Bitcoin versus gold? Look at trending topics on the internet, and you’ll find that this inquiry has consistently attracted eyeballs, especially with the cryptocurrency market’s spectacular rise last year. Even this year when things haven’t panned out so well, one bitcoin is worth roughly six-and-a-half troy-ounce gold coins. That’s upside that you simply can’t ignore for the original crypto coin.
On the other hand, no other investment class has the universal appeal and consistent allure of gold bullion. Very quickly after man walked the earth and established civilizations, gold became the central source of monetary and economic value. Whether you’re a believer or not, it’s interesting to note that the creation story in Genesis imbues positive sentiment towards gold and other precious resources.
God, it would seem, does not talk about bitcoin. So that’s case closed for some gold proponents, or is it?
Reality is never that simple to be condensed into a binary conclusion. While gold carries the unassailable leverage of universal acceptance, bitcoin between the two has far greater upside potential. One can argue against this point, sure, but it’s an opinion that’s as close to fact as you can get.
Nobody is storming down to their local precious-metal retailers to demand their gold and silver rounds. That has much to do with the current price deflation. On a side note, I’ve argued in the past that this is a great contrarian opportunity – buy the blood on the streets and sell it later at a premium.
I still believe this because gold certainly has upside potential in this geopolitically unstable environment. But let’s also be real: if the yellow metal returned to its 2011 peak, we’d see about a 54% profit. That’s a day’s work in the cryptocurrency markets. Even if gold went to $10,000 as many argued several years ago, we’re looking at a 700%.
That’s phenomenal, but we’ve seen such profits with regularity in bitcoin and the altcoin markets. The conclusion is patently obvious: if you’ve got the fortitude to handle the sometimes crushing volatility, the bitcoin versus gold debate firmly lands in the former’s favor.
So why won’t people answer this question firmly and decisively? I can’t speak for all reasons, but I suspect the biggest reason is that the bitcoin versus gold subject is vitriolic. I want to make clear it’s not an inherent problem. But how many times have you had a civil discussion involving politics or religion? Even the most level-headed people can devolve into ad-hominem laced irrationality.
Another reason is that gold is a sour topic because of the prolonged bear market. The broad suspicion among gold bugs is that this is due to banker control and market manipulation. But as I covered recently for Crush The Street, these very same bankers could possibly be angling for control with the upcoming bitcoin ETF.
In other words, the bitcoin versus gold debate could eventually cease being one.