Bitcoin vs. Gold Prices

[shuvo999]

Bitcoin and Gold are both good investments. But value wise i go for Bitcoin because it is more profitable compare to Gold and more people are getting interested to invest in bitcoin.

THIS is so wise if you are preferring bitcoin over gold because investing into gold for earning some decent profit has become old fashion and it is very slow method of increasing your capital whereas bitcoin is having the potential of making you rich in very short time span.

[Manchumichael]

Bitcoin and Gold are both good investments. But value wise i go for Bitcoin because it is more profitable compare to Gold and more people are getting interested to invest in bitcoin.

THIS is so wise if you are preferring bitcoin over gold because investing into gold for earning some decent profit has become old fashion and it is very slow method of increasing your capital whereas bitcoin is having the potential of making you rich in very short time span.

I think if you invest in Gold you will not make more profit and the price is almost stable at any time. very rarely the price will increase high so be making more profit chances are less in Gold but your investment will be. You invest in Bitcoin you can make big profit but risk is also high

[BobK71]

So you are basically saying that even if we have somehow postponed consumer price inflation now, it will inevitably kick in later because the printed trillions will sooner or later trickle into the real economy pushing consumer prices higher. It may be like that in many cases as it happened in the past with Germany after World War I. But even with Germany that in fact remains to be seen. Germany lost war in 1918 when the Versailles peace treaty was signed, while hyperinflation started there only 3 years after, in 1921. And it was an obvious outcome of excessive money printing back then, not due to paper money having been stashed for 4-7 years. 

Between 1919 and 1920, a loaf of bread went up about 5 times in Germany.  This was before the hyperinflation and was due to money printing to finance the war, with the money being hoarded immediately after the war, but for some reason flooded into the market a year or so afterwards.

As I mentioned again and again, I think focusing narrowly on consumer price inflation in the West really misses the important issues due to the modern system of central bank created money.  And these include severe economic and social pain outside the West, terrorism, wars, pollution, etc.

That is, when the Western elites choose not to inflate enough but try to continue to prop up confidence in their currency, is the time when the worst suffering occurs.  (It's also not one or the other: usually it's a combination of inflation, deflation, financial repression, etc.  I'm simplifying here to refer to the effects of deflation vs. inflation.)

[usam_coiner]

Bitcoin and Gold are both good investments. But value wise i go for Bitcoin because it is more profitable compare to Gold and more people are getting interested to invest in bitcoin.

THIS is so wise if you are preferring bitcoin over gold because investing into gold for earning some decent profit has become old fashion and it is very slow method of increasing your capital whereas bitcoin is having the potential of making you rich in very short time span.

I think if you invest in Gold you will not make more profit and the price is almost stable at any time. very rarely the price will increase high so be making more profit chances are less in Gold but your investment will be. You invest in Bitcoin you can make big profit but risk is also high

yeah you are telling truth bitcoin can give much more than gold investment and due to its volatility the ratio of high profit is more in bitcoin and now gold investors are also coming toward bitcoin because bitcoin is attracting each investors of any kind of investment,

[sachdientugoogle]

With the two commodities now in roughly the same price range, it's worth putting aside some of bitcoin's short-term volatility and liquidity concerns to compare them as long-term stores of value side by side.If we think about the qualities that make gold a respected 'money' or store of value, bitcoin is actually superior in many regards.

[Hell-raiser]

So you are basically saying that even if we have somehow postponed consumer price inflation now, it will inevitably kick in later because the printed trillions will sooner or later trickle into the real economy pushing consumer prices higher. It may be like that in many cases as it happened in the past with Germany after World War I. But even with Germany that in fact remains to be seen. Germany lost war in 1918 when the Versailles peace treaty was signed, while hyperinflation started there only 3 years after, in 1921. And it was an obvious outcome of excessive money printing back then, not due to paper money having been stashed for 4-7 years. 

Between 1919 and 1920, a loaf of bread went up about 5 times in Germany.  This was before the hyperinflation and was due to money printing to finance the war, with the money being hoarded immediately after the war, but for some reason flooded into the market a year or so afterwards.

