[2017-11-09] Will bitcoin be the demise of gold?

[aysha9872]

As gold continues to wallow below the $1,300 per ounce mark, bitcoin made a fresh record high this week. Considering bitcoin and gold share some similar attributes, why is gold’s performance so lacklustre as bitcoin continues to march higher?

The question now is, is Bitcoin a better store of value than gold? To answer this we need to know what is driving the lacklustre performance in gold and if the factors weighing on the yellow metal will last.

   . Interest rates: expectations that the Fed will hike rates in December and continue with its rate-hiking cycle in 2018. Since gold yields nothing, and US assets are starting to yield more, this erodes gold’s attractiveness.

   . The Fed’s balance sheet: the Fed’s decision to shrink its balance sheet is also contributing to gold’s under-performance.

   . Stocks: this earnings season has seen a surge in firms who have said that they will increase their dividend. This also makes stocks more attractive than gold from a yield potential.

   . Demand: the World Gold Council reported that demand for gold slid to an 8-year low. Demand for gold fell to 9 tonnes in Q3, down 9% from Q3 2016.

   . Demand cont.: Sluggish demand is coming from significantly lower inflows into gold ETFs and a softer jewellery market in India, according to the World Gold Council.

But this doesn’t explain why Bitcoin, which shares some attributes with gold, continues to embark on its ferocious march higher. Here are some of the attributes shared by gold and bitcoin:

   . Both are decentralised, and are not under the control of a central bank or other authority.

   . Both are mined: one physically, one digitally.

   . Both yield nothing.

   . They are considered a store of value.

But, the crucial differences between gold and bitcoin include:

   . While demand for gold has slumped, demand for bitcoin is soaring, which is why its price has increased by a whopping 900% so far this year. This compared with a more moderate 14% gain for gold in the last 12 months.

   . Demand for gold ETFs has also slowed, one reason may be the prospect of more bitcoin-linked products that are about to come onto the market including bitcoin futures listed by the CME and bitcoin options listed on the CBOE. Some investors may be taking money out of gold-backed funds in anticipation of investing in bitcoin when these new products go live.

   . Gold has been around for millennia, bitcoin is the new kid on the block, which is inevitably adding to its lustre.

Overall, you could argue that the story behind bitcoin is stronger than it is for gold right now and that is the chief reason why gold is lagging behind Bitcoin. The potential for Bitcoin and crypto in general to overtake the fiat currency system in the coming years is also a powerful driver of demand, and is something that gold cannot compete with.

The case for gold:

We would caution against writing gold off completely for a few reasons:

   . Gold positioning, as measured by the CFTC, is still relatively strong even if it has backed off the highs of the year. There are currently 1.9mn long gold futures positions, which is above the 5-year average of 1.2mn contracts.

   . The technical picture also suggests that any further decline in gold could be capped by some key support levels including the 38.2% retracement of the Dec 2016 low to the September high. This level comes in at $1,268 and acted as solid support in early October and early November.

   . Gold is a tried and tested safe haven. During the financial crisis the price of gold surged 181%. Bitcoin is yet to be tested during a period of intense financial stress. Can the crypto currency only rally in a low volatility environment? If that is the case, then old-fashioned gold could see its fortunes rise once again, but we may have to wait for the elusive market sell-off before we can get excited about a potential resurgence for gold.

To conclude, although gold and bitcoin share many attributes, the bitcoin story has grabbed the trading and investing world’s attention like nothing else, hence the huge rise in its price this year. Gold cannot keep up with this and it is natural that we see some drift away from gold and into bitcoin in the coming months. In the short-term this may continue to weigh on the gold price, however, if we get a period of market stress then it could be time for the gold bugs to step up a gear as no one knows how bitcoin will react to a market panic.



