As bitcoin continues its meteoric rise, breaching new records and crossing the $1 trillion market capitalization mark in just the last week, more investors are assessing the longstanding comparison between the famous cryptocurrency and an equally well-known asset class: gold.
Both assets, experts say, are often seen as ways to diversify a portfolio or as a hedge against fiat currency inflation brought about by what some observers see as unsustainable fiscal and monetary policies.
Yet, until recently, it was rare to see Wall Street analysts, chief executives, or established investors seriously compare the two assets. Bitcoin, commonly referred to as digital gold, has historically been seen as a risky speculative investment for those looking to profit in the short term. Gold, meanwhile, has always been considered a safe-haven asset.
Now, bitcoin’s rapid ascent to over $57,000 per coin, backed by new investments from Tesla and other institutional names, has led some to question whether old assumptions about these assets are correct.
Given digital currencies’ dizzying climb, Insider surveyed 10 experts to see if they’d rather hold bitcoin or gold for the next 10 years, and why. We asked bitcoin bulls, gold lovers, analysts, executives, and more.
Here’s what they had to say:
- “My vote would be for gold because it has thousands of years of a historical record as a store of value, has one-fifth the volatility of bitcoin, and doesn’t face the same competition risk. The day that Queen Elizabeth trades in the five pounds of gold in her crown for crypto is the day I’ll shift course.” – David Rosenberg of Rosenberg Research, former Chief Economist and Strategist for Merrill Lynch Canada and Merrill Lynch in New York
- “Gold and silver have been stores of value and mediums of exchange for at least 4 millennia in every civilization in every corner of the world. It has unmatched accessibility to people of all economic standing and technological knowledge. And gold is the ultimate currency of central banks, silver of the people. There is room for cryptocurrencies too since their digital nature is a fundamental difference from gold and silver. But that characteristic also ensures that cryptocurrencies will never replace gold and silver and will ultimately improve the metal’s value.” – Phil Baker, President and CEO, Hecla Mining Company
- “Gold has long been considered to be the safe-haven asset of choice, and, while bitcoin is ‘the new kid on the block,’ it’s debatable that it will eat into gold’s market share for a number of reasons. Bitcoin and gold both have significant advantages over fiat currencies because neither can be diluted or debased. There is a possibility that bitcoin could one day cease to exist through hostile legislation. Some bitcoin derivatives have already been banned. Companies such as Facebook who have attempted to start crypto have been prevented from doing so. So, while bitcoin is a more recent form of investment that is certainly receiving a lot of hype, gold has retained its value through centuries. Whether bitcoin will offer the same level of longevity is highly questionable.” – Sylvia Carrasco, CEO and founder of the gold exchange platform Goldex.
- “One of the assumptions underlying bitcoin’s bull case is its limited supply, but the supply of cryptocurrencies, on the whole, is theoretically unlimited. Some extol bitcoin as a portfolio diversifier, but it has so far exhibited higher correlations to equities than gold, particularly during periods of equity market stress when diversification tends to add the most value. The demand for bitcoin may be over its skis relative to its likelihood to carve out a significant economic or financial use case.” – Michael Reynolds, Investment Strategy Officer at Glenmede.
- “Both crypto and gold have passionate investor bases… However, there are very clear differences. Gold’s history as a basic building block of global money is 5,000 years old and time-tested; Bitcoin is 10 years old and has existed in only one monetary regime. The standard deviation of bitcoin’s price is 75%, making it a horrible store of value. Recent price history shows a large bias toward speculative interest, so much so that companies are tempted to include bitcoin on corporate balance sheets to help grow assets…