Gold Reaches Historic High Amidst Dollar Weakness
As gold's price hit a new historic high of $4,750 per ounce on January 20, the U.S. dollar index (DXY) fell to 98.52 on the same day, marking its lowest point since January 6. The DXY is an index that calculates the value of the USD relative to a basket of foreign currencies.
The decline in the DXY is an indication of dollar devaluation. This phenomenon was humorously noted by Dogecoin (DOGE) co-founder Billy Markus amidst a rally in gold prices.
yay dollar devaluation
— Shibetoshi Nakamoto (@BillyM2k) January 20, 2026
Founded in 2013, Dogecoin is a meme coin that originated as a playful jab at the first decentralized cryptocurrency, Bitcoin (BTC). Dogecoin was created as Bitcoin sought to challenge Wall Street's financial dominance in the aftermath of the 2008 economic crisis. Over time, DOGE garnered attention and praise from figures like Elon Musk, eventually becoming the world's ninth-largest cryptocurrency by market capitalization. Bitcoin, however, continues to hold its position as the leading cryptocurrency.
Geopolitical Tensions Fuel Dollar Devaluation and Gold's Appeal
Dollar devaluation is generally viewed as positive news for assets such as gold and Bitcoin. When confidence in the world's primary fiat currency wanes, investors often turn to these assets as hedges against currency depreciation. Gold has long been recognized as a premier safe-haven asset, particularly during periods of geopolitical uncertainty.
Several factors have contributed to the current geopolitical uncertainty. These include President Donald Trump's ongoing tariff disputes, the recent Greenland situation, his statements regarding the Federal Reserve's independence, and the rapidly increasing federal debt, which has surpassed $38.45 trillion. In this climate, gold appears to be providing a sense of security to investors.
Gold is traded extensively worldwide and is widely regarded as a stable, high-value asset. The precious metal has experienced a significant price surge in recent months, appreciating by 17% over the last three months.
Bitcoin's Divergent Performance Amidst Gold's Ascent
Despite the positive outlook for traditional safe havens, Bitcoin's performance has diverged significantly. During the same three-month period that saw gold's 17% appreciation, Bitcoin's price has declined by approximately 17%.
Canadian billionaire and gold financier Frank Giustra has suggested that this recent price action challenges the widely held belief among Bitcoin maximalists that the cryptocurrency is a form of "digital gold." Giustra posits that gold functions as a safe haven, while Bitcoin is best characterized as a risk-on asset.
It is important to note the historical context: gold boasts a history spanning thousands of years, whereas Bitcoin has only been in existence for 17 years. At the time of writing, BTC was trading at $90,843.49, which is 28% lower than its record high price of $126,080 achieved in early October of the previous year.