uploads///Bitcoin versus Gold price

Could Bitcoin Be the New Gold?


Jan. 24 2018, Updated 9:38 a.m. ET

Haven calls

Many analysts assume that the rise in gold’s price last week may have been supported by the tailwinds that caused the cryptocurrency market (ARKW) to slump, with Bitcoin correcting almost 30%. The physical demand for gold increased staggeringly in the week. The sales data of Frankfurt-based traders showed a fivefold rise in gold physical demand.

Investors often seek the shelter of gold during turbulent times in the markets, and there’s the chance that shaken investors found some solace in gold after the cryptocurrency rout.

Article continues below advertisement

Store of value

One similarity we can point to in gold and Bitcoin is that many investors could be turning to Bitcoin for longer-term investments rather than for a short time. Most investors aren’t opting for Bitcoin for daily use; instead, they’re choosing to keep it as a store of value. The case with gold is similar: people don’t use gold for daily expenses, but it’s used a store of value. However, at nearly 80%, Bitcoin’s high volatility deters many investors, and it holds much uncertainty compared to gold.

The increase in the physical demand for gold (GLD) also likely has some backing from the upcoming Chinese New Year. A calendar anomaly could also be what’s helping gold’s price. Gold often performs well during the months of January and February.

Among the mining shares that have risen due to the revival in gold prices are Buenaventura (BVN), Eldorado Gold (EGO), Alacer Gold (ASR), and IAMGOLD (IAG). These stocks have risen 3.7%, 3.9%, 1.3%, and 1.5%, respectively.


More From Market Realist

    • CONNECT with Market Realist
    • Link to Facebook
    • Link to Twitter
    • Link to Instagram
    • Link to Email Subscribe
    Market Realist Logo
    Do Not Sell My Personal Information

    © Copyright 2021 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.