As I mentioned again and again, I think focusing narrowly on consumer price inflation in the West really misses the important issues due to the modern system of central bank created money.  And these include severe economic and social pain outside the West, terrorism, wars, pollution, etc.

That is, when the Western elites choose not to inflate enough but try to continue to prop up confidence in their currency, is the time when the worst suffering occurs.  (It's also not one or the other: usually it's a combination of inflation, deflation, financial repression, etc.  I'm simplifying here to refer to the effects of deflation vs. inflation.)

But I feel confused. What you say comes down to asserting that asset inflation, for example, due to 3 rounds of quantitative easing and money poured into stock markets, will ultimately turn into consumer price inflation. In other words, it is just deferred inflation and a matter of time when shit hist the fan. If so, I want to know how it will get transferred to goods and services. It is not like people are hoarding money as they did in Germany according to you, though even that sounds dubious if you ask me. You are talking in broad and vague terms (like terrorism, wars, pollution, whatever) which don't make a lot of sense to me.

[BobK71]

But I feel confused. What you say comes down to asserting that asset inflation, for example, due to 3 rounds of quantitative easing and money poured into stock markets, will ultimately turn into consumer price inflation. In other words, it is just deferred inflation and a matter of time when shit hist the fan. If so, I want to know how it will get transferred to goods and services.

QE was only the tip of the iceberg.  The vast majority of money is created in the banking sector as new deposits (or equivalent in investment banks.)  QE was merely a symbol of the ultra-low-interest environment after the crisis 10 years ago, that created a ton of money through the banking system.

Anything I say about how this will turn into goods and services inflation is by definition speculative, as it hasn't happened yet in this case.  If you want to read this kind of narrative, there's plenty right now in investment literature, since reflation is one of the major bets (if not the major bet) in financial circles right now.  Suffice it to say, there are many pathways possible.

In fact, for all we know, it may never turn into inflation in our lifetime.  (It's just that that scenario would be far worse from a humanitarian point of view.)  But inflation is still a good bet (at least inflation as part of the tools used to reset the system.)

As I pointed out before, even if it doesn't turn into inflation in our lifetime, even if it takes 100+ years (as the paper-pound bubble lasted,) history is that it always turn into inflation (or worse -- as in the Dutch case, where Dutch public debt was simply defaulted on by the French occupation government, long after the decline of the Dutch empire.)

It is not like people are hoarding money as they did in Germany according to you, though even that sounds dubious if you ask me.

Try reading 'Lords of Finance' by Liaquat Ahamed, in the relevant chapter, about post-WWI Germany.

You are talking in broad and vague terms (like terrorism, wars, pollution, whatever) which don't make a lot of sense to me.

The point I was making was big enough that, if I didn't talk in very generic terms, it would take too long to write.

Final thing I'd like to say is, if you're looking for cut and dry answers, I'm afraid there's no such thing in this field.  There are multiple possible pathways for each case of financial inflation to evolve, but what we do know is that things won't be good.

[stellgod]

Bitcoin and Gold are both good investments. But value wise i go for Bitcoin because it is more profitable compare to Gold and more people are getting interested to invest in bitcoin.

THIS is so wise if you are preferring bitcoin over gold because investing into gold for earning some decent profit has become old fashion and it is very slow method of increasing your capital whereas bitcoin is having the potential of making you rich in very short time span.

The difference in between the market value of bitcoin and that of gold is very much obvious and there is no way that we can deny this fact that the market value as well as the increase in the market value in case of bitcoin is far more than that of gold and bitcoin is the best way of investing money as it really helps you in making of more money in less time. Gold is only good for keeping your money safe, nothing more than this.

[Hell-raiser]

As I pointed out before, even if it doesn't turn into inflation in our lifetime, even if it takes 100+ years (as the paper-pound bubble lasted,) history is that it always turn into inflation (or worse -- as in the Dutch case, where Dutch public debt was simply defaulted on by the French occupation government, long after the decline of the Dutch empire.).

