The current AI stock market frenzy has attracted capital from across the market, from traditional metals, considered the safest assets, to cryptocurrencies, considered the riskiest.
Gold fell below $4,000 for the first time since November earlier this week, silver lost more than half its value from its peak and bitcoin slipped to near $58,000.
The three massive sales are not a coincidence. For most of the last two years it was, to a large extent, the same trade, and now the same forces are unraveling it.
This trade even has a name, the trade of “debasement”. It’s a bet that heavy government spending and rising national debt will slowly erode the value of paper money, pushing investors into scarce assets that no government can print more of.
Gold and silver are the oldest versions of this bet, while bitcoin, with a supply capped at 21 million coins, has been released digitally. Until 2025, when the dollar seemed vulnerable, money flowed into all three, and they were treated as one basket.
