What Is Going On With Gold and Bitcoin?

We're barely a month into 2026 and precious metals have already delivered fireworks. Gold and silver have gone on a generational run before violently collapsing—gold fell 13.87% and silver plunged 31.4% in just two trading days. This after precious metals have lagged equities for years. One compelling theory for this reversal is that central banks have lost/are losing their appetite for storing their respective country's national wealth in U.S. dollars and Treasuries. In 2025, for the first time since 1996, central banks collectively held more gold than U.S. Treasuries—about $4.5 trillion in gold versus $3.5 trillion in Treasuries. They've been buying gold at record levels while simultaneously reducing Treasury holdings.

Why the shift?

The U.S. has set two precedents that make dollars and U.S. debt less attractive:

1. Currency debasement through money printing: Since January 2020, U.S. debt jumped from $23 trillion to $38 trillion—a 65% increase in just five years driven largely by COVID spending. When the total supply of dollars increases, each individual dollar loses value. This inflation has been especially problematic since 2020. Furthermore, the interest we paid on our debt in 2025 totaled to roughly $1 trillion. Interest payments alone now exceed all defense spending and they're growing faster than any other major budget category at 76% over the next decade.

2. Counterparty Risk: In 2022, the U.S. froze $300 billion of Russian central bank reserves and kicked Russia off SWIFT (international banking network) after its invasion of Ukraine. This was a wake-up call to other countries, especially those with adversarial relationships to the U.S. as they now realize that their asssets can be frozen or seized if you fall they happen to fall out of favor with Washington. Not to mention the ripples (or tidal waves) resulting from the tariffs imposed by the U.S. over the last few years.

Why Gold Works as a Store of Value

Gold appeals to central banks, institutional investors, and individual investors alike because its supply is extremely difficult to manipulate. New gold is hard to come by, so we don't have to worry about a glut of new supply diluting the value of existing gold like we do with U.S. dollars. Additionally, directly holding physical gold has no counterparty risk—you're not exposed to government, bank, or corporate actions that could adversely affect your wealth (such as your assets being frozen or confiscated).

This supply stability has historically made gold an excellent long-term store of value. A simple example: in 1900, the typical U.S. home cost an estimated $3,100, equal to about 151 ounces of gold at the era's fixed $20.67/oz price. Today, with median home prices estimated to be $400,000 and gold near $4,900/oz, a home costs roughly 82 ounces of gold. Despite housing increasing ~130x in dollar terms over 126 years, homes actually became nearly half as expensive in gold terms.

However, gold does have drawbacks—namely, it is difficult to store, transport, and is not easily divisible for everyday spending.

Enter “Digital Gold”

Bitcoin is often referred to as “digital gold” because like gold, Bitcoin is a thought to be a store of value over long periods of time due to its limited supply. Gold is relatively scarce as it is hard to find, and if you do find it, it is hard to mine. However, the possibility of more gold being discovered will always remain—humans have been mining it for thousands of years and we have yet to find the bottom. 

Bitcoin, on the other hand, has absolute scarcity as the Bitcoin protocol immutably caps total supply at 21 million coins, which are mined at a predictable and constantly slowing rate. 95% of those 21million have already been mined (brought into circulation) and because the rate at which that last 5% will be mined is constantly slowing, the last Bitcoin won’t be mined for another 100+ years. 

Like gold, Bitcoin has no counterparty risk if held directly with the caveat that self-custodying Bitcoin is much easier as it requires nothing more than a 12 or 24 word password. 

Because of this, Bitcoin is perfectly transportable–you can travel anywhere in the world and so long as you have access to the internet and your password, you have access to your Bitcoin. 

Additionally, Bitcoin is nearly infinitely divisible as each coin can be divided up to 100,000,000 times. This level of divisibility means you could use Bitcoin to buy a mansion or a cup of coffee–something not achievable with gold. 

For these advantages, I've been a wildly enthusiastic Bitcoin proponent and remain one today. Though, I'll admit, it's difficult watching Bitcoin struggle while gold enjoys its generational run. I've long believed the world will grow tired of the U.S.-dominated financial system and seek something more transparent, honest, and equitable. But instead of leaping forward via Bitcoin adoption, it seems we're reverting to what we know... for now.

The Reality of Volatility

For clients interested in investing in Bitcoin, we generally recommend they commit to holding it for 10+ years as the year-to-year swings can be extreme. Bitcoin has existed since 2009—17 years isn't long enough to see how it performs across multiple economic cycles. So let's examine gold–a reasonable, yet very imperfect proxy.

The chart below shows how far gold has fallen from its various ATH (all-time highs) going back to 1978. When the purple line touches horizontal line marked "0%", gold is at an ATH. Notice: gold set an ATH in 1979, then fell 53% by 1981 and hit -62% from that high in 1998. It didn't recover until 2006—a 27-year round trip back to breakeven.

Past performance is not indicative of future results; all investments involve risk including potential loss of principal.

The Bottom Line

Both gold and Bitcoin are finite assets that can't be printed and have no counter-party risk, and thus, deserve consideration in the portfolio of investors concerned with money supply growth and currency debasement. We see investments in gold and Bitcoin as decades-long bets that governments around the world will continue the monetary abuse that has caused housing to become 130X more expensive in only 126 years when priced in dollars, but has become half as expensive when priced in gold. As we have seen, both assets can be wildly volatile in the short-term and should likely be avoided by investors who don’t have a decades-long time horizon or can’t tolerate the extreme volatility. Gold's recent volatility has been stellar, and Bitcoin's has been maddening. However, both can turn on a dime and both need decades to prove their worth as a potential solution to the insidious inflation that is constantly compounding against us.

Generations Wealth Design is a Kansas state registered investment adviser. Information presented is for educational purposes only intended for a broad audience. The information does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and are not guaranteed. Generations Wealth Design has reasonable belief that this marketing does not include any false or material misleading statements or omissions of facts regarding services, investment, or client experience. Past performance is not indicative of future performance. External links are provided for educational use and do not constitute endorsements.