BTC,Stocks and Gold...Is the Bubble in the Economy Going to Pop?

Gold, the traditional safe-haven asset, has reached record-high international spot and futures prices, and central banks are beginning to hoard it. BTC, the eighth largest asset in the world, once considered an 'IQ tax', is now priced at nearly $72,000 per coin, with a market capitalization soaring to $1.41 trillion.

In addition to the hottest gold and BTC, the world's mainstream stock markets have reached record highs. Since February 23rd, the U.S. S&P 500, Dow Jones, and Nasdaq indices have all hit record highs. The market value of the U.S. technology 'seven giants' has soared 70% since the beginning of the year. The U.S. stock boom has been accompanied by the European stock index hitting a new two-year high.

In Asia, India's stock index SENSEX30 recently rose to 74,000 points, making it the most expensive market in Asia Japan's Nikkei index has also reached 39,000 points. Additionally, the stock markets in Indonesia, Vietnam, and the Philippines have hit new highs...

However, behind the appearance of prosperity, there are many questions and contradictions.

The Economist's view is that the US stock market bubble may burst, given that the overall market capitalization on Wall Street has reached an average of 80% of what it was during the late 1990s Internet bubble. The Economist's view is that the US stock market bubble may burst, given that the overall market capitalization on Wall Street has reached an average of 80% of what it was during the late 1990s Internet bubble. The Economist's view is that the US stock market bubble may burst, given that the overall market capitalization on Wall Street has reached an average of 80% of what it was during the late 1990s Internet bubble. This is supported by similar indicators such as concentration or valuation spreads.

For instance, the share of value held by the top 10% of companies in the U.S. is second only to the level before the stock market crash of the 1930s, which triggered the Great Depression.

Given this context, should the average person adjust their investment strategy? For example, in light of volatile gold prices, should we buy or sell U.S. stocks, bonds, or other dollar-denominated assets?

The severity of the current problem in the United States is unprecedented. On one hand, the debt continues to expand, while on the other hand, the country faces severe fiscal pressure due to the fiscal deficit and geopolitical risks associated with external spending needs. It is crucial to protect the economy's inherent stability, particularly given the increasing pressure on the United States' financial debt financing and convergence model. Additionally, as this is an election year in the United States, maintaining political and economic stability is a priority.

In this context, the international price of gold has risen due to the United States' self-protection logic. The United States has the highest gold reserves in the world. The increasing price of gold indicates that the United States is becoming more capable of dealing with risks and strengthening its position.

Additionally, the dollar's hegemony has led other central banks to increase their gold holdings in recent years. Due to the strong correlation between the price of gold and the dollar, as the price of gold increases, the value of the dollar continues to depreciate. This is in line with the US strategy of maintaining the competitiveness of the world by using the pricing power of the US dollar to keep it depreciated.

Additionally, the main driving force behind the rise in the US stock market is the technology industry. The number of AI-related 'seven giants' increased by over 100% last year.

Additionally, the US macroeconomy is considered the 'perfect anti-inflation' as it maintains economic resilience and growth while reducing inflation through interest rate hikes. Based on the relatively strong economic data in the US, the stock market bubble is not a serious issue as expected.

Based on this assessment, the US stock market remains a worthwhile investment due to the growth of the AI industry and the resilience of US corporate earnings. Additionally, gold, as a non-interest-bearing asset, becomes more attractive in a low-interest-rate environment. Therefore, the greater the expectation of the Fed's rate cut, the more favourable gold becomes.

Finally, due to the Fed's anticipated interest rate cuts, the U.S. 10-year Treasury yield is expected to decrease to approximately 3.5% this year. Despite this, U.S. bonds remain a valuable asset.