I’ve been thinking a lot about gold lately. Not because I’m bullish on it — quite the opposite. But because the conversation around gold as an inflation hedge has gotten pretty loud this week, and I think most of it is wrong.
JPMorgan put out a note arguing that Bitcoin is going to start losing value as gold sucks up its investors, because gold is the “real” inflation hedge. I read it twice. I need it dissected, honestly — because it seems like they’ve completely missed that a growing number of people view BTC itself as an inflation hedge. That’s not a fringe opinion anymore. It’s a legitimate thesis.
But let’s step back from the BTC vs gold cage match for a second and talk about gold on its own merits. Because I think there’s a bigger story here.
Gold Isn’t Doing What It’s Supposed To
Here’s the thing. Inflation has been well telegraphed. CPI numbers have been running hot. Classic strategy says buy gold. And yet — gold isn’t really moving. Not on a medium-term basis. Not in the way the textbooks say it should.
If CPI comes in strong next week, I don’t think it’ll matter for gold. And THAT is the problem. When an asset stops responding to the very drivers it’s supposed to be correlated with, you have to ask some uncomfortable questions about whether the correlation still exists.
I’ve been looking at this pretty closely, and my view isn’t bullish or bearish for the sake of it — it’s just based on what’s happening. Inflation going up, gold isn’t following. Gold’s correlation to its historic market drivers has dropped. As a financial tool, it’s lost my interest.
The Questions Gold Can’t Answer
When I evaluate any asset class, I run through a few basic questions. For gold, the answers aren’t encouraging:
- User base — up or down? Down. Younger generations aren’t reaching for gold.
- Practical uses — up or down? Flat at best. Industrial use cases haven’t expanded meaningfully.
- Demographic appreciation — up or down? Down. Ask anyone under 35 what they’d rather own — an ounce of gold or some BTC. You already know the answer.
- Market correlation to historic drivers — up or down? Down, as I just mentioned.
Many of these questions point in the same direction. And it’s not up.
I think gold is going the way of the Dow 30. It doesn’t represent what it used to. It’ll become less and less important — especially culturally and demographically, its uses will decline. That’s not a controversial prediction. It’s just trend observation.
The “But What If Everything Collapses” Argument
Gold bugs love this one. “What if the grid goes down? What if we lose computer networks? You can’t hold a Bitcoin in your hand.”
Sure. Fair point. The only thing you can do with gold that you can’t do with Bitcoin is make jewellery. And yes, that’s useful in trade if we lose electricity and computer networks.
But here’s what gold bugs never address — if we actually lose those things, most gold buyers will never be able to physically collect their gold anyway. It’s sitting in a vault somewhere. You own a piece of paper that says you own gold. Sound familiar? That’s not so different from a digital asset when the apocalypse hits.
Meanwhile, under every scenario where we DO have electricity and computer networks — which is, you know, the overwhelmingly likely future — Bitcoin comes with so much more utility than gold. Smart contracts, DeFi, programmable money, borderless transfers. Gold just.. sits there.
Is BTC the New Inflation Hedge?
Now — has BTC actually replaced gold as an inflation hedge? I think it’s way too early to say that definitively. Many would argue it already has, and time will tell. But the fact that we’re even having this conversation is itself a signal.
The smart money that moved into gold keeps asking every week why it doesn’t go up. That should tell you something. Gold, in my view, is becoming an obsolete financial asset. When there’s turmoil, nobody’s rushing to buy gold the way they used to. I’m not saying crypto has definitively taken that role yet — but I don’t see a compelling story for owning gold right now.
Which brings me to where I think the real conversation needs to go — because it’s not just about what you sell. It’s about what you replace it with.
The Old Balanced Portfolio Is Broken Too
For decades, the standard advice has been some version of the same thing: equities for growth, bonds and cash for safety, maybe a sprinkle of commodities for inflation hedging. Rebalance quarterly. Sleep well at night.
But here’s the problem — bonds and cash aren’t doing what they’re supposed to do anymore. With real yields negative and inflation running hot, your “safe” allocation is actually LOSING purchasing power. That’s not safety. That’s a slow bleed.
Gold’s preservation argument was supposed to plug that gap. But given bond yields running negative in real terms, even that story falls apart. So if gold isn’t the answer, and bonds aren’t the answer — what is?
A New Allocation Framework
Here’s how I’m starting to think about it.
Where crypto used to sit outside the portfolio entirely — a play-money thing on the side — I think it makes more sense now to almost replace equity as the “risky” growth allocation with crypto. Your safer allocation then becomes equities themselves, replacing what bonds and cash used to do. Then within your crypto allocation, you make further percentage-based sub-allocations based on conviction and risk profile. You rebalance each bucket on a frequency that suits the cycle.
It sounds aggressive. But when you actually map out the risk-reward, it’s more rational than it first appears.
Rethinking What “Risk” Actually Means
Here’s where I think most people get tripped up. They look at crypto’s volatility and call it “risky.” And sure — if your definition of risk is short-term price swings, then yes, crypto is riskier than a government bond.
But I’d push back on that framing. Risk is calculated by the risk taker. In my view, I’m currently getting a substantially discounted price on future digital dollars when I invest in crypto. The risk I’m taking is that I’m wrong — and that’s factored into the discount I expect in exchange for taking that risk. At the moment, I feel extremely well compensated.
Think about it differently. Equity might be “safer” in terms of the probability you’ll lose your initial capital. But is it really “safer” when you consider the probability you’ll maximise your returns over any meaningful length of time? I like the moonshot returns that are possible with crypto, and I’m prepared for a total wipeout on any individual position. That’s the tradeoff. And I think it’s a GOOD one.
What I’m Actually Watching
While the gold debate rages on, I’m more interested in what’s happening in crypto markets right now. AVAX is making a major move. SOL has an interesting trajectory worth watching. Ethereum just got a pretty significant endorsement from JPMorgan — ironic, given their gold thesis — with analysts arguing ETH is now a superior investment to BTC.
The space is evolving fast. And the energy, the developer activity, the institutional interest — it’s all flowing toward crypto, not toward gold.
The Takeaway
Gold is a classic case of an asset living on reputation rather than fundamentals. The story that made it valuable for decades is weakening, and no amount of inflation data is going to revive it if the next generation of investors simply doesn’t care.
And the old balanced portfolio — bonds for safety, gold for inflation, equities for growth — that model is breaking down at every seam simultaneously.
The biggest risk I see right now isn’t volatility. It isn’t regulation. It’s sitting on the sidelines while a generational wealth transfer happens and you’re watching from the bleachers because traditional allocation models told you bonds were “safe.” They’re not safe. They’re a slow bleed with better PR.
My view? Pay attention to what’s actually moving, not what the textbooks say SHOULD be moving. The market is telling you something. Crypto isn’t an alternative asset class anymore — it’s becoming the growth engine that equities used to be. Structure your allocations accordingly. The game is changing. I’d rather be in it than reading about it.
