As times goes by more people are asking whether gold is dead and whether Bitcoin will flippen gold. It has not been responding to what is happening in the markets. Unlike Bitcoin which has been going up in price.
Bitcoin has gone up over 18 million percent since the start of 2011 when it was $0.30. On the other hand gold is up around 25% since then. As a result Bitcoin has stolen media attention away from gold.
When you consider how much time has passed and all that has happened in the world, 25% is not great. In fact currently there is a lot of negative sentiment against gold and a lack of investor demand.
However are things going to remain this way?
Will Bitcoin Flippen Gold?
Bitcoin’s current market cap is around $1 trillion while gold’s market cap is around $11 trillion. Although gold has not gone up by much, no market cap is static. Additionally there have been a few things happening that we need to take note of.
Roaul Pal had an interview with Robert Breedlove on YouTube. He stated clearly gold preserves wealth. However since millennials have no wealth there is nothing to preserve. On the other hand millennials think Bitcoin has value. It offers them the chance of becoming wealthy. So millennials as a group are not going to be buying up gold, but Bitcoin.
As yet bitcoin is not competing with gold as a store of value. After all its market cap is far lower than gold’s at this point. However with time this could change, but things are not that straight forward.
Will Bitcoin Flippen Gold: Bitcoin’s Progress
Bitcoin is going to continue to go up in price. Of course it is not going to go up in a straight line. It will have its ups and downs. However there is mass adoption coming on the horizon.
Big institutional players are preparing to get into the market and buy Bitcoin. Additionally there may be other countries that decide to adopt Bitcoin like El Salvador. Bitcoin will benefit as a result.
However there are those that do not think that Bitcoin will flippen gold. For example Ronald Stoeferle invests in both Bitcoin and gold. Stoeferle believes Bitcoin will catch up to gold, but not surpass it in market cap. One reason for this is gold’s 5000 year history and countries accumulating gold. This includes China.
On the other hand if there are extreme circumstances like war you never know what might happen. In our article Bitcoin, gold and war we speculate on what might happen.
Will Bitcoin Flippen Gold: China
China’s top regulators banned crypto trading and mining. China is continually increasing its gold reserves. Additionally there is talk of a gold backed Yuan.
Most other countries do not like Bitcoin. Mostly central bankers do not like it because they cannot control and manipulate it, unlike gold. If China were to create a gold backed Yuan it would push the gold price up significantly. To clarify China might not be that far away from doing this.
The Better Standard Always Wins
China may decide to go for a gold standard, but will it work?
Here is an interesting bit of history. Back in the day, India and China had adopted a silver standard when others adopted gold. What ended up happening is that the superior standard won and as a result the silver standard ultimately failed.
So China may adopt gold, but it probably is not going to work out in the long run. They made a mistake by pushing out Bitcoin miners out of the country.
Additionally Bitcoin has two things in its favour over gold. As it stands Bitcoin is offsetting monetary debasement and has a network effect. It has exponential growth.
In fact Hillary Clinton said crypto could undermine the dollar’s reserve currency status. What could happen is that there could be competing standards for a while.
Until eventually one standard will prove to be superior. Crypto as a whole could share the space and Bitcoin may end up being the new gold standard.
However this is going to take time to play out. Gold still needs to have its time to shine. In the meantime as Lawrence Lepard put it Gold and Bitcoin are in the same camp. That is the anti-fiat money camp.
Here is Lawrence Lepard’s exceptional speech at the New Orleans conference
Disclaimer: This is an opinion page and is not meant to be financial advice.