But how do we know that inflation we are likely (not) to see in a hundred years is the consequence of the QE's that the Fed had run some ten years ago? I'm not questioning that we will see plenty of inflation in the future, I'm just dubious about its causes lying that far in the past. The point is that deferred inflation can be gradually eaten away by the subsequent economic growth, so it may in fact have been a good idea to pour money into the financial sector (including stock markets) to extinguish the consequences of the subprime mortgage crisis back then and deal with inflation later if required.

[Obeng ketok]

Early in the week of August, Bitcoin set a record: for the first time, the price of 1 Bitcoin is more expensive than 1 ounce of gold. It was the US $ 4.

When viewed more backward, folding is more bombastic. In 2012, the price of 1 BTC (unit Bitcoin) about US $ 15, now? The price is more than the US $ 15 thousand, was predicted to touch the US $ 60 thousand in 2018

[Notcalculator]

The last time I did this analysis, gold was a thousand times more expensive than Bitcoin, if we compare the same proportions of total supply.  By now, Bitcoin has risen 30-fold, and so gold is only 30 times more expensive.

Of course, I was roundly dismissed for speculating Bitcoin could get anywhere near a six-figure price in dollars.  If I was criticized for being too bullish on Bitcoin, today I might be seen as too bullish on gold.

How to answer the question -- where to from here?  As I wrote recently, gold is objectively a better money for securing savers' freedom from governments and central banks.  So, if the long-term price ratio is 10 to 1 in favor of gold, Bitcoin can still go up 3 times.  It'd still be a great return by the standards of any asset, but Bitcoin is not quite as compelling as it used to be.

Especially, many early owners of Bitcoin, now flush with capital, who are also sympathetic to gold, might decide to sell some Bitcoin and buy gold at these prices.

We have to be careful here.  This entire analysis was based on the (pretty common) assumption that governments and central banks have nothing to do with gold and Bitcoin prices, and that the future of Bitcoin is to be another limited-supply monetary asset like gold, but at an appropriate relative price.  (The reality, at least with gold prices, is of course the opposite.)

So, the real question is what the Western elites want (and what China and Russia want, if they're able to counter the West in the field of monetary engineering.)  If Western debt levels and resulting economic/social/political problems are so bad that the elites have decided to use cryptocurrency to effect a reset of the entire system, to effectively wipe out their debt and start afresh, as just after World War II, then the sky is the limit for Bitcoin and cryptos.

If, on the other hand, the Western elites are only preparing for such a reset by taking advantage of cheap crypto prices so far, then we have to watch the relative price to gold.  The rise of Bitcoin, so far, is consistent with this scenario too.  From here on, our thinking might have to change.

For the answer to that question, watch the news closely for the signs!

You're right, gold is objectively better when it comes to hiding your money for now. Considering that it's guaranteed that it would keep its value for years to come. The only way gold would lose its value is if that a meteor made of gold crashes to earth. But you bitcoin does have its simple advantages over gold. It's easier to keep bitcoins. You can hide it in a piece of paper. Gold cant beat that.

[Tang lancip]

Bitcoin for investment now and save the wealth. If anyone buys gold why? Because he can just like to cancel or want to make a spaceship because gold is one of the materials that heat resistant.

People buy gold why? Because they believe that they have a good golden future. So if you talk Bitcoin, do not talk Bitcoin on a currency scale. Because if you talk Bitcoin in the context of currency, later our mindset will be limited, our mindset will be hard to think of Bitcoin as currency.

Later thoughts will arise, then who is the responsible part of the state? Then who is the central bank in charge? Then inflating how? Then the rules how? That's if we think of it as a currency. Now if you love Bitcoin as digital gold. All those questions will be gone. Bitcoin.co.id always considers Bitcoin as a commodity. Since the first interview in 2013, I always say Bitcoin is digital gold.

[Hillthy]

In terms of form, bitcoin and gold are exploited and used for human needs. However, the nature of the bitcoin meets the needs of modern and high, while the gold meets the needs of daily life. Gold is accepted or actively traded, exploited and used by the government. Bitcoins may need time to be seen in the future. All said, the value of gold is safe and will not be comparable to bitcoin in the long run.

