Gold was up 27% in 2024, and the S&P 500 24%.

Not bad for a “barbarous relic,” as economist John Maynard Keynes described gold in 1924. Keynes was talking about the gold standard, which was finally buried in 1971 when the US stopped converting dollars to gold. Since then we’ve had free-floating currencies, or what we better understand as “fiat.”

Keynes saw gold as an impediment to the kind of monetary expansion he advocated to refloat the global economy in the past-World War 1 period. There just wasn’t enough of the yellow metal to go around for the kind of economic prosperity he imagined.

He declared that gold's value and usefulness were obsolete. His solution was to free governments to expand money supply as a way to create economic growth. We are still living with the terrible effects of this wrong-headed policy. Evidence of this is that it costs $8.13 today to buy what $1 bought in 1970. That’s an 88% depreciation.

In 1970, $1 would cost you R0.71. Today, it costs R18.40 for $1. That’s a 93% depreciation.

You can see where this is going, and don’t expect it to get better.

That explains why gold is starting to shine.

Investor Karin Richards recently tweeted the following useful chart giving a comparison of investment performances over the 12 months to December 2024.

The Nasdaq, with a net return of 28.6%, was the best place to put your money in 2024.

That’s not counting bitcoin of course.

BTC beat the pants off all of the above with a more than doubling in price over the year.

It’s no wonder that investors are pressuring fund managers to knock off their hesitancy and get them into BTC, even if it’s just 2% or 4% of invested funds.

Given the extraordinary debt mountain holding the USD aloft, we wonder how long before something gives. That explains gold’s robust performance in 2024, and why bitcoin is going mainstream (with several ETFs now providing an on-ramp for institutions). There are serious – and growing – concerns about the health of the world financial system. The 2008 financial crisis was the canary in the coal mine. The dead wood in the financial system has yet to be flushed out.

The USD and other fiat currencies are going to remain under pressure in 2025 relative to BTC. It’s going to be an interesting year. Several analysts are predicting that BTC will end 2025 higher than when it started, perhaps as high as $150k.

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