Foreign media reports that the recent strength in gold and Bitcoin is not just a short-term emotional fluctuation; it reflects a market re-bet on "devaluation trades." The core of these trades is to increase holdings of scarce assets while reducing holdings of the US dollar, which is expected to continue to weaken amid expanding fiscal deficits and persistent inflationary pressures.
After the repurchase of U.S. Treasury bonds, trading logic intensifies
The article mentioned that U.S. Treasury Secretary Scott Bessent unexpectedly announced a Treasury bond repurchase plan, with the goal of lowering long-term U.S. bond yields. In terms of short-term effects, this measure indeed led to a decline in yields, with the yield on 30-year U.S. bonds falling significantly on the day of the announcement.
But what the market is more concerned about is that this arrangement does not truly address the fundamental issues that drive long-term yield increases, including the scale of U.S. Treasury debt approaching $40 trillion, the persistent fiscal deficit, and the risk of inflation rising again. The article argues that an increasing number of investors are viewing this plan as a buffer measure rather than a long-term solution, which also puts pressure on the dollar and leads to renewed activity in related transactions.
Gold's upward trend in August preceded policy announcements.
The article states that this round of gold price increases is not entirely triggered by the Treasury bond repurchase program. As early as the beginning of August, the US dollar was already under pressure. During that time, the United States and Japan stepped in to support the Japanese yen, which also increased the volatility of the US dollar. At the same time, concerns about inflation caused by the Iran war, as well as fiscal worries stemming from the rising yields on long-term US bonds, have been continuously driving up the demand for safe-haven assets.
In this context, gold has once again become an object of capital allocation due to its scarcity, relatively weak political ties, and its position outside the US dollar system. The article states that since August, the price of gold has risen by 14%.
The upward trend of Bitcoin has been concentrated after the buyback program.
Unlike gold, the upward movement of Bitcoin was more concentrated after Binance announced its buyback plan. The article considers August 19th as a critical moment. On that day, the yield of 30-year U.S. Treasury bonds fell by 9 basis points in a single day, and Bitcoin subsequently rose rapidly.
The article states that since then, Bitcoin's cumulative increase has exceeded 20%. Foreign media also cited data compiled by Bloomberg, which shows that in the past five trading days, gold and Bitcoin-related ETF have attracted a record $7 billion in capital inflows.
From the logic presented in the article, although gold and Bitcoin have different risk characteristics, both are considered scarce assets outside of the US dollar system. When market concerns about debt, deficits, and inflation rise, such assets tend to attract more capital attention.
