Bitcoin Forum

Gold is up 14% in 2020 where it has been a horrible year for other markets like oil and metal industry like copper and aluminum, stocks, etc. And about Bitcoin, it is 4.1% down this year.

"The gap between gold and bitcoin returns has frustrated traders who predict that trillions of dollars of coronavirus-related emergency aid and monetary stimulus from the Federal Reserve and other authorities will eventually lead to inflation. "


Why isn't Bitcoin getting the uplift that gold is increasing?

According to Jeff Dorman, chief investment officer at cryptocurrency-focused firm Arca Funds,


According to the World Gold Council (https://www.gold.org/goldhub/data/above-ground-stocks), an estimated 197,576 metric tons of gold have been mined throughout history. At 32,150.75 troy ounces per metric ton, and based on the current price, that works out to an outstanding value of about $11 trillion. That's 87 times the outstanding market value of all bitcoin ever produced, currently about $129 billion, according to CoinMarketCap.

In a report published by Coin Metrics, digital-asset research and data firm ran the math on bitcoin's correlation with gold. Historically, the correlation hasn't been strong, wrote the analysts, led by Nate Maddrey.

But since March 12, the depth of the coronavirus sell-off for bitcoin, the correlation with gold has increased. It's still pretty weak, currently, at less than 0.5, where 1 represents perfect synchronicity, 0 is no correlation at all and -1 is a perfectly inverse relationship:

https://i.imgur.com/mgKO8lE.png
Image source: Coin Metrics (https://coinmetrics.substack.com/p/coin-metrics-state-of-the-network-7c4?r=511fo&utm_campaign=post&utm_medium=email&utm_source=copy)

"These are small pieces of evidence that the correlation between bitcoin and gold may be growing," according to Maddrey and the Coin Metrics team. "However, bitcoin’s overall correlation with gold is still relatively weak."

https://i.imgur.com/tJOT9BL.png
Image source: Coin Metrics (https://coinmetrics.io/correlation-charts/#assets=btc-gld)


>> After reading this article/news about the digital gold which is going down the gold. Will this be a short time uncertainty due to pandemic or is the inflation will continue for the long term? What is your opinion on this?

We hope everything becomes normal and the Digital gold should stand out of this pandemic.

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Source:
https://www.coindesk.com/first-mover-gold-is-crushing-bitcoin-but-inflation-may-bring-the-cryptocurrency-a-boost

The former chart, according to the methodology described in the referenced article, corresponds to natural log returns using Pearson correlations over a 250 day rolling window (i.e. each data point analyses the prior 250 days). The second chart though uses Spearmans correlations, arithmetic (not logarithmic) and a 180 day window.

The former shows better results in the correlation charts than the latter, although the latter is the one that we can play around on Coinmetric’s website.

Focusing on this second chart as is, the correlation is weak as per their own definition. Values range between just below 0 and just under 0,2 for the yearly window displayed in the chart, which corresponds to a very weak correlation:
 https://coinmetrics.io/correlations/#assets=btc-s&p
http://www.statstutor.ac.uk/resources/uploaded/spearmans.pdf

In any case, it we are trying to see the effect of the pandemic on the correlation (as potential peer stores of value), the values displayed need for more time to go by as, as I mentioned before, each data point requires a historical of 250 days (for the former chart) or 180 days (for the latter chart). 

Ignoring the data for a second - it makes me shudder to say that, because in general I demand data and evidence - but ignoring the data...

The reason that bitcoin is not getting the uplift that gold is getting is because: bitcoin is not seen as a store of value.

We all know that bitcoin has the potential to be a safe haven asset, and the ultimate store of value. We all know the reasons for this, it's all been covered many many times, including why bitcoin is superior to gold as a safe haven and store of value.

However, at the moment the crypto markets are still (relatively) young. The bitcoin market is still comparatively low volume, which means that volatility is high. We are some way away from an end state here. Bitcoin is at the moment considered by the general public to be a high risk high reward gamble, in short, the sort of asset that you might buy into when stocks and shares are enjoying a boom, when the economy is healthy and you have plenty of money, it's speculative, a long-shot that if you are a big investor you might throw some money at. But it's not currently a place to go when the economy hits the rocks and you are pulling out of stocks and shares and looking for somewhere safe.

Not yet.

The overall GOLD market size is supposed to be more than $11 trillion as of now; on the other hand, bitcoin market size is one tenth of a trillion as of now.
GOLD is widely well-known to a lot of investors while BTC is far from that. It's okay to compare both but comparing both on changes within a year isn't enough to get the actual output. GOLD is seen as a store of value to everyone including investors to some people who use as ornaments while BTC is yet to be store of value due to the high fluctuations.

