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Here is the ratio of Bitcoin to gold. This is promising. It seems that a turning point has been reached . The last words are known. I don't want this to sound like a famous last word, but it seems like there 's a certain breakthrough here. And you know what's interesting, you can see it here: the correlation between Bitcoin and gold is very low.
Very low by historical standards. So seeing Bitcoin start to outperform gold is very encouraging from our perspective . You know, we're big optimists about Bitcoin. This is a technological revolution. This is a new global monetary system. And it is the first asset of its kind in a new asset class. So we believe that thanks to these three revolutions, it has room to grow.
The ratio of metals to gold. Now that gold is falling, I thought we would see a bigger reversal on the green line. We don't see it. And this suggests that something may be happening in China that is limiting the growth of metals. We talked quite a bit about interest rates. Interest rates may rise more because of the US than because of China.
Maybe that's all this graph is about. And here is the S&P for oil, you see, it's hovering around its highs. If we are right about what will happen to oil, it will make a very powerful breakout from the upper end of the range, which, as it turns out, has been in place since the late 90s. And the S&P to gold—again , many of the bears focused on deficits and government debt were expecting a collapse in this series, a fall in the S&P relative to gold, like in the 70s.
We completely disagree with this and believe we are moving in a different direction. Here is the ratio of gold's total return to Treasury bills. You can see how it behaved during the " golden age" of stocks in the 80s and 90s—it was falling. We believe the same thing could happen this time, but more through gold than through Treasury bills .
Interest rates on Treasury bills mostly declined during the 1980s and 1990s. We don't think it will be the same this time. Here is the ratio of Bitcoin to gold. This is promising. It seems that a turning point has been reached . The last words are known. I don't want to, I don't want this to sound like a famous last word, but it seems like there's a certain breakthrough here.
And you know what's interesting, and you can see it here, the correlation between Bitcoin and gold is very low. Very low by historical standards. Um, and so seeing Bitcoin start to overtake gold is, from our perspective, very encouraging. You know, we're big optimists about Bitcoin. This is a technological revolution.
This is, um, a new global financial system. And it is the first asset of its kind in a new asset class. So we believe that thanks to these three revolutions, it still has room to grow. And if we are right about inflation, then the pressure on gold will be downward. I will say that we have carefully considered the role of Bitcoin and gold as the insurance policies that they both provide, because we believe that this technological revolution will put many companies at risk, and we expect counterparty risk if enough companies find themselves in a difficult situation.
Interestingly, 200 railroad companies went bankrupt in the 1800s. Back then, so much capital was chasing opportunities in the railroad industry. We don't think that's going to happen with artificial intelligence, because the difference between then and now is that railroads were built on the hope and faith that a new world would develop and eventually revenues would appear.
In the field of AI, revenues are simply growing rapidly. The return on invested capital in this industry today is enormous. And we see Elon's land-based data centers turn from huge losses to massive profits as he refocused that part of the business in the short term to cloud service. So the return on invested capital is huge.
It seems Anthropic has agreed to pay $50 billion for ...They, they what? This is equivalent. Only 50 billion, and I think it cost Elon and the team somewhere in the mid- to late 20s. So, right here—immediate return on invested capital. So, we still think there will be a lot of creative destruction as this new world takes shape.
Again , robotics, energy storage, AI, blockchain technology, multiomics—this touches every one of our sectors. And so, you know, if enough funds, like private lending institutions, have made huge bets on SaaS. And some software companies and stocks are making a small comeback. Salesforce.com had a very good recovery after demonstrating how important agent-based AI and Slack together can be for the company.
But still, you still have to deal with a huge database of outdated software. In the software industry, not everything is so hopeless. But we believe that certain shifts will occur in all sectors of the economy . Uh, you know, we've talked a lot about electric cars, robo-taxis, and their overall impact on transportation.
We believe this is a big sector where we will see a lot of change. But we believe that this will affect every sector, so the question arises: where in the economy are the counterparty risks hidden? This could benefit both Bitcoin and gold. So, we'll see how it goes. We consider Bitcoin an asset for both minimizing risks and investing in risky assets.
So, under current conditions, we believe that this ratio will continue to grow and reach historical highs. Listen, you don't have time. Don't miss this 2025 bull market . First, gain knowledge to stay ahead of others. We have created the best step- by-step guide to cryptocurrency that will be your guide in this market.
