Is bitcoin replacing gold?
The bitcoin price has more than doubled this year, but gold has disappointed.
Bitcoin has hit a new record high above $64,000 (£46,700). But while bitcoin has more than doubled this year, gold has disappointed, notes John Authers on Bloomberg. That’s odd given the “historic amount of money printing” and talk of coming inflation. Dhaval Joshi of BCA Research thinks bitcoin has stolen gold’s thunder by emerging as a new “anti-fiat” asset: investors looking for protection against inflation increasingly turn to digital currencies. “Circumstantial” evidence suggests that some of the money that big investment institutions have pulled out of gold since last November may have flowed into the cryptocurrency. Yet bitcoin’s high volatility and periodic crushing losses are hardly the hallmarks of a store of value.
Bitcoin’s $1trn market cap is still smaller than the $2.5trn of privately held gold, says Daren Fonda in Barron’s. Bitcoin would have to hit $146,000 for the market capitalisation to match that of gold. But will governments really tolerate a “freewheeling digital token” that undermines their own currencies? China has already stopped banks from making transactions in bitcoin and closed down crypto-exchanges, while India is contemplating an outright ban. Stock prices ultimately depend on earnings and gold has applications in manufacturing and jewellery. Yet bitcoin’s value is purely speculative: as long as people believe it can one day supplant the dollar or gold they will keep on buying.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
Alex is an investment writer who has been contributing to MoneyWeek since 2015. He has been the magazine’s markets editor since 2019.
Alex has a passion for demystifying the often arcane world of finance for a general readership. While financial media tends to focus compulsively on the latest trend, the best opportunities can lie forgotten elsewhere.
He is especially interested in European equities – where his fluent French helps him to cover the continent’s largest bourse – and emerging markets, where his experience living in Beijing, and conversational Chinese, prove useful.
Hailing from Leeds, he studied Philosophy, Politics and Economics at the University of Oxford. He also holds a Master of Public Health from the University of Manchester.
-
Small UK industrial stocks are hidden gems
Opinion Ed Wielechowski of the Odyssean Investment Trust highlights three of his favourite British small-cap industrial stocks
-
Aurora Innovation is running on empty – is it overvalued?
Aurora Innovation, a maker of self-driving trucks, may have promised far more than it can deliver
-
'Ride the recovery in emerging markets': Gustavo Medeiros of Ashmore Group tells MoneyWeek
Interview What's the outlook for emerging markets? Gustavo Medeiros, head of research at Ashmore Group, gives his analysis and reviews progress in developing economies
-
What is the Enterprise Investment Scheme and should you have one?
The Enterprise Investment Scheme is tax-efficient and potentially lucrative. Taking a chance on the scheme could trim your family’s IHT bill, says David Prosser
-
The alcohol industry is suffering as consumers sober up – is it still worth investing in the sector?
Changing consumer tastes are rocking the alcohol industry, but the best players are adapting their strategies. Buy them while their shares are still cheap
-
A strange calm in credit
Corporate bond markets remain remarkably relaxed, with yields that offer little compensation for risks
-
'The City's big bet on green finance fails to pay out'
Opinion Insurers and banks are backing away from “green finance”, and there is not much sign of the green boom we were promised. That’s a problem for the City
-
Why is English football thriving – and can it last?
What has gone so right for English football? The national team has found its feet; the Premier League is swimming in money and profits are soaring