Yeah, eventually, when the actual recovery comes. This isn't the recovery.

The economy is actually experiencing extreme deflationary forces right now. USD inflation has absolutely nothing to do with why gold is going up.

Gold is going up because the world's largest miners and smelting factories are shut down, so physical supply to markets has been drastically cut. That combined with panic buying from physical gold bugs has created short term bullish conditions.

https://www.reuters.com/article/precious-refining-argor/update-1-three-swiss-gold-refineries-suspend-production-due-to-virus-threat-idUSL8N2BG3ZJ

https://www.bloomberg.com/news/articles/2020-04-09/world-s-deepest-mines-to-take-weeks-to-open-after-virus-shutdown

I see this as temporary. When the stock market turns bearish (sometime between now and early May), so too will gold (and BTC) as we enter another short term liquidity vacuum.

Both markets are heavily manipulated. Can we really say that gold is leaving Bitcoin behind? In the last 5 years Bitcoin gained much more value than gold, so it was already ahead.

You're confused about the price because you're looking at a short timeframe. Gold hasn't passed it's ATH from 2013 and 14 yet so it's barely recovering after some corrective years.

Maybe just a short term  :D

Gold has been down since 2011 where as crypto has grown far more.   You have to consider the wider picture for commodities and gold in total to really contrast one against the other.   As Bitcoin is over a decade old now its possible to do so though not exactly fair as Bitcoin came out of nowhere and of course shows far greater growth.
  I watch gold every day, arguably its a superior currency to any other especially at this time in peak politics and debt based currencies.   Gold itself despite being many eons old and ancient in its usage, is somehow now also an emerging global currency and will be traded more and show a higher price when placed vs FIAT.    Put simply gold should be rising in 2019 2020 and many years forward as it reflects the larger dollar monetary base which forms the global reserve currency system, very few national currencies hold a tighter standard though Bitcoin is restricting its block reward now it still has work to do on its demand, utility and usage.   
  Gold and Bitcoin will swap back and forth probably many times, BTC has a far higher monetary velocity to it I think where as Gold relies on buying as an asset for security only.   National governments especially dont move their gold but just issue notes of worth against it as a security where as BTC definitely moves transactionally.

Right from the beginning when I got to know about bitcoin or cryptocurrency, I had 2 standards for considering them. One as the common SoV concept and another was the usage of bitcoin as a MoE for buying goods and commodities. This is completely based on the individual's perspective and how they are using bitcoin. Right from using bitcoin in 2017, I had been using them as a MoE for global transactions and only a very few percentage of my investment is being considered as a SoV. Bitcoin was created by satoshi as an alternative to payment system and today's developers are striving hard to scale bitcoin along the terms of Visa and other payment processors. Why should someone create a protocol called Lightning Network if we are considering Bitcoin as a SoV? This perspective is completely based on my thought on bitcoin and it would vary among different bitcoiners.

If something needs to be considered as a MoE, they shouldn't be subjected to volatility standards and should be stable for quite a certain amount of time which isn't happening with bitcoin. Gold on the other hand, is rising in value for quite a long time and would most likely reach even greater heights in future. If bitcoin tends to follow up the similar strategy as the market has been following all these days it would rise up in price. But from a MoE perspective since there is demand for bitcoin and limited in number, they should certainly rise in price to be used up as a global transaction currency. If there is higher adoption towards bitcoin being used as a global currency, there is no other go for it to rise in price to support the global population which is currently happening right now.

As Cnut237 pointed out, we are still mining bitcoin and the market is relatively new. For a market to stabilize, we need the commodity to get settled and to reach a stabilization. If 99% of the coins have been mined, we would be reaching the stabilization point and would have a price to quote until then there would be influx of virgin bitcoins from blocks and volatility would rise up and down.

Jeff Dorman, who the hell's he? Gold is so much easier to buy? Especially true for traditional investors, no, only true for traditional investors. But let's say Warren Buffet wants to buy gold. How does he do it? He calls up his broker, tells him he's got this much for this much, brokers says ok I'll call you back with a deal, then they get their lawyers and accountants to escrow the money and then ok, he gets certificates in his name.

Paper promises, he doesn't actually see the gold.

I want to buy bitcoin now, right now, in any country anywhere in the world, I just go online, find a trader who's online, accept his price, send him the money. If it's instant transfers like in most countries, he sees my payment, sends me my bitcoin. If it's escrow, fine, another step to withdraw to my own wallet (but worth the extra security). It's mine, all mine. Not a promise, not an account that tells me I have something, mine. In my wallet.

