Welcome back to The Breakdown with me, NLW.

It's a daily podcast on Macro, Bitcoin, and the Big Picture Power Shifts remaking our world.

What's going on, guys? It is Wednesday, October 22nd, and today we are asking if the gold to Bitcoin rotation is on. Before we get into that, however, if you are enjoying the breakdown, please go subscribe to it, give it a rating, give it a review, or if you want to dive deeper into the conversation, come join us on the Breakers Discord. You can find a link in the show notes or go to bit.ly slash breakdown pod. Well, friends, gold fever broke on Tuesday as bullion prices saw their largest drawdown in 12 years.

Gold has been on an absolute tear this year, but the rally over the past two months has been

won for the record books.

Prices were up 26% from the beginning of September, extending year-to-date gains of 68%.

And despite what Peter Schiff might tell

you, gold typically isn't a high-performing investment. It averages around a 6% compound annual growth rate,

so this year has been a massive outlier. To find another year that looks anywhere close to this,

you have to go all the way back to 1979 when Nixon closed the gold window and prices shot up by

123%. And even in a hot year, the past

two months have been one of the most notable rallies in the modern history of gold markets.

Central bank purchases, trade war concerns, and simple momentum had gold stuck in overbought territory

for weeks on end. Last week, we started to see lines around the block in major global capitals

to buy gold in person, a site that many took as a sure-fire top signal. The jitters were starting to show on the trading floors as well. Ole Hanson, commodity strategist at Saxo Bank said, In the last couple of trading sessions, traders have increasingly been looking over their shoulders as concerns about a correction and consolidation have arisen. And sure enough, the correction came swift and hard on Tuesday

with gold plummeting by 6.3%. One interesting corollary to the crash is that we have very little

knowledge of what happened thanks to the government shutdown. The CFTC usually publishes a

weekly commitment of traders' reports that discloses net positions in the derivatives market.

Without that report, traders were flying blind on just how over-leveraged the market had become. We did, however, have data from the stock exchanges,

which reported record call option volume for the 3x leveraged gold ETF. Interestingly, there

wasn't a single headline anyone could point to that triggered the crash. Bloomberg just

referenced potential positive tradeout comes with China, dollar strengthening, overstretched technicals, and the end of seasonal buying in India to explain it.

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