Exploding Gold Sales at Pawnshops Offers Lesson for Bitcoin Bulls

There are plenty of reasons to be bullish on gold, but the evergreen bear case on the precious metal is that it's never really consumed. Every ounce of gold that's been mined since the beginning of time is still here.

To wit is a Bloomberg story over the weekend reporting on a flood of customers rushing into a Brooklyn pawnshop with their valuables to cash in on gold's recent run to a record price above $2,400 per ounce. "People are using gold as an ATM they never had," owner Gene Furman, who is seeing three times the normal traffic of sellers since the metal's rally began in earnest two months ago, told Bloomberg.

Buyers appear to have gone on strike at these prices as well, with the U.S. Mint posting March American Eagle gold coin sales that were roughly 10% of the level hit a year prior.

Whither bitcoin?

There are clear differences between gold and bitcoin (BTC), but they share many similar properties. Among them is that bitcoin, too, is never truly consumed and all that's ever been mined is still with us (though some may be unavailable due to lost private keys).

Mostly thanks to boosted demand from the spot ETFs, bitcoin by mid-March had risen nearly 70% for 2024 to a new record above $73,000. The rally has stalled since, with the price now more than 15% below that all-time high. The reasons for the pullback are up for debate, but for the last month, sellers have overwhelmed a modestly slowed but still quick pace of buying by the ETFs.

While bulls like to point to just 900 bitcoin being mined per day (and with the bitcoin halving this week, that will be trimmed to 450 per day) versus ETF demand often numbering in the thousands per day, the math doesn't necessarily lead to "number go up." The circulating supply of bitcoin is nearly 20 million and at a high enough price, there have been plenty of willing sellers just as happy to cash in as those rushing to Gene Furman's pawnshop.

Just today, in fact, an early crypto enthusiast moved 50 bitcoin mined in 2010 worth $3 million at current prices to crypto exchange Coinbase, likely with intent to sell. That follows December's move from an address that had been dormant for 13 years of more than 1,000 bitcoin worth $40 million to a trading desk.

The last word on gold and possibly bitcoin goes to Tobina Kahn, president of House of Kahn Estate Jewelers. "It's very busy and we are getting more calls than ever before about clients wanting to bring in their jewels," she told Bloomberg. "I'm telling the clients to bring them in now, as we are at unprecedented levels."