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Source: World Gold Council<\/span><\/p>\nAs the chart indicates, total demand for gold in the first half of the year was buoyed by demand from the jewelry sector and the bar and coin sector. Central bank demand rose by about 63% year over year<\/p>\n
The obvious question is whether bitcoin (and other digital coins) is replacing gold as a store of value. Companies like Tesla and Microstrategy that have invested some of their cash in bitcoin get a lot of ink. Microstrategy\u2019s market cap is around $6 billion and its investment in bitcoin was valued at around $3 billion as of late June. Tesla\u2019s bitcoin holdings are valued at around $1.5 billion, a relatively tiny 0.2% of the EV maker\u2019s $640 billion market cap.<\/p>\n
Inflows of capital into all ETFs are set to shatter 2020\u2019s record-setting inflows. In the first half of 2020, net inflows total $473 billion, not far from 2020\u2019s full-year total of just over $500 billion. This year\u2019s inflows are led by demand for equity-based ETFs.<\/p>\n
Can gold make a comeback? Drew Rathgeber, senior futures broker and branch manager at AIO Capital, told Barron\u2019s that a \u201cperfect storm\u201d is setting up to drive gold prices \u201cmuch higher.\u201d Rising production and raw materials cost are creating \u201ccost-push inflation\u201d that the Federal Reserve has so far failed to address.<\/p>\n
The signs to watch for, according to Matt Psarras, head of client relations and market research for GoldCore USA, interest rates, debt and inflation. So far, the Fed has held to its view that this year\u2019s rising inflation is transitory. That view has weighed on gold prices that Psarras calls \u201cexceptionally cheap.\u201d He also points out that \u201c[g]old cannot go to zero\u2013almost everything else can.\u201d Including, we presume, bitcoin and the dollar.<\/p>\n<\/p>\n