U.S. Treasuries Waver, Gold, Silver, Copper, and Bitcoin Rally as Alternative Assets Surge

Concerns Over U.S. Fiscal Health Spark Dollar Weakness

Gold Up Nearly 16% This Month... Bitcoin Touches $80,000

Debasement Trade Accelerates

Funds Flow Into Related ETFs, Fueling the Rally

Despite the U.S. Treasury's Treasury buybacks, trust in the dollar and U.S. Treasuries is wavering, marking a fundamental turning point in the flow of global capital. With assets such as gold, silver, copper, and Bitcoin all showing strong performances, the so-called "Debasement Trade" is gaining momentum as capital moves en masse into physical and alternative assets to hedge against currency devaluation and mounting fiscal deficits.

Gold up 16% this month alone... All four major alternative assets surging

On the 25th (local time) at the New York Mercantile Exchange (COMEX), gold futures for December settled at $4,694.50 per ounce. This is up 15.94% since the beginning of the month.

Silver is also on the rise. Buoyed by the appeal of being undervalued relative to gold and robust industrial demand, silver's upward momentum is surpassing that of gold. COMEX silver futures reached the $68 per ounce level, up more than 18% so far this month.

Copper surpassed the $14,000 mark this month. The spot price for copper on the London Metal Exchange (LME) hit an all-time high of $14,850 per ton on the 17th. Tight mine supply and burgeoning demand from artificial intelligence (AI) data centers and power infrastructure are together supporting copper’s price above $14,000.

Bitcoin, too, is showing remarkable strength, surpassing $80,000 for the first time in three months following short position liquidations and institutional fund inflows. According to CoinMarketCap, Bitcoin was trading at $78,984.90 as of 1 p.m. on the 26th. During the previous session, it even rose beyond $81,000, touching $81,235.03. This is the first time Bitcoin has topped $80,000 since mid-May. Over the past week, it has climbed by about 23%.

The simultaneous strength in gold, silver, copper, and Bitcoin is attributed to the debasement trade. The debasement trade refers to an investment strategy that targets physical and alternative assets in anticipation of the decline in fiat (paper) currency’s real value, driven by excessive government debt accumulation and indiscriminate monetary supply.

Debasement Trade Fuels the Rally

The U.S. Treasury’s significant expansion of buybacks—purchasing government bonds to prevent a collapse in long-term Treasury prices (i.e., a spike in yields)—has heightened concerns about the erosion of the real purchasing power of the dollar, thereby stimulating the debasement trade. In August, mounting inflation fears and worries over fiscal deficits jointly pushed U.S. long-term interest rates sharply higher. The 30-year yield briefly soared to 5.3%, the highest since 2007. In response, on the 19th, the U.S. Treasury announced it would more than double the size of its buybacks to over $4 billion.

Choi Jaewon, a researcher at Kiwoom Securities, said, "With gold and Bitcoin both strengthening since August—after a period of weakness earlier this year—concerns about the debasement trade, which had faded for a time, are resurfacing. Notably, the recent rise in long-term interest rates is being driven not by inflation expectations, but by deficits, Treasury supply, and the resulting rise in term premiums. This means gold’s rally reflects a decline in confidence in U.S. fiscal and Treasury markets, rather than simply functioning as an inflation hedge."

As the debasement trade is expected to persist for the time being, the bullish trend in alternative assets is also likely to continue. Park Sangwon, a researcher at iM Investment & Securities, noted, "While it’s difficult to say for sure whether the debasement trade will be a long-term trend, it will likely persist in the short term, given that 'Bidenomics' (fiscal tightening, inflation control, and a weak dollar) is bound to intensify until the midterm elections."

There are forecasts that gold will reclaim the $5,000 mark before the year is out. Hwang Byungjin, a researcher at NH Investment & Securities, commented, "The expansion of long-term Treasury buybacks by the U.S. Treasury has underscored the massive fiscal deficit and policy uncertainty, sparking a weakening in the dollar index. Furthermore, the rise in the term premium on long-duration Treasuries is accelerating gold buying by global central banks looking to diversify reserve assets. Against this backdrop, gold is expected to recapture $5,000 this year, potentially setting new all-time highs in 2027, with robust investment demand for gold bars, coins, and exchange-traded funds (ETFs)."

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For Bitcoin, rather than chasing short-term rallies, it is recommended to monitor price trends and adopt a gradual investment approach. Lee Joonho, a researcher at Hana Securities, stated, "The sharp short-term rise has occurred as the end of the halving-driven downward cycle is expected within the next two months. While there could be significant upside, it’s more effective to gradually build up positions after identifying support zones, rather than aggressively pursuing short-term gains in the latter half of the year."

Funds Flowing into Resource Stocks and ETFs

The debasement trade, which has lifted alternative asset prices overall, is expected to intensify investor interest in related stocks and exchange-traded funds (ETFs).

Among the beneficiaries of strong precious metals trends such as gold and silver are Korea Zinc, Elcomtec, and ITCen Global. Korea Zinc sells gold and silver recovered during zinc and lead smelting. In the first half of this year, its silver sales surged 170% from a year earlier, and gold sales also rose 58%. Elcomtec, holding mining exploration rights in Mongolia, is seen as a representative theme stock in times of a gold rally. ITCen Global owns Korea Gold Exchange as a subsidiary. ITCen Global’s share price alone has soared by over 80% this month. Overseas, global industry leaders—such as Newmont (NEM), the world’s largest gold miner, and Pan American Silver (PAAS)—are seen as direct beneficiaries of rising commodity prices.

For copper, Poongsan, which operates a downstream copper business and enjoys "metal gain" (inventory valuation profit), LS, a core player in electric power grid expansion, and Freeport-McMoRan (FCX), the world’s largest private copper producer, are considered major beneficiaries. For the Bitcoin rally, Woori Technology Investment—which holds a stake in a domestic virtual asset exchange—and MicroStrategy (MSTR), the world’s largest corporate holder of Bitcoin, are cited as direct beneficiaries.

If the volatility in individual stocks is concerning, diversifying through ETFs can be a viable alternative. The ACE KRX Gold Spot ETF and GLD, which is listed on U.S. exchanges and invests in physical gold, are seen as effective long-term inflation hedges. Net individual investor purchases of the ACE KRX Gold Spot ETF have surpassed KRW 200 billion since the start of the year, and its one-month yield recently reached 10.83%. Other strong performers include TIGER KRX Gold Spot with 10.72%, KODEX Gold Futures (H) at 14.91%, HANARO Global Gold Mining Companies at 33.26%, and more. For silver and copper, KODEX Silver Futures (H), TIGER Physical Copper, and KODEX Copper Futures (H) enable direct investment in derivatives and spot prices, and funds such as CPER, which invests in global copper mining companies, have also been highlighted as alternatives. As for Bitcoin, inflows of institutional funds can be expected via spot ETFs such as IBIT and FBTC, which are listed on overseas markets.

This content was produced with the assistance of AI translation services.