Interesting question from Steve:
Bitcoin has broken through $50k, so there is now some USD940 billion in circulation. What would be the impact on the Gold price? It seems to me that many Bitcoin purchasers are buying as an alternative to buying Gold as a store of assets.
Bitcoin may be diverting some investors from gold but we believe this is marginal. Global gold reserves ($9.6T according to Perth Mint) are still 10 times the size of Bitcoin.
If we look at 2018, when Bitcoin fell from $19,000 to $3,200….
There was little benefit to Gold which also fell for most of the year.
Again in 2020, when Gold peaked at the beginning of August….
Bitcoin remained flat for 3 months before commencing an up-trend in November 2020. And broke $20,000 on Dec 17th, while Gold was rallying.
Conclusion
The rise in Bitcoin is not the cause of recent weakness in Gold.
We see Bitcoin as speculative and would not hold it as a store of value — any more than Dutch tulips.
Gold has served as a store of value for thousands of years and this is unlikely to change.