Investors are simultaneously rushing into gold and Bitcoin, using both as hedges against fiscal risks, with exchange-traded funds tracking these two asset classes setting records for net fund inflows over the past five trading sessions.
On August 26, according to data compiled by Bloomberg, related ETFs collectively attracted $7 billion over the past five trading days, placing the largest gold and Bitcoin ETFs among the top rankings for U.S. ETF fund inflows, on par with flagship equity products.
This wave of capital is being driven by renewed concerns over the U.S. debt burden, the dollar's trajectory, and efforts to manage long-term yields.
The immediate trigger came from U.S. Treasury Secretary Besant's proposal—to at least double the scale of long-term Treasury repurchases. Following the announcement, U.S. bond yields and the dollar weakened, while gold and Bitcoin prices jumped.
According to Bloomberg data, State Street's SPDR Gold Shares (GLD) saw nearly $3.4 billion in net inflows this week, and BlackRock's iShares Bitcoin Trust ETF (IBIT) saw $1.5 billion in net inflows. Both funds ranked among the top ten for U.S. ETF inflows this week.
GLD trailed only a handful of products like the Vanguard S&P 500 ETF (VOO).
What investors want are assets whose supply is not subject to government intervention. Gold reserves are constrained by natural endowment, and the total supply of Bitcoin is hard-capped by its protocol.
Against the backdrop of rising expectations for fiscal expansion and monetary easing, the two share the same pricing logic. Besant's long-term Treasury repurchase plan was interpreted by the market as a signal that authorities are attempting to suppress long-term yields, directly triggering this round of concentrated buying.
For investors seeking fiscal hedge tools, the lines between gold and Bitcoin are blurring. Gautam Chhugani, Senior Analyst of Global Digital Assets at Bernstein, wrote in a research report:
The era of declining interest rates that lasted 40 years seems to have ended. As sovereign debt levels climb to record highs, governments face increasing pressure from debt servicing. Investors holding scarce assets like Bitcoin, which cannot be easily increased or diluted, may benefit.