Gold is consistent because people believe in gold that it has a stable value and a real store of value for their money.
However, it's too early to make a conclusion, 2020 is not over yet, so there's still a big chance that bitcoin will rise.

The good thing about bitcoin is that it will not only rise 20% or less than 100%, it could rise higher and it's been proven in the past.
If basing only on the graph or related resources, we can't certainly tell what would happen as Bitcoin is full of surprises, we might see a bull run this year.

Are going to continue the good old "gold vs.bitcoin" discussion? ;D
In a crisis,95% of all people stick to what's known and what they are familiar with-gold.
Gold isn't as volatile as Bitcoin and it's price/value increases every time there's a economic/financial crisis.
It's common sense the the gold price will increase and the Bitcoin price will stay volatile.Bitcoin is a riskier asset than gold.Most of the investors are running away from risk.
When everything is back to normal and greed starts to dominate over fear in the markets,many investors will choose bitcoin over gold.

Comparing gold to BTC is a topic that never loses interest from forum users, though the only touchpoint of these two assets is that they can serve as a store of value. Although gold has undoubtedly a long tradition and serves many purposes, it still makes no sense to compare it with BTC, especially in the short term.

OP is saying "gold is up 14% in 2020, and BTC is down 4.1%", but does that mean anything at all? BTC has only been around for 11 years, how long history has gold? Looking at the big picture, gold has seen a 43% growth over the last 5 years, and BTC is up for 3400% from 2015 ($200 -> $7000).

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If less than 1% of the world population buys/sells/owns BTC, then it is clear that we are still far from some major adaptation. If you ask 100 random people to explain to you what BTC is, maybe just one would give you some meaningful answer - so try asking the same question for gold.

Gold cannot leave BTC behind because it has an advantage that goes back thousands of years, and it's totally pointless to expect that this can change in just 10 years.

If we think of stability, gold will win on the battle betwen bitcoin, that's for sure, but gold does not pump like bitcoin does, so let's see and judge them by the end of the year. Also, I'm not expecting that this pandemic will last til the end of the year, when this will be over, people will be back to business as usual and we will eventually see crypto to grow again. I'm not seeing it's certain, but I trust that crypto would give better profit than investing in gold, especially if you are not a big investors.

Bitcoin is so volatile, that it might have 14% year to date gains  before end of this weekend. And then whole article your post is base on is totally pointless.

Currently, almost all investors of traditional assets and stocks are eyeing gold as it serves as a good hedge against the current economic situation that the world is in. Most stocks are down because people who are invested in such moved their assets to gold for the mean time, and does not trust bitcoin well enough to consider it as something to place their funds while they wait out the storm. On the contrary though, Americans who received their money from the stimulus fund seems to be buying bitcoin presently as evidenced by market data. It just goes to show the psychology and ability of the rich and the middle class in terms of preserving their assets. Rich dudes have the means to buy physical gold, keep it safe and hope for the best while the middle class can buy bitcoin or any other crypto and store it directly without having to go through hoops and hassles and again, hope for the best.

I like your response about why gold has been stable in value. The government are solidly behind gold. They use gold for many things including jewelry and they have kept an eye constantly on it. They control too, the activities of gold from country to country and this one reason the price is stable, it is part of stock exchange. I wait for when bitcoin will gain the influence of government.

everyone knows that the most profit is always coming from bitcoin but only to day traders and long term investors. those who look at short term charts can see losses at times.
so lets take a closer look at these two markets:

1) 2020 bitcoin's 86% rise versus gold's 4%.
after the coronavirus scare and the market manipulation that everything dropped bitcoin went back up 86% while gold only went up 4%

2) the actual 1 year (past 365 days) bitcoin went up 112% while gold went up only 31%

3) in the past 5 years (from Gold's lowest price in the past decade, note that gold price was higher than this, i intentionally used the lowest gold price possible to get the maximum gold price rise) meaning from 2015 bitcoin has gone up 13100% while gold has only gone up 48%.

if anyone is frustrated with these returns and think for a second that gold is leaving bitcoin behind then they are doing it wrong!!!

The time frame for gold rising is more like decades, if we could select decades for bar size on the chart.   Of course nobody considers things in that way but I honestly think its so easy to get mixed up considering things short term as if it matters.   The surprising thing about BTC would be that it does seem to be influenced by macro monetary policy when many thought it would disappear long ago as irrelevant and unrelated to any real currency flow.