[plaintiff77]

Bitcoin is actually for modern world while gold has been with us for hundreds of years. Bitcoin is generated through the internet while gold is tangible. When it comes to price, gold's is volatile and sometimes stabilized while bitcoin's price has never been stabilized. It keeps fluctuating.

[maydna]

Bitcoin is actually for modern world while gold has been with us for hundreds of years. Bitcoin is generated through the internet while gold is tangible. When it comes to price, gold's is volatile and sometimes stabilized while bitcoin's price has never been stabilized. It keeps fluctuating.

the bitcoin price is higher depends on gold but for the popularity, I think gold is more famous than bitcoin because people know gold for the first time and they still use gold as a long-term investment. but in this new era, I think bitcoin will replace gold and will be the next best of investment in the future so right now, there are many people which start to buy bitcoin although they can only buy for small part of bitcoin, they think that with this small part of bitcoin, they can make a lot of money in the future.

[BobK71]

As I pointed out before, even if it doesn't turn into inflation in our lifetime, even if it takes 100+ years (as the paper-pound bubble lasted,) history is that it always turn into inflation (or worse -- as in the Dutch case, where Dutch public debt was simply defaulted on by the French occupation government, long after the decline of the Dutch empire.).

But how do we know that inflation we are likely (not) to see in a hundred years is the consequence of the QE's that the Fed had run some ten years ago? I'm not questioning that we will see plenty of inflation in the future, I'm just dubious about its causes lying that far in the past. The point is that deferred inflation can be gradually eaten away by the subsequent economic growth, so it may in fact have been a good idea to pour money into the financial sector (including stock markets) to extinguish the consequences of the subprime mortgage crisis back then and deal with inflation later if required.

QE was only a small part of the systemic problem that we allow governments and central banks to create 'money' in various forms and prop it up with state power.  As I wrote, most money is created outside QE, but QE was big news because it was a sign that things were so bad that the authorities had run out of their considerable conventional power to manipulate financial markets and still pretend we have a free market economy.  QE was significant as a symbol, but it was never a major part of the problem, in itself.

That the 'systemic problem' always causes inflation is evident in the long term decline of the purchasing power of even the top currencies like the pound and dollar.  Over the last 100 years the dollar has lost its power to purchase Western labor at very roughly the same rate as its loss of value against gold.  Most, if not the vast majority of state-issued currencies on this earth have died by abuse.

Economic growth does 'bail out' the issuing of money from the problems it creates.  It's a classic scenario and happens all the time.  The problem is that the entire credit and economic cycle is dictated by central planning rather than the free market.  Central planning is designed to benefit the elites at the expense of everyone else.  Economic growth would happen anyway, due to market incentives, but centralized money creation artificially quickens it and distorts everything else.  Most of the suffering from the instability lands on the people at the bottom of the world system.

This is never specifically about the right or wrong of what the Western elites did after the 2007-8 crisis (QE, zero/negative interest, etc.)  That is a much smaller topic.

[BobK71]

You're right, gold is objectively better when it comes to hiding your money for now. Considering that it's guaranteed that it would keep its value for years to come. The only way gold would lose its value is if that a meteor made of gold crashes to earth. But you bitcoin does have its simple advantages over gold. It's easier to keep bitcoins. You can hide it in a piece of paper. Gold cant beat that.

As you can probably guess I'm far from an admirer of Goldman Sachs, but Goldman did write a report recently comparing the relative merits of gold vs. Bitcoin, as money.  Gold wins on most measures.  The only advantage of Bitcoin is, as you point out, in storage and ease of transportation.

[Hell-raiser]

As I pointed out before, even if it doesn't turn into inflation in our lifetime, even if it takes 100+ years (as the paper-pound bubble lasted,) history is that it always turn into inflation (or worse -- as in the Dutch case, where Dutch public debt was simply defaulted on by the French occupation government, long after the decline of the Dutch empire.).

