How gold and Bitcoin are responding to inflationary pressures – comparing the 1970s and the 2020s

Quick Take

• Many investors try to pinpoint the exact times we are in previous cycles or decades.
• Every cycle and decade is slightly different in some way, but we have similar narratives to the 1970s of high inflation and elevated interest rates.
• Similar to the 1940s of financial repression, i.e., inflation is a lot higher than interest rates hence negative real rates.
• A comparison to the 1970s saw colossal inflation, rising interest rates, and an economy in stagflation. However, unemployment is still at record-low levels.

In the 1970s, this is how some assets performed;

• Gold appreciated: 1718%.
• Fed Funds % change went up 121%.
• US CPI grew by 108%.
• S&P appreciated 27%.

In the 2020s, this is how some assets have performed;

• Fed funds have appreciated by 189%.
• Bitcoin has appreciated 146%.
• S&P: 28%.
• Gold: 17%.
• US CPI: 16%.

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