, the compensation of $ 600 per week given to more than 20 millions of unemployed Americans just expired at the end of July 2020. Already in dire straits, these millions of Americans, among the poorest in the country, will be at risk like never before.
Faced with the urgency of this situation, the American government wants to put in place a new recovery plan for 1,000 billion dollars. The Democrats are calling for a more ambitious plan up to $ 3,000 billion.
Either way, a stimulus check from $ 1,200 should once again be part of this stimulus package.
The Fed’s printing of the US dollar is far from over. This also indicates that the US public debt will probably reach the 30,000 billion dollars by the end of 2020.
The Cantillon Effect will continue to play full force
The great monetary inflation that we have been experiencing since March 2020 will therefore intensify. The resulting monetary devaluation at the level of the US dollar will primarily impact the poorest citizens.
Described since the 18th century by the economist Richard Cantillon, this phenomenon responds to the name ofCantillon effect. All the money printed is going to make the rich even richer, while the poor who have wealth made up mostly of cash are going to be made even worse.
This is exactly what is happening at the heart of the 2020 economic crisis.
For example, the Fed’s actions created a real tech bubble in the stock market. This made Jeff Bezos, Bill Gates, or Elon Musk even richer. A few days ago, Jeff Bezos’ fortune even jumped 13 billion dollars in one day.
If you were still in doubt, it’s time to open your eyes, a speculative bubble has formed in the stock market around tech companies.
In the meantime, the real US economy is heading straight for a W-recession. The disconnect between the economy and the stock market cannot last forever. This iceberg illusion will end sooner or later. The big question is when.
Great uncertainty hangs around the world. Until a vaccine against the coronavirus has been made available to as many people as possible, we cannot envisage a complete restart of the world economy. It’s not me saying it, but the chairman of the Federal Reserve, Jerome powell in person.
Gold benefits from this uncertainty but remains reserved for the richest
In the face of this uncertainty, investors turn to safe-haven stocks in times of crisis.
Known for decades as a safe haven in times of crisis, gold is taking advantage of the current situation to see its price in US dollars break records. The demand for the precious metal is exploding at all levels.
Under these conditions, it is no wonder that gold is up + 26% in 2020. The price of an ounce of gold is even approaching $ 2,000 on the spot market.
Central banks increase their gold reserve, institutional investors as well, but the phenomenon is also spreading to retail investors.
However, even though gold has some interesting qualities as a hedge against uncertainty, it is still reserved for an elite. The people who buy gold now are among the richest. Moreover, the divisibility limited gold makes it inaccessible to the majority of Earth’s inhabitants.
Gold can be confiscated at any time by governments
In addition, gold suffers from serious limitations in terms of resistance to censorship. Since gold is not easily transportable without being noticed, you will probably have to store it in a bank’s vault.
However, history has already proven that states can seize gold from their citizens at any time. This was done in the United States by Franklin Roosevelt as part of Executive Order 6102.
All the gold of the Americans was then seized in order to finance the policy of New Deal. The Gold Reserve Act of 1934 then leads to devalue the dollar against its gold fixing. The official rate of $ 20.67 then go to $ 35 the ounce.
Many believe it will not be able to happen again. I’m not a diviner, but it’s a risk I’m not ready to take. This risk appears to me all the more real as many voices have been raised for several months advancing an idea of reserving the possession of gold to central banks.
As such, keep in mind what said Mark Twain:
“History doesn’t repeat itself, but it rhymes often.”
While it is often said that history never repeats itself twice, what happened before still gives ideas to leaders today.
Either way, the price of gold will likely continue to rise in the coming months as demand from the wealthiest people grows.
While gold is reserved for the richest, Bitcoin is accessible to all
The poorest people will also have to find refuge from the current uncertainty. Since gold is inaccessible, they will have to find an easily accessible store of value at all levels.
Bitcoin perfectly meets this need for a store of value accessible to all, which will grow in the coming months..
Divisible up to eight decimal places, Bitcoin can be bought in very small amounts.
In fact, even the poorest people can buy Bitcoin to protect themselves from the current situation in the world.
On the other hand, it is sufficient to have a smartphone and an Internet connection to buy Bitcoin, making it an easily accessible store of value. For gold, it is much more complicated than that, as you will be asked for identification documents.
When it comes to transporting your Bitcoins, you will only need to remember your 24 word restore phrase.. With this phrase ingrained in your brain, no one will be able to steal your Bitcoins when you travel.
Your gold will have been stolen from you long before. And you will have to justify the reasons why you want to move it.
Bitcoin is therefore a store of value that is totally resistant to any type of censorship.
If you have the private keys to your Bitcoins, no one can confiscate them from you. No one can stop you from using them the way you want.
The year 2020 will have shown all of Earth’s inhabitants how uncertain the world today is. Everything is possible, and even unimaginable.
The current monetary and financial system is showing its flaws like never before. The people’s need to protect their wealth in a censorship-resistant way came to light in 2020.
This is good, because it is precisely Bitcoin’s biggest value proposition today. Much more than a means of payment for the daily life of the general public, Bitcoin is the only censorship-resistant store of value available to everyone.
Bitcoin is the people’s currency. Bitcoin is the haven from uncertainty for the people.
As such, the adoption of Bitcoin as a store of value will explode in the future. The potential for Bitcoin price growth is incredible. Lat Rising demand will oppose an ever-shrinking supply of new bitcoin. It should come as no surprise that the price of Bitcoin will reach one million dollars within 20 years, even though the operation could involve an intergenerational war.
A developer by training, I discovered Bitcoin in 2014 but did not immediately grasp the importance it could have for the world of tomorrow. I took a more in-depth look at it from the start of 2017 and I haven’t let go of it since.
Passionate about Bitcoin and the new system it is trying to build for the future, I decided to participate in its evangelization at my modest level by writing about Bitcoin, Blockchain and cryptocurrencies in different media.
It is with pleasure that I publish some of my texts in French on The Coin Tribune.
I also write quite a bit about personal development and self-improvement.
Please feel free to connect with me via social media or in comments on my articles if you have any questions regarding my articles.