Can the Rise of Gold and Bitcoin Strengthen the Dollar?

It may seem paradoxical, but the rise in gold and Bitcoin could actually reinforce the dollar system. While gold prices rise, the US holds the largest gold reserves in the world, valued at approximately $915 billion. However, this only covers about 4% of the $21.9 trillion M2 money supply—far below historical levels, like during the Bretton-Woods system, when gold reserves exceeded 40%.

How Gold Strengthens the Dollar

Increased Confidence: Rising gold prices can boost confidence in the dollar, particularly during periods of fiscal stress.

Liquidity Support: Gold offers liquid backing to the dollar without changing existing monetary policies.

Crisis Insurance: It can act as a safeguard against future geopolitical shifts or crises.

Bitcoin’s Role in Supporting the Dollar

While Bitcoin is decentralized, its growth still supports U.S. interests. The U.S. leads in crypto infrastructure—from mining to regulation. For institutional investors, Bitcoin offers a non-political asset that diversifies portfolios.

"Gold and Bitcoin won't return us to the gold standard, but they could make the dollar a more stable anchor."

Explore more insights at:

Lean Research Insights

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