Source; https://www.fxstreet.com/analysis/will-bitcoin-be-the-demise-of-gold-201711091334

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[darkangel11]

Gold will continue to exist, you can't wipe it out just like that. Bitcoin's role is different than gold's. It offers more investment opportunities but also more risk. It was made to give people an alternative and break the chains of the banking system around them. It can coexist with gold and once the dust settles and BTC's  price stabilizes gold will still be there. Much cheaper, much more affordable and much more robust.

[Extr22]

gold have value from long time and will keep this value for next future but problem about bitcoin hope to survive longer (not be like nokia)

[marckenigsberg]

Gold will continue to exist, you can't wipe it out just like that. Bitcoin's role is different than gold's. It offers more investment opportunities but also more risk. It was made to give people an alternative and break the chains of the banking system around them. It can coexist with gold and once the dust settles and BTC's  price stabilizes gold will still be there. Much cheaper, much more affordable and much more robust.

Perfect. I wanted to say the same thing but you said it better.
Exactly this.

[Snaic]

There is a natural process. Demand for bitcoin, and in general for the crypto currency is increasing. People, instead of investing in gold, as before, are investing in bitcoin and, following the fall in demand for gold, it starts to fall in price. However, this will happen until a certain point. Gold will still always be a classic repository of value. Crypto currency can not completely dislodge gold, it will always have a certain demand and will be used as a repository of value.

[BillyTalent]

Bitcoin can not affect gold. And even more so, can not make gold useless. There will always be investors who invest only in gold and do not trust bitcoin

[cvan]

I think it's very idealistic to think that we can just wipe out gold. at the end of the day, it looks like the trajectory of our currency will be many forms of it.

[mehrlin]

Bitcoin is definitely the gold of crypto-currencies though! 

[honeyb0y]

Bitcoin is definitely the gold of crypto-currencies though! 

Yes that is correct but gold will always be gold. Aside from it being the basis of fiat currencies. Gold has many uses, on industrial sector even on information technology.  So maybe gold just lost its demand from the investors but not for it's physical use.

[Garld1936]

for price bitcoin better , for global use gold better

https://coinatmradar.com/blog/wp-content/uploads/2017/07/bitcoin-the-internet-of-money-10-638.jpg

[aso118]

This is way too far fetched. Even if the millenials start using bitcoin, the previous generation will stick to gold. And you cannot forget about governments. There is no way they are going to abandon gold for bitcoin.

[Granxis]

There is a natural process. Demand for bitcoin, and in general for the crypto currency is increasing. People, instead of investing in gold, as before, are investing in bitcoin and, following the fall in demand for gold, it starts to fall in price. However, this will happen until a certain point. Gold will still always be a classic repository of value. Crypto currency can not completely dislodge gold, it will always have a certain demand and will be used as a repository of value.

It is not technically possible to take the gold of Bitcoin because it is an element frequently used in gold space and electronic fields, for this reason it is among the gold precious metals.

[Thiptiout]

point that make bitcoin better than gold is gold depend on dollar and oil while bitcoin only depend on law of Demand and supply

[veleten]

bitcoin wil lnever be second gold or any gold for that matter
gold is gold,bitcoin is bitcoin,do not mix the two or try to substitute one wit hanother
gold has intinsic value,you can use it as a commodity and as wealth storage and you can use it in many areas
producing actual goods,bitcoin is a virtual cryptocurrency and cannot do that by default
you can compare bitcoin to gold only in one area i.e. "money" and I'm using this term here broadly

[Qartersa]

As gold continues to wallow below the $1,300 per ounce mark, bitcoin made a fresh record high this week. Considering bitcoin and gold share some similar attributes, why is gold’s performance so lacklustre as bitcoin continues to march higher?

The question now is, is Bitcoin a better store of value than gold? To answer this we need to know what is driving the lacklustre performance in gold and if the factors weighing on the yellow metal will last.

   . Interest rates: expectations that the Fed will hike rates in December and continue with its rate-hiking cycle in 2018. Since gold yields nothing, and US assets are starting to yield more, this erodes gold’s attractiveness.

   . The Fed’s balance sheet: the Fed’s decision to shrink its balance sheet is also contributing to gold’s under-performance.