Its more a case of gold vs everything and anything.   Why the heck do you want to hold a piece of metal instead of something usable and instantly transactable.    Its the two dynamics to the economy of transaction, commerce and savings and gold is mostly about saving value for later.   BTC is more involved in actually enabling commerce that might not occur otherwise like across borders or locked down countries with capital controls and so on.
  Pricedingold is a good website that measures the price of anything including crypto.

The pandemic has caused mining and production shutdowns, leading to increased gold prices. However as panic buying of physical gold fades, a new reality is setting in: consumer demand for gold is plummeting. (https://www.reuters.com/article/us-health-coronavirus-india-gold-idUSKCN21Y1IB)


I think those betting on a new ATH from here are in for a rude awakening soon.


It's plenty easy to buy physical gold too, which you can hold in your hands. Just order from APMEX or a similar retailer. You can even pay with BTC. https://www.apmex.com/

For those in the US, buying gold in this way is not a problem - but Apmex Global ships internationally in 34 countries only, and everyone should be informed of any additional costs arising from taxes and delivery/shipping. For this reason, it is advisable to look for a cheaper option if we live outside the USA.

Point taken (though it's still not plenty easy if I need a credit card (and I would, if I bought from apmex, which I can't, since I don't). I could, without a bank account or card buy bitcoin. To buy that gold).

Cheapest gold I could find there was 1/10oz for $210 if I use wire or cheque. Meaning I've paid 20% more than standard gold price to get it in my hand. But that's ok.

Now if I somehow decide I'm rich enough to buy a 100g of gold, I might need to next ask you to help me find insurance, storage, security options. And maybe a home kit to test the purity of that gold. And authenticity. But that would need me to trust all those additional 3rd party services right? Maybe if I get my entire family and relatives and their inlaws to put everything into gold, we might actually have about 10kg between the few thousand of us (half a mill worth of gold).

I'd start to worry about that gold by then =D

Nobody else thinks they are totally different things? I mean I personally think that gold is valuable and worthy and I like it, definitely something I would love to own as much as I can :D lol. Yet at the same time bitcoin is like that as well, there is no either or situation going on, you can have both if you want and diversify your portfolio and have them.

However gold is right now the biggest commodity that everyone in the whole world knows, we shouldn't really be shocked if it is still considered the best investment anyone can make and people who do not need the feeling of going out to buy some gold, thinks they can trust their banks, the idea that digital gold exists is purely because people who do not want the gold itself but the profits a gold could make could bring.

There are many pundits who does not have any clue about economy still proclaims that bitcoin and the crypto market is a store of value, the market is seen as a speculative one and we are yet to see any definitive improvement in the technology that would see a value in the long term and unless there is an intrinsic valuation in bitcoin in terms of the way it is utilize it is hard to claim to be a store of value.

There is always going to be a premium for physical vs. spot. There's no way you can get 1:1 at your local gold dealer right now. I've read people have been paying premiums upwards of 50% over spot, if you can believe it.

It's interesting that APMEX prices haven't adjusted to Friday's spot market dip though. When I posted that, the premium for a 1 oz coin was ~ 8%. That's the other thing too, smaller sizes = bigger premium. It's the way of the world.


The risk is quite low buying through a reputable broker, from a reputable mint. A home safe seems reasonable for a few ounces of gold. Or maybe just bury it. :)

Gold may be uplifted far beyond bitcoin. Golds are widely known for its value as an asset. Bitcoin is still a young and growing market where assets have a chance to gain profits up to sky rocketing but less known by people around the globe. The value of gold may be into monetary amount by selling it in the market but the value of it still depends on the supply and demand of gold in the market.

Might as well buy jewelary if you end up paying 50% over spot, I know one site which offers to buy it back and only sells bullion quality gold not mixed.   Pure gold is soft metal so should be handled more carefully, as a ring I'd wonder how long it'd last well.  Mene is the website I'm thinking of but might be a few, I know some people set smaller coins into rings or maybe necklace.

I wonder if it works the other way around too, that it takes time to adjust in a sudden rise (in which case, one could possible take advantage as a buyer!) as it has been doing weirdly enough more recently.

I actually over 15 years ago did get into gold... but if you know about e-gold, then you know I lost everything when the US swooped in and seized everything. It's the main reason I deliberately ignored bitcoin when I first heard about it in 2012/13 -- I didn't understand then bitcoin's decentralised nature. I still hurt a lot from what happened with e-gold... so I agree, if anyone gets into it, it had better be physical.

