JPMorgan analysts suggest that rising geopolitical tensions and the upcoming US presidential election are driving investors towards safe-haven assets such as gold and Bitcoin.
JPMorgan Believes Geopolitical Risks Are Beneficial to Bitcoin and Gold
The shift, according to the report, is part of what they call “devaluation trading,” a trend in which investors seek refuge in assets that provide protection against currency devaluation.
JPMorgan Global Markets Strategy analysts Nikolaos Panigirtzoglou, Mika Inkinen, Mayur Yeole, and Krutik P. Mehta wrote in a recent note that rising geopolitical uncertainty and concerns about the stability of fiat currencies are making gold and Bitcoin more attractive to investors.
Gold prices, while initially subdued by recent global events, have risen over the past quarter. As of September 26, gold was nearing the $2,700 mark, driven in part by a 4-5% decline in the U.S. dollar and a significant 50-80 basis point decline in real U.S. Treasury yields. However, JPMorgan analysts believe that the rise in gold prices indicates renewed interest in “depreciation trading” beyond what these factors alone would suggest.
According to JPMorgan, this trend is driven by a variety of factors, including rising geopolitical risks since 2022, persistent inflation, large government deficits and declining confidence in traditional currencies, especially in some emerging markets.
*This is not investment advice.