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Gold Vs. Bitcoin: 'Comparison Is Overdone' And Here's Why


Wednesday February 21, 2018 19:29

Kitco News

(Kitco News) - The comparison between gold and bitcoin has been “overdone,” according to one investment expert, who sees gold as extremely different from bitcoin.

“Gold is a store of value that will last forever. Bitcoin, on the other hand, is something that is young and speculative. [Bitcoin] is very exciting, but the comparison with gold has been overdone,” Newscape Capital’s chief investment officer Charlie Morris told The London Bullion Market Association (LBMA).

The only true similarity between the two investment choices is on the supply side, Morris pointed out. “The bitcoin network was designed around the idea of gold. That is why they are so similar,” he said.

But, on the demand side, things look completely different, Morris noted. “For gold, it’s a long term store of value, which is driven by inflation. Bitcoin is driven by the network effect. It is more similar to a social media stock than it is to a precious metal.”

Morris described different economic and social scenarios that would work for gold and bitcoin.

“In a strong growth environment, where all is well and speculation is rife, no doubt the audience will be voting for bitcoin. However, in the adverse scenarios, such as inflation, nuclear war, or even socialism, I suspect most of the audience will favor gold over bitcoin,” Morris explained.

The reason for this is because for bitcoin to do well, it needs the young and vibrant supporters to keep exchanging it in order to push the value higher.

“If people stop using bitcoin, then its value will decline. And therefore, in an environment, which is suppressive or disrupting, it is less likely that network will be so strong,” Morris said.

Gold has been having a great start to the year, firmly trading above last year’s key psychological level of $1,300, while bitcoin has on a rollercoaster ride since hitting its all-time high in December.

April Comex gold futures were last at $1,327.60, down 0.34% on the day, while bitcoin was back up at $10,313, down 1.31% on the day, according to Kitco’s aggregated charts.


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