author ：Eric Fine Natalia Gurushina
compile ：Gary Ma Wu said blockchain
Edit Preface ：VanEck Previously launched bitcoin Futures ETF, But was rejected bitcoin spot ETF. In this paper, the imagination of bitcoin becoming a reserve currency is very exaggerated ,“ Use the same as gold M0 value , The implied price of bitcoin is about 130 Thousands of dollars . Use global M2 The implied price of bitcoin is 480 Thousands of dollars ”. You can read its basic logic here . Similar arguments can be referred to ：Arthur Hayes Long article ： Sanction 、 Gold and bitcoin
Sanctions against Russia may have changed the reserve currency system . From this monetary perspective , We are trying to quantify the impact on gold and bitcoin as potential reserve assets .
The currency has changed . Sanctions against the Russian central bank have eliminated its dollar 、 Euro and yen reserves . This should reduce the demand for hard currency as a reserve asset , At the same time, increase the demand for currencies that can play the original functions of these former reserve currencies . We believe the central bank will take action , Private individuals will also take action . To put the current event in context , Our emerging market bond investment team is trying to quantify the emergence of a new gold or bitcoin backed monetary system . The end result is , The upside of gold and bitcoin may be huge . To be specific , The framework estimates that the price of gold is about... Per ounce 31,000 dollar , The potential bitcoin price is about 130 Thousands of dollars . If the greater pressure on the financial and monetary system is adjusted , Will result in higher prices .
From a monetary perspective, the valuation framework of gold and bitcoin
We have established a simple framework to evaluate the value of gold and bitcoin . For gold , We will the global money supply （M0 and M2） Divided by global gold reserves . Monetary liabilities divided by reserve assets . We use troy ounces to represent the current reserves , We use the current exchange rate to convert monetary base liabilities into US dollars . We use base money because econometrics is good （ Worldwide ）, It's understandable , It's just currency and demand deposits in your pocket .
except “ The global ” In addition to the price of gold , We also know the gold holdings of central banks , And can calculate the gold price of each country . This may be useful to measure the potential pressure on national monetary and financial systems . for example , Under the strict gold standard , A national central bank's balance sheet should produce about an ounce 1900 Dollar gold . This will show that , The potential pressure from their monetary system is not obvious （ Although there are obviously many other important factors . Besides , We do not recommend adopting the gold standard , We continue to take a negative view of the prices of all Russian assets ）. We are right. M2 Run the same operation , Just to enhance the framework （ I'll talk about it in detail later M2 and M3）.
For bitcoin , We used the same framework . We calculated BTC Of “ The global ” Price , namely M0 and M2 Divide by quantity . We only calculate BTC The price of , Not the price of all cryptocurrencies , Because the number of bitcoins is limited （2100 ten thousand ）, and “ Cryptocurrency ” The potential number of is unlimited . This is the denominator of bitcoin calculation , Just as gold was the denominator in the previous calculation .
Extremes of gold and bitcoin and real price targets
In the extreme case where gold or bitcoin becomes a reserve asset , Obviously, the resulting “ Price ” Lower expectations , They are just a starting point . Investors should at least determine the subjective possibility of the result . perhaps , They should choose a degree for the result ： Gold or bitcoin will be the only reserve asset , Or share this position with other assets ？
We believe that , Most investors will and should use the expectation framework to achieve these numbers . for example , One who sees gold has 10% Investors who have a chance to become reserve assets may say , our “ Extreme scenarios ” Price 31000 dollar / Ounces represent 3100 dollar / The actual price target for ounces . They might think , Relative to the current price , This is an attractive upside space , Maybe not .
Our point is , We may never happen , Or extreme situations that may not happen completely begin . However , They are a way to start the quantification process , Investors should adjust according to their own assumptions .
Understand the new monetary paradigm
Some famous commentators said , Due to sanctions against the Russian Central Bank , The currency has changed . But so far , The output is prose , Our goal is a framework and some specific figures .
The Russian central bank may change its reserve portfolio to some extent , To the detriment of the dollar, the euro and the yen , And strengthen other currencies . The United States 、 The sanctions imposed by the eurozone and Japan on the Russian central bank are basically “ disappear ” The Russian dollar 、 Euro and yen reserves . therefore , Some central banks and the private sector will diversify their foreign exchange reserves .
Many of the new reserves will be based only on existing “ emerging market ” National currency , Such as RMB . Relative to the central bank , The private individual role is now the more important price maker in the market . therefore , Gold and cryptocurrency are our primary concerns .
Central banks and individuals may look at... In a new paradigm “ currency ”, We are trying to figure out its exact meaning . let me put it another way , We think it is necessary for market participants to answer such a question ： If China buys 3 What happens to trillions of dollars of gold ？ If people lose faith in fiat money , Switch to other currencies , What will happen ？
Under the valuation framework , What insights do you have about the price of gold
For gold , Our main conclusion is ：
In global currency （M0） Divided by global gold reserves, the implied value of gold “ The global ” Price , For the countries with the most gold holdings , Per ounce 3.1 Thousands of dollars （ Average ） and 2.1 Thousands of dollars （ Median ）.
