Are Gold and Bitcoin Overvalued? Fidelity Strategist Weighs In

Fidelity market strategist Jurrien Timmer has raised questions about the potential overvaluation of gold and Bitcoin (BTC), drawing attention to the current relationship between these assets and the United States' money supply. On October 23, Timmer shared his perspective on the social media platform X, emphasizing that the combined value of gold and Bitcoin now represents 133% of the U.S. broad money supply (M2).

Understanding M2 and Its Role in Evaluating Asset Valuation

The M2 metric, an important indicator of the national money supply, includes cash, checking deposits, savings deposits, and other near-liquid assets circulating within the U.S. financial system. By comparing the values of gold and Bitcoin to this metric, Timmer has established a reference point that reveals potential market trends.

Timmer noted that the current percentage—133%—mirrors the historic peak reached by gold in 1980, a time when the value of the precious metal was at its all-time high relative to the U.S. money supply.

Cautionary Parallel: Gold’s Historic Peak in 1980

This comparison to 1980 serves as a cautionary reminder, as gold experienced a significant surge before declining from its peak in the early 1980s. That era was marked by rampant inflation and economic instability, conditions that contributed to a gold price surge, followed by a correction. By drawing parallels to that historic moment, Timmer underscores the importance of evaluating the sustainability of the recent performances of gold and Bitcoin.

No Definitive Zenith for Gold or Bitcoin

While these metrics suggest potential overvaluation, Timmer refrained from making a conclusive judgment that gold or Bitcoin has already reached their respective peaks. Instead, his analysis invites investors to approach these assets with caution, particularly in light of gold's historical behavior when it hit similar valuation thresholds.

“Something to think about after the meteoric rise of gold,” Timmer remarked, encouraging investors to remain vigilant as they consider opportunities in both gold and Bitcoin.

Balancing Opportunity With Prudence

Timmer’s insights serve as a reminder of the importance of assessing broader economic conditions, historical patterns, and market fundamentals when evaluating the future trajectory of these assets. For investors who view gold and Bitcoin as safe-haven investments or hedges against economic uncertainty, understanding their valuation relative to monetary metrics like M2 can provide an invaluable perspective.

As both assets continue to capture global attention, the question of whether their current values can be sustained remains a topic of active debate. By urging caution, Timmer offers a thoughtful lens through which investors can critically evaluate their strategies in an evolving economic landscape.