Gold prices have been surging, nearing record highs, fueled by various factors including economic uncertainty, inflation, geopolitical tensions, and central bank purchases. Rick Kanda, managing director at the Gold Bullion Company, emphasizes gold’s appeal as a “stable investment” during turbulent times.
Bitcoin, often dubbed “digital gold,” is lagging behind, currently 20% below its peak. Analysts suggest this discrepancy is due to Bitcoin’s sensitivity to US political uncertainty and large sell-offs from institutional investors.
Gold’s status as a haven asset makes it attractive during economic downturns and currency devaluations. While Bitcoin could theoretically serve a similar role, its performance during high inflation and market crashes has been underwhelming.
Geopolitical risks are also bolstering gold demand, while Bitcoin tends to follow the trajectory of riskier assets like tech stocks, making it less desirable when investors are seeking safety.
Central banks are actively increasing their gold reserves, further driving up its price. In contrast, Bitcoin has seen limited institutional adoption, with some central banks explicitly ruling out its purchase.
Finally, gold’s scarcity, due to limited mining production, enhances its value. Although Bitcoin also has a capped supply, its mining process and halving events introduce additional complexities.