The fact is that the choice that a person makes in favor of Bitcoin or gold metal will primarily be determined by the conditions of his life and what country he lives in.  In addition, the environment in which he lives is very important.  The fact is that it’s easier for someone to save bitcoin, while for someone else it’s better to store their funds in gold.  I believe that this question there is no single answer, At least until Bitcoin became popular all over the world with at least 50% of the world's population.

I read an interesting analysis today about the mid-term outlook for gold. (https://www.valuewalk.com/2020/04/deflation-gold-prices/)

This could have implications for BTC prices as well, since BTC apparently correlates twice as strongly to gold than stocks. (https://data.bloomberglp.com/professional/sites/10/Bloomberg-Crypto-Outlook-April-2020.pdf) While many including gold bugs are expecting inflation to pump gold prices, this is an interesting contrarian viewpoint:

OP, that is a good analysis but severely wrong in many aspects of the sense, when the dollar is not something obtainable easily because of the shutdown we are talking about governments usually making it easier to obtain instead of letting it be. Sure if the situation kept going like this and there is no way people earn dollars and the ones with dollars don't have places to spend it all keeping it, that would result with deflation and that would result with gold going down and bitcoin going down as well.

However, we are talking about people who do not have dollars, that doesn't really a sustainable situation and governments will either print money or give money to those people and they will spend it right away, which will create inflation, that is the reasoning behind inflation calls so much.

The case for gold is inverse to monetary policy which we've seen is reliant on diluting value.   I dont see that will change, even without the virus it was not a prospect.    Gold as a retail product for people is a minor, people will hold it to secure value but I would rate that not yet in effect especially.   I cant think of one person I know who thinks to save any gold, jewelry I dont rate as significant and its always mixed and used lightly.  In could be in future used in majority to store value, we are nowhere near to that end game possibility for gold.  
  India has always have poor currency standard so far as I know, so it is tradition to them.   The quote above mentions it as part of wedding season but really the gold represents value passed, inheritance though it might be jewelry they do actually use the value I think.  Its worth looking into anyway, a few countries in asia do employ gold as a tool to manage their finances.
   
I consider the case for gold and BTC separately, I'm not going to put them in competition as I think they both have their uses.   For the common people BTC appears more easily handled to me, that wont be as true in countries with poor telecoms and infrastructure.

I am sure that gold is a valuable metal that will always be appreciated as much as humanity will exist.  The fact is that due to its physical characteristics, gold takes a very important place for use in high technology, and since its quantity on the planet is limited, your value should only increase.  Thus, bitcoin also has every chance to actively rise in price due to its limited amount, but only if it really becomes an international cryptocurrency and is used on a larger scale in a person’s daily life as a means of payment, and not just speculators for earning thanks to volatility  Bitcoin  In reality, bitcoin and gold have their purpose and high value, compared with which all national fiat currencies are real garbage.

Not all of the national currencies are this way, its with regard to trade balance and ongoing debt which is a measure of future supply as all debt pays out in cash notes.     Just two rough figures I remember reading, would have to be double checked but Norway has about a reserve spare per citizen of 70,000 in their national wealth fund.     A couple countries have this but this is the most notable western country.    USA I think is about the opposite with 70k debt per person liable and Japan is one of the most extreme with over 3 times the entire countries annual productive capacity in debt owed.   At present the countries in debt are issuing new money to pay off the old debts but its a system subject to topple and unbalance.
   Hence we have to consider change or potential difference from now to future figures and its not the gold which is going to change but the currency pricing gold, so dollars or whatever your own countries currency is.   The notes themselves will be worth less every year hence the gold price is fairly assured in ascension as a superior standard of value.  
   Gold did fall from its early eighties peak arguably for over 20 years, thats a long time to be 100% sure it will always do well.    However I would never suggest someone place everything into an asset in just one year, thats the main mistake and all prices can become inaccurate.

What ever you argue about the debt , the price of gold started rising at an incredible rate after the global recession in 2008 because investors lost trust in everything but the yellow metal for their investment, i will not invest everything in gold but if there is a global crisis the first preference is always gold for the investors and that is evident in the past and that is likely to happen again in the future.

Bitcoin is now up 30% this year. What about Gold?  Oh gold is up 12% this year.  This post did not age that well did it? And not even one month passed from it.

I'll start to worry about Bitcoin vs gold, but I won't really as gold does nothing for me, when the same number of people understand Bitcoin and it has the same number of avenues to buy. Until then comparing the two is overwhelmingly futile. BTC has embarked on a long journey from nothing and it's not very far into it still.