From the collapse of the Bretton Woods system to now, exactly in the early 50s, the price of gold has risen from $35 an ounce to more than $1,900 per ounce today, and these years have also risen more than 50 times.
In a soccer match with a huge disparity in strength, the weaker side will win applause from the audience in the stands as long as there is a shot on goal, regardless of whether it scores or not. The same is true in the market. In the race against Bitcoin, gold led by at least one point in the first quarter of this year: the price of gold closed up 8% to $1942 an ounce in the first quarter of this year, the best quarterly performance since the second quarter of 2020. In contrast, the price of Bitcoin fell by about 2% in the first quarter.
10 years ago, for such a small victory, gold was not in sight at all. But in 10 years, there is no obvious trace on the gold that can withstand the erosion of the years, but it has made a drastic change in Bitcoin, growing from a humble seedling to a big tree that cannot be ignored - when the price is at its highest, it can account for about 1% of global financial assets.
As the latter savagely grew, the price balance was also tilted in favor of Bitcoin in the comparison of gold and Bitcoin: initially the price of Bitcoin was far less than the price of gold, but in November 2013 the price of a bitcoin exceeded the price of one ounce of gold for the first time; by February 2021, the price of a bitcoin surpassed the price of one kilogram of gold.
In the first quarter of the year, gold outperformed Bitcoin, and on the 10-year time scale, Bitcoin won another big victory. So, when comparing these two assets, what kind of time length is more objective?
Gold fans definitely hope that the larger the scale, the better, or at least from the Wall Street financial crisis before, after all, bitcoin as a comparison item was officially born in early 2009, if you talk about the background, bitcoin will be thrown out of several "Marvel Universe" distances.
By the same logic, Bitcoin adherents want the timescale to be as specific and close to the present as possible, such as rising inflation that makes gold one of the major underperforming asset classes in 2021, with the price of gold falling by about 5%, compared to Bitcoin appreciating by 65% in 2021.
Different time scales reflect the difference in perceptions of gold and Bitcoin. One of the basic assumptions in economics is that everyone dies in the long run, so a cycle of more than half a century is almost meaningless to the individual. From the collapse of the Bretton Woods system to now, exactly after the early 50 years, the gold price from $35 per ounce to the current more than $1900 per ounce, these years have also risen more than 50 times, is still a satisfactory answer.
But current investors are clearly not satisfied with 50 years of time. In the YOLO movement that has emerged over the years (people only live once), investors are increasingly moving in and out, and may not even be able to wait for months. Previously, under the YOLO movement, meme stocks such as GameStop (the world's largest video game and entertainment software retail giant) and AMC (asset management company) were rapidly pulled up, and the slow gold price naturally could not keep up with this rhythm, and electronic cryptocurrencies were the first choice for this short-draw fast play.
If you are pursuing risk aversion, then gold is a good choice. Although the effect may not take 50 years, it also requires patience to see. By contrast, any previous claim that Bitcoin may be a geopolitical hedge has been falsified by its performance in the wake of geopolitical tensions between Russia and Ukraine. Gold prices are higher, while Bitcoin is falling, and the claim that cryptocurrencies are a means of hedging value is self-defeating.
But if you are looking for short-term gains, Bitcoin is a better choice, after all, its volatility is comparable to a roller coaster, and the trend of gold prices is more like a grandmother crossing the street. Of course, the premise of benefiting from Bitcoin is to press in the right direction, otherwise the speed of loss will be equally staggering.
Gold and Bitcoin come and go according to various scales, each with its own advantages and disadvantages. The current consensus is that gold and Bitcoin have something in common, it is highly evident that their fundamental value is limited, they do not bring benefits in themselves, and their price fluctuations stem from the common belief that enough people consider them valuable.
But in the eyes of some, neither gold nor Bitcoin are reliable assets. Robert Triffin, the American economist who proposed the famous "Triffin problem," said that no one can imagine a waste of human resources than digging gold, and that the sole purpose of mining gold at the ends of the earth is to transport them together and bury them in deeper, specially dug deeper holes.
Teriffin did not see Bitcoin, otherwise he would feel that using advanced machines, high-end computing power and a large amount of energy to make some invisible targets, and also be marked with different prices according to the trading fluctuations of speculators, which is a more wasteful of human resources.
But from another perspective, this "waste" of resources has intrinsic value. Even Professor Trenifen acknowledges that gold is a commodity with unquestionable advantages over other items that can be substituted as money. A big reason investors flock to Bitcoin and gold is scarcity. According to the World Gold Council, the total stock of gold already mined in the world is only slightly more than 200,000 tons, and the cost of increasing the gold stock from mining to refining, from transportation to warehousing, is very high.
The same logic applies to Bitcoin. It tracks 21 million bitcoins in a fixed supply through a decentralized public ledger blockchain, technically ensuring that its quantity is controllable. In contrast, the central bank's credit money can be issued indefinitely, and the finiteness of gold and bitcoin contrasts with the fiat currency that flows out of the printing press, which also gives it a different charm.
At a deeper level, both gold and Bitcoin have anarchist cores, and distrust of central banks drives acceptance of both – even though gold's history is much greater than that of central banks. After the Wall Street financial crisis in 2008, the price of gold led to a period of rapid rise, and Bitcoin was born during the financial crisis. Since then, low and even negative interest rate environments, misgivings about the Fed, advances in digital technology, and a broader asset shortage have all contributed to the perfect storm for digital currencies.
Storms always have moments to stop, but how long can Bitcoin's allure last?
At present, Bitcoin is labeled as electronic gold by its adherents, and perhaps gold, like Bitcoin, is a bubble asset with false hopes. But if Bitcoin really wants to be on par with gold, it must at least guard this bubble for 5,000 years, not less than 15 years.
After all, in a fair football game, the two teams play for equal time.
(The above content does not constitute investment advice or operation guide, according to this market, at your own risk)