Are Gold and BTC Similar Stores of Value?
The simple answer is no, though many instant-crypto-millionaires would strongly, and understandably, disagree.
Despite our shared distrust for fiat currencies and the now openly inflationary and failed experimentalism of extreme central bank money creation (and hence currency debasement), we do not see crypto currencies as either “digital gold,” an alternative currency or an actual store of value against such distorted global currencies.
There’s a reason, moreover, that central banks around the world have been acquiring more and more gold rather than BTC as trust in currencies in general, and the USD in particular, wanes.
Instead, we see crypto, and its exceptional blockchain technology, as the greatest (and hence potentially most dangerous) speculation asset of modern times.
Speculation, of course, is fine, and we congratulate any and all who have successfully speculated in the crypto space.
But as a stable and historically-confirmed store of value and hence wealth preservation asset, crypto’s, by their very profile and volatility (as opposed to “consolidation phase”), do not qualify as such.
Thus, speculate as you wish with digital coins, but make sure the wealth generated therefrom is protected by a natural store of value, as many of our gold clients have themselves done.
Nor do we see cryptos emerging as a new and widespread medium of exchange, for the simple reason that central banks and sovereign nations will and would never allow such digital currencies to replace their own admittedly debased currencies. Although openly unfair, the pending rise of CBDC will directly reduce the role and value of independent digital currencies, whose very presence serves as an existential threat to national currencies.
The political, legislative and banking forces against which names like BTC are fighting are simply too strong, albeit distorted, discredited and likely to implode one day. When that day comes, however, gold will be the far more trusted and consistent asset to protect against such a disorderly currency “re-set” to come, which, again, will be characterized more by central bank digital currencies (CBDC) than individual coins like BTC.
In the interim, of course, cryptos can continue to enjoy, as well as suffer, extreme price moves which can and should only be speculated by those who can manage and afford the risks of such speculation.
For more detail on the much-debated differences between gold and cryptos, please see here.