El Salvador is in the news again with a potential $3 trillion gold discovery. What this could mean for the country’s future, especially when it comes to Bitcoin?
Gold rush or Bitcoin boom?
President Nayib Bukele is all about the untapped gold reserves in El Salvador, claiming they could be worth more than $3 trillion if fully explored.
He took to social media last week to share his vision of how responsible mining could transform the economy, because Bukele believes that the profits from this gold could fund important projects like job creation and infrastructure improvements.
He’s even suggested lifting the 2017 ban on metallic mining, calling it a barrier to tapping into the country’s natural wealth.
As Bukele shared, studies show that only 4% of El Salvador’s mining areas have been explored so far, revealing an estimated 50 million ounces of gold valued at around $131 billion, which is about 380% of El Salvador’s GDP.
If they fully explore these reserves, he thinks their value could skyrocket to over $3 trillion, or 8,800% of GDP.
He also mentioned finding other rare and valuable materials like gallium and tantalum, which are essential for tech advancements.
Environmental concerns
While many are excited about this discovery, not everyone is on board, and critics warn that mining could lead to serious environmental damage.
Bukele argues that sustainable mining practices can balance economic benefits with environmental protection, but still, some skeptics question whether El Salvador really has such big gold reserves.
Given that El Salvador was the first country to adopt Bitcoin as legal tender, this gold discovery adds an interesting twist to its Bitcoin journey.
Pierre Rochard from Riot Platforms pointed out that if El Salvador starts mining gold, it could dilute the existing supply of gold in a big way, something that doesn’t happen with Bitcoin since its code is open source.
Monetizing gold for Bitcoin?
Max Keiser has proposed that El Salvador should monetize its gold reserves to invest in Bitcoin, suggested that selling convertible preferred shares to fund large-scale Bitcoin purchases.
Keiser argues that as Bitcoin continues to gain traction over gold, it makes more sense to invest in the cryptocurrency rather than hold onto a potentially depreciating asset like gold.
He tweeted that El Salvador should capitalize on its gold by selling a series of convertible preferred shares and buying as much Bitcoin as possible while prices are still below $200,000.
Keiser believes that with Bitcoin rapidly outpacing gold in value, the actual worth of the gold might be closer to one-tenth of current estimates.
