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Bitcoin vs Gold Investment Bulletin #1, Medium @eric.bott, 22 June 2020 (CC BY-SA 4.0)

Bitcoin vs Gold Investment Bulletin #1

Bitcoin Investment Data, in Terms of Gold with Analysis.

This Bulletin is intended to assist those considering “Safe Havens” for cash that they may wish to invest for an uncertain future, given the bizarre economic events we have seen occurring since the onset of COVID-19.

Rationale

Intuitively, and from a glance at historical data (Weimar, Zimbabwe, Venezuela, etc), the values of all fiat currencies which are being used to stimulate markets by massive injections of literally Trillions of Dollars-worth of newly printed money, every month, are likely to drop at some point, with the result that more and more cash will be needed to buy the things we need to live.

Data

In the data plot of the header graphic, appearing also below, we see two traces.

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Bitcoin vs Gold Investment Bulletin #1, Medium @eric.bott, 22 June 2020 (CC BY-SA 4.0)

Method

The Gold price data for Bitcoin was computed by dividing the historical daily Gold price, by the historical daily Bitcoin price, for each daily date point that the gold price was recorded.

Comparison

Over the longer term, the two traces appear closely correlated, showing variations in the market value of Bitcoin, with a sharp peak at the time of the Bitcoin price bubble, which burst around the beginning of 2018

  • The Bitcoin price, over the period of interest, has gone from around $100 per Bitcoin, to its current price of around $8000 per Bitcoin, which is an increase of around 8000%
  • From the second half of 2019 onwards, we see the traces swap places. The blue line trends upwards relative to the brown. Increasingly more dollars are needed, to buy Bitcoin, than the increase seen in the amount of Gold required to buy Bitcoin. Thus Bitcoin has been a better store of value since the second half of 2019. We can see also that this appears to be steadily diverging, thus