Scarcity and Investment: Bitcoin, Equities, and Gold

One of the primary arguments for Bitcoin’s valuation is its fixed supply. With a hard cap of 21 million coins, and just under 20 million already mined, Bitcoin holders are shielded from inflationary dilution — unlike fiat currencies such as the dollar or euro, where governments can print unlimited quantities.

But Bitcoin isn’t the only investable asset with supply constraints. Several traditional investment opportunities also exhibit shrinking or stable supply characteristics that may similarly support valuation over time.

Equities: The Case of Share Reduction

Multiple publicly traded companies actively reduce their share count through buybacks, benefiting shareholders by increasing the ownership value per share.

Walmart

• Shares Outstanding (2015): 9.729 billion

• Shares Outstanding (2025): 8.081 billion

• Reduction (10 years): 16.94%

  
  

Apple

• Total Buyback (10 years): $687 billion

• Share Count Reduction: 35%

  
  

Apple is particularly striking: If it reduces its share count by another 35% in the next decade, existing shareholders may see considerable appreciation — all else equal — simply due to supply contraction.

Other Notable Share Reductions (2014–2024)

• AutoZone: –45%

• Home Depot: –30%

  
  

Even the S&P 500 Index, despite being a composite, shows signs of scarcity trends. In 2024, companies in the index repurchased and cancelled $942.5 billion in stock — amounting to just under 2% of the index’s market cap ($47.155 trillion as of May 6, 2025).

🟡 Gold: Naturally Limited, Slowly Growing

Gold also exhibits scarcity, but through limited natural production rather than structural restrictions.

Gold Supply Overview

• Annual Production (2023): ~3,644 tonnes

• Total Gold Mined in History: ~212,000 tonnes

• Annual Supply Growth: ~1.7%

Of newly mined gold it is estimated:

• 46% goes into jewelry

• 7% into industrial/technology

• The rest is absorbed by investors and central banks

The investable supply of gold remains relatively stable. Over time, gold has proven to preserve purchasing power — a key reason it remains a core portfolio component for many.

📉 Shrinking Public Markets: A Bigger Picture

While Bitcoin has a fixed cap, public equity markets are shrinking in availability:

• Fewer IPOs as more companies stay private

• Increased buybacks, takeovers, and “going private” transactions

These trends create a diminishing pool of public equity, which may help explain the strong performance of equity indices despite mixed macroeconomic fundamentals. There is a possible future where ever increasing pools of capital bid for ownership in public companies, with the same level of excitement that is shown for Bitcoin.

🧠 Scarcity ≠ Exclusivity to Bitcoin

The idea that Bitcoin’s value is partially driven by its fixed supply overlooks a key point: scarcity also exists in traditional assets, often in more economically productive forms. Share buybacks, gold’s slow supply growth, and shrinking public equity markets all contribute to scarcity dynamics.

Ultimately, the case for Bitcoin must rest on broader fundamentals — utility, adoption and demand — rather than supply alone.

regards, Tim

tim@mortonir.com

Subscribe to future MortonIR posts 

Tim Morton, CFA is a retired portfolio manager with 45 years of experience working with private clients. For the past two years, the editor of mortonir.com and a contributor to Barron's. My comments are not to be taken as investment recommendations. They are purely for discussion purposes. Please see your advisor for investment advice.