Uncover the secrets of the crypto world and make smarter investments today. Follow the link below to get your exclusive copy for less than $10. When you look at debt as a percentage of GDP, you see a green line that takes us back to the 40s, uh, late 40s. You can see that the debt- to-GDP ratio is approaching a historic high.
Many, many headlines are screaming about a record $40 trillion debt. But as a percentage of GDP, this is not quite a record. You see, it stays at a certain level. And COVID and all the incentives really, really got us to that point. And we remained at this level. Of course, this is very upsetting to many people who see waste, fraud, embezzlement, and everything else.
So the purple line here is debt. This is government debt to corporate equity, and you know what that looks like. Of course, this comparison is not entirely correct. Of course, the government does not own the shares, and this is not a general debt to all capital. But it gives a point of view: debt as a percentage of equity is declining, similar to how it was in the 90s.
And in the 90s, we had a very good stock market. In fact, in the 1990s, it seems we had our first budget surplus in many, many years. So, the debt- to-equity ratio has declined and is actually approaching historical lows , if you don't take into account the late 90s. So, this suggests that debt servicing capacity has improved due to economic growth and wealth creation.
Now this highlights the frightening situation with wealth taxes. We are strongly opposed to wealth taxes, mainly because we support innovation. And we believe that this will destroy the entrepreneurial spirit. Let's hope our economy doesn't move in this direction, because it would give China an advantage over the US.
China is now our biggest competitor in innovation. Okay, now we move from fiscal policy to looking at fiscal and monetary policy on the same chart. So, M2 is marked in green. This is the annual growth rate. This is the four-year annual growth rate, as is the growth in federal spending, shown in purple .
We believe that if we compare today with the 70s, there can be no comparison. We are at the lower end of the range on this graph, and so from that perspective we can be calm. However, we agree that as economic growth accelerates, the rate of growth in federal spending should slow. This is especially true for transfer payments and other social benefits.
You can see the growth in the money supply if you look at the last 4 years: this is not an inflationary rate of money growth. COVID was like that, but we canceled it, and that's good. Another thing we like to focus on and have mentioned many times is M1 growth, which, unlike the 4-year figure, is just over 5% year-on-year.
As we noted earlier, if nominal GDP growth accelerates from the current rate of approximately five percent. Then the demand for money will increase , and we expect M2 to continue to accelerate. However, another thing we are closely monitoring is the velocity of money. The velocity of money is now leveling off.
This is the green line here. And you can see it from the purple line. In fact, this is the only correlation we have been able to find when trying to explain why the turnover rate started to decline in the late 90s and has had a clear downward trend since then . So, this is the labor force participation rate.
Interestingly, it rose slightly in today's employment report. This is an interesting fact. This is nominal GDP growth. What is nominal GDP growth? This includes real GDP growth and inflation. Here you can see a short history from the early 60s. And you can see what happened when we abandoned the gold standard in 1971.
You can see what happened to inflation, or I would say nominal GDP growth, which included both real GDP growth and inflation. And how far we went into double digits then. Both interest rates and inflation then reached double digits. So, here you can see a long-term decline over 40 years; If we analyze trends, both nominal GDP growth and interest rates were falling.
Most people in our business have seen nothing but falling rates until recently—before COVID, when the last big decline occurred, and since then, of course, we have seen growth. Now the question is, we think inflation will surprise us with low numbers, maybe even go negative, and I'll show you the charts so you can see why, but one of the factors on the other side of inflation will be real GDP growth.
As I just mentioned, we believe it will accelerate significantly. So there will be some confrontation. Real GDP growth in this calculation of nominal GDP is up, and inflation is down, possibly into negative territory. This graph also shows that nominal GDP growth and the 10-year Treasury yield have a fairly high correlation in terms of trends.
So the question is, where are we headed now? And as you can see, the yield on 10-year bonds has actually stabilized. It has been in a range since around 2023. So, we are in this range for the third year . But you see that nominal GDP is growing. Now I have to make a clarification. This is a 10-year moving average.
It seems to be out of range. And we should expect Treasury yields to follow suit . This 10-year moving average has some sensitivity to endpoints. Hi, I'm Maria from Daily Dose Crypto. Have you noticed that gold, silver, and Bitcoin have recently reached all-time highs? Is this a coincidence or do smart investors know something?
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