In global currency （M2） Divided by global gold reserves “ The global ” The price of gold is much higher , About per ounce 10.5 Thousands of dollars （ Part of the reason is that many central banks have little or no gold reserves ）.
The greater the possibility of a financial crisis ,M2 The more important the price is .
M3 It is now implicitly guaranteed by the Federal Reserve （ In our view , This is one of the most important effects of the global financial crisis ）, This indicates greater upside space . If the Fed is forced to guarantee the world more openly in future crises M3, Then the gold price will be more optimistic . But as we all know , The Federal Reserve and other institutions stopped counting this figure before and after the global financial crisis , The price is obviously much higher .
On the basis of various countries , Japan's data exceeded the record . It has a lot of money , Only a little gold .
The UK is another developed market with very low gold reserves relative to currency liabilities .
Relative to monetary liabilities , China's gold reserves also seem to be low .
The results of gold prices in various countries may indicate , Countries with high gold prices may face pressure of currency devaluation .
In some developed market countries , There is a lot of pressure to devalue , More than emerging market countries . Developed market countries “ print ” Own reserve currency , therefore ,“ reserve ” It's a different concept for developed markets , Emerging markets must strive to generate external account surpluses , To increase reserves .
Russia is really interesting . Relative to money （ Under the current exchange rate and gold price ）, It has almost enough gold to build a currency board .1999 year , stay 1998 After the crisis in , When Russia's foreign exchange reserves （ in the past , Russia's foreign exchange reserves are US dollars ） When equal to the base currency , The opportunity to buy appears .
Of course , We need to remind investors , According to their understanding of this “ extreme ” Assumptions about the likelihood of a scenario happening , Or the assumption of the proportion of gold realized in any new reserve state , Down this “ extreme ” Price expectation under scenario .
For those who pay attention to the calculation of gold prices in various countries , There is a big difference in prices . The following evidence should be self-evident .
Under the valuation framework , What insights do you have about bitcoin prices
Cryptocurrencies all benefit from this situation , And compete with gold . Maybe cryptocurrency is the new gold , And will benefit from this demand for new hard money . Maybe not. , Maybe both . Our current view is , For the central bank , Gold is the easiest thing to consider and buy , At this special moment , The central bank is the key role in our hearts . But private actors are more agile , Respond to the same underlying motivation .
We did the same calculation for cryptocurrency . Because the potential number of cryptocurrencies is unlimited , We focus on bitcoin , It has 2100 Restrictions on the supply of 10000 bitcoins . In this regard , It is closer to gold than other cryptocurrencies . that , The global M0 and M2 Divided by the number of bitcoins ？
Use the same as gold M0 value , The implied price of bitcoin is about 130 Thousands of dollars .
Use global M2 The implied price of bitcoin is 480 Thousands of dollars .
The upside of cryptocurrency seems to be much higher than that of gold （ about 33 times ）, Although gold is the central bank's more direct first choice . However , Individual participants may act faster .
Like gold , We need to remind investors , According to their understanding of “ extreme ” The assumption of the probability of occurrence , Or the assumption that the bitcoin will be realized in any new reserve state , Down regulation “ extreme ” Price expectation in case .
The starting point framework for the valuation of gold and bitcoin
We cannot overemphasize , This is a framework that helps us begin to concretize . There are many problems with these implied prices j Come down . The most obvious thing is to include a probabilistic scheme .
There are other assets that may perform the functions of gold or bitcoin , As a reserve asset . Physical assets such as real estate are another obvious alternative to gold or bitcoin , Many people define it as limited supply . Maybe even an unlimited supply of assets , Like stocks , It can also play a function similar to money . Perhaps the same is true for emerging market currencies （ More on ）.
We just provide a starting point for any quantitative process . The spirit of our framework is to start a quantitative process , Let you refine your answers , Instead of producing " answer ".
Emerging market currencies / Bonds may benefit
Emerging market currencies （EMFX） And a potential beneficiary . However , The above framework is not suitable for EMFX, So we won't include them in this discussion .
First , Unlike gold or bitcoin , Emerging market currencies are subject to potentially unlimited supply . Besides , We have a formal investment process for local currency bonds in emerging markets . and , This process does not distinguish between money and interest rates . Logically speaking , Separating money from interest rates is double counting inflation （ Unless you're looking at non economic factors , Such as technical factors ）. Relative to the fundamentals , We are attracted by high real interest rates . period . This is the core of our formal analysis process . We have the second step of analysis , To include non systemic risks . for example , We don't have Russia at all , Because although relative to its fundamentals , Real interest rates are attractive , But we think the risk of sanctions is too high , The impact is too great . in any case , We think EMFX Is a potential major beneficiary , But we didn't discuss it here , Because this framework is not suitable for unlimited supply of assets .
Quantify the impact on gold and bitcoin prices
up to now , The world has not imposed sanctions on major economic and financial participants such as Russia . About the future of money “ The story ” Very interesting , But if someone thinks this may be a new paradigm , Then it is necessary to try to quantify . This is the purpose of our work -, Make a vague and complex problem as specific as possible . The key impact of this major change on asset prices is the sharp rise in gold and bitcoin .
original text ：https://www.vaneck.com/us/en/blogs/emerging-markets-bonds/how-one-bond-manager-values-gold-and-bitcoin/