But how do we know that inflation we are likely (not) to see in a hundred years is the consequence of the QE's that the Fed had run some ten years ago? I'm not questioning that we will see plenty of inflation in the future, I'm just dubious about its causes lying that far in the past. The point is that deferred inflation can be gradually eaten away by the subsequent economic growth, so it may in fact have been a good idea to pour money into the financial sector (including stock markets) to extinguish the consequences of the subprime mortgage crisis back then and deal with inflation later if required.

QE was only a small part of the systemic problem that we allow governments and central banks to create 'money' in various forms and prop it up with state power.  As I wrote, most money is created outside QE, but QE was big news because it was a sign that things were so bad that the authorities had run out of their considerable conventional power to manipulate financial markets and still pretend we have a free market economy.  QE was significant as a symbol, but it was never a major part of the problem, in itself.

That the 'systemic problem' always causes inflation is evident in the long term decline of the purchasing power of even the top currencies like the pound and dollar.  Over the last 100 years the dollar has lost its power to purchase Western labor at very roughly the same rate as its loss of value against gold.  Most, if not the vast majority of state-issued currencies on this earth have died by abuse.

Economic growth does 'bail out' the issuing of money from the problems it creates.  It's a classic scenario and happens all the time.  The problem is that the entire credit and economic cycle is dictated by central planning rather than the free market.  Central planning is designed to benefit the elites at the expense of everyone else.  Economic growth would happen anyway, due to market incentives, but centralized money creation artificially quickens it and distorts everything else.  Most of the suffering from the instability lands on the people at the bottom of the world system.

I don't deny that they often abuse their power of printing money but it seems to me that it is still rather a lopsided view to indiscriminately blame the government for every wrongdoing. After all, it was the financial (banking) sector that had created the subprime mortgage crisis in the first place, not the government itself. You could of course say that they should have interfered but it is free market, isn't it? Further, the fiat inflation is eventually offset by the growth in wages since otherwise there wouldn't be economic growth. I agree that inflation takes away from the purchasing power of a currency, but in the long run some balance gets established unless external factors such as wars are at play.

[srmecdes]

ahahah please forget tradational investment things..

yes you can lost easily but you can not earn good profit.

[BobK71]

I don't deny that they often abuse their power of printing money but it seems to me that it is still rather a lopsided view to indiscriminately blame the government for every wrongdoing. After all, it was the financial (banking) sector that had created the subprime mortgage crisis in the first place, not the government itself. You could of course say that they should have interfered but it is free market, isn't it?

In this analysis, we have to view the state and the banks as an alliance to jointly benefit by issuing financial assets and propping them up.  E.g. the asset bubble that led to the mortgage crisis was inflated not just by banks, but by bankers working hand in hand with a coalition of political entities.  It's not just the narrow interests involved (such as those wanting an increase in home ownership by minority groups,) but asset inflation benefits all politicians because the 'free' wealth lifts the entire economy, job base, investor base for public debt, and tax base.  (At least until, hopefully, one leaves office!)  This is why the 2nd most popular narrative about that crisis is that Fannie and Freddie (the de-facto public lenders) had a major hand in the bubble too.

As I implied above, top bankers and politicians are generally in alliance, not in competition, unless assets values totally collapse.  'Free market' vs 'bank regulation' is just a story for the public, in the big picture.  The only honest way to regulate banks is, as Austrian economists maintain, either 'totally free banking' or '100% reserve banking.'

Further, the fiat inflation is eventually offset by the growth in wages since otherwise there wouldn't be economic growth. I agree that inflation takes away from the purchasing power of a currency, but in the long run some balance gets established unless external factors such as wars are at play.

This is where things get so complicated that you can pretty much argue any position and no one can say you're definitely wrong.  The problem is with the complication in the first place (created by the state intervention in financial markets.)

The argument against socialism (either the Soviet type of economic socialism or the Western financial socialism) is always that, power corrupts, and the incentives of power are always to benefit those who hold it.  Complexity and the impossibility to analyze cause and effect are part of the power wielded by the state-bank elites.

The 'otherwise there would be no growth' part is not something I can agree with.  Growth comes naturally from the market economy simply because we all want better products and services.  What we have in the modern West is unnatural (perhaps too-quick) growth, which creates all sorts of problems, including environmental disaster and personal unhappiness.