   . Stocks: this earnings season has seen a surge in firms who have said that they will increase their dividend. This also makes stocks more attractive than gold from a yield potential.

   . Demand: the World Gold Council reported that demand for gold slid to an 8-year low. Demand for gold fell to 9 tonnes in Q3, down 9% from Q3 2016.

   . Demand cont.: Sluggish demand is coming from significantly lower inflows into gold ETFs and a softer jewellery market in India, according to the World Gold Council.

But this doesn’t explain why Bitcoin, which shares some attributes with gold, continues to embark on its ferocious march higher. Here are some of the attributes shared by gold and bitcoin:

   . Both are decentralised, and are not under the control of a central bank or other authority.

   . Both are mined: one physically, one digitally.

   . Both yield nothing.

   . They are considered a store of value.

But, the crucial differences between gold and bitcoin include:

   . While demand for gold has slumped, demand for bitcoin is soaring, which is why its price has increased by a whopping 900% so far this year. This compared with a more moderate 14% gain for gold in the last 12 months.

   . Demand for gold ETFs has also slowed, one reason may be the prospect of more bitcoin-linked products that are about to come onto the market including bitcoin futures listed by the CME and bitcoin options listed on the CBOE. Some investors may be taking money out of gold-backed funds in anticipation of investing in bitcoin when these new products go live.

   . Gold has been around for millennia, bitcoin is the new kid on the block, which is inevitably adding to its lustre.

Overall, you could argue that the story behind bitcoin is stronger than it is for gold right now and that is the chief reason why gold is lagging behind Bitcoin. The potential for Bitcoin and crypto in general to overtake the fiat currency system in the coming years is also a powerful driver of demand, and is something that gold cannot compete with.

The case for gold:

We would caution against writing gold off completely for a few reasons:

   . Gold positioning, as measured by the CFTC, is still relatively strong even if it has backed off the highs of the year. There are currently 1.9mn long gold futures positions, which is above the 5-year average of 1.2mn contracts.

   . The technical picture also suggests that any further decline in gold could be capped by some key support levels including the 38.2% retracement of the Dec 2016 low to the September high. This level comes in at $1,268 and acted as solid support in early October and early November.

   . Gold is a tried and tested safe haven. During the financial crisis the price of gold surged 181%. Bitcoin is yet to be tested during a period of intense financial stress. Can the crypto currency only rally in a low volatility environment? If that is the case, then old-fashioned gold could see its fortunes rise once again, but we may have to wait for the elusive market sell-off before we can get excited about a potential resurgence for gold.

To conclude, although gold and bitcoin share many attributes, the bitcoin story has grabbed the trading and investing world’s attention like nothing else, hence the huge rise in its price this year. Gold cannot keep up with this and it is natural that we see some drift away from gold and into bitcoin in the coming months. In the short-term this may continue to weigh on the gold price, however, if we get a period of market stress then it could be time for the gold bugs to step up a gear as no one knows how bitcoin will react to a market panic.



Source; https://www.fxstreet.com/analysis/will-bitcoin-be-the-demise-of-gold-201711091334

I agree with what statement that although there are circumstances wherein we can properly compare Bitcoin from gold, I think they are unique in their own ways which make them both formidable investments. One thing they greatly differ to is that gold can no longer be used as a form of payment, at least in the modern world. It is because its value may be less of the actual price the vendee is ought to purchase. Or at the very least, maybe because the vendor has no efficient means to know the value of the gold at the moment of transaction. While as to Bitcoins, there has been noted merchants who accept it as a form of payment because its value can readily be known to the vendor and that it is easily convertible to cash.

Caveat: My statements are based on what I have observed.  

[Marry Finch]

In connection with a sharp increase in demand for bitcoin and other crypto currency, demand for gold has fallen, which leads to its cheapening. Despite this, gold will always be in constant demand. Gold will always find its buyer, since it is a long-standing value that will remain it. Bitcoin will press gold, but he will not be able to completely replace it.