Over the last two days, Bloomberg Intelligence commodity analyst Mike McGlone published the firm’s commodity and crypto outlook reports, and McGlone’s latest analysis details that the price of gold could resume its rally after a foundation similar to 1999 is constructed. Moreover, as far as bitcoin and ethereum are concerned, the analyst argues that the two leading crypto assets will “outperform most major assets” when the “economic tide turns.”
Commodity Strategist Mike McGlone: ‘We See Risks Tilting Toward an Elongated Deflationary Period, Which Can Favor Gold’
The senior commodity strategist at Bloomberg Intelligence (BI), Mike McGlone, believes gold, bitcoin (BTC), and ethereum (ETH) are currently forming price bottoms, and when the economy shifts back to better standings, all three will likely rally. While gold is down from the precious metal’s all-time price high ($2,070), for now, it’s held above the 1,700 nominal U.S. dollars per troy ounce range. McGlone says that gold is currently forming a foundation akin to the market performance it saw in 1999.
At the time, the price of gold was 250 nominal U.S. dollars per troy ounce and it never went below $250 an ounce again. BI’s senior commodity strategist thinks there’s a possibility this trend could happen again. “The disparity in dollar-denominated gold vs. euro-based is nearing levels that formed a lasting foundation for the metals price in 1999,” McGlone’s report explains. “Down about 10% in 2022 to Sept. 28, dollar gold compares with respective gains of 5% and 10% for the euro and yen.”
The commodity strategist added:
Aggressive Fed tightening to address inflation and elevated asset prices — which is buoying the greenback, as the rest of the world tries to catch up — echoes trends about two decades ago. Underpinnings are firming for the price of gold to resume the rally that started with that base.
McGlone further remarked that rising gold on a non-dollar basis is “showing the kind of stress that may break the Federal Reserve’s rate-hike trajectory.” If the Fed happens to halt monetary tightening policy, McGlone suspects it could be the catalyst for the rally to resume. “The relative discount in the dollar vs. euro gold spread is showing currency distress and suggests a potential catalyst for a gold bottom — an easing of Fed rate-hike expectations,” the BI report asserts.
Bloomberg Intelligence Report Says Bitcoin, Ethereum, BGCI Could Outperform Most Major Assets
In addition to the October metals outlook, McGlone and fellow market strategist Jamie Douglas Coutts published BI’s crypto outlook for October. McGlone’s crypto analysis says that when the economy shifts, the two analysts see bitcoin and ethereum surpassing most of today’s assets. “When the ebbing economic tide turns, we see the propensity resuming for bitcoin, ethereum, and the Bloomberg Galaxy Crypto Index (BGCI) to outperform most major assets,” the strategist’s latest report highlights.
The crypto report further says that rate hikes could pose a potential threat and send the two leading assets a strong headwind. “But it’s the potential for the benchmark crypto to shift toward becoming a risk-off asset, like gold and U.S. Treasurys, that may play out in 2H,” the October BI report states. Furthermore, McGlone also discussed how October is typically a bullish month for BTC in contrast to September’s dismal price history.
McGlone’s crypto analysis states:
Since 2014, October has been the best month for bitcoin, averaging gains of about 20%, and in 3Q the BGCI advanced about 16% vs. 5% declines for the Nasdaq 100 and S&P 500. Ethereum’s transition to proof-of-stake may be helping it build a base above $1,000 and Bitcoin about $20,000.
What do you think about McGlone’s analysis concerning gold, bitcoin and ethereum? Let us know what you think about this subject in the comments section below.