Why I Chose Gold Over Bitcoin

Published 10/30/2023, 02:05 AM
XAU/USD
-
DX
-
GC
-
BTC/USD
-

Why did I choose to compare Bitcoin to Gold?

Three simple answers:

  1. Both are comparable in terms of their store of value and quasi-limited supply)
  2. Both have been shown to act as possible substitutes/competitors to one another
  3. The 16.0 ratio has had a solid track record in calling inflection points in the value of BTC vs USD and other assets.

More on BTC vs gold below. You've already heard that Bitcoin is a form of monetary gold. They both serve as stores of value but are far from the best medium of exchange. The market value of gold that's above ground is around $9 trillion, whereas for Bitcoin it is $670 billion.

As Bitcoin disruption picks up partly with the help of democratization from one of the safest investment instruments (ETFs) by the world's biggest asset manager (Blackrock (NYSE:BLK) manages $9.4 trillion), it has the potential to gain 13x (9trillion/670 bln) to catch up with gold's capitalization. We learned in 2020-2022 that things can happen fast.

Bitcoin remains the strongest computer network (confirming and validating transactions) in the world and Money is the most powerful social network. It combines these two elements, alongside speed of exchange as powerful as email. Bitcoin is not controlled or backed by a sovereign state, while its supply shall remain capped at $21 million.

As sovereign states resort to fiscal acrobats, living month-to-month by issuing debt to meet existing obligations, the fixed supply nature of Bitcoin combined with its technical invincibility makes it hard to miss. The Bitcoin/Gold ratio has been well above 16/oz for over a week. Take another look at the video to assess for yourself what happened to BTC when the ratio held or broke over the past 7 years.

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2025 - Fusion Media Limited. All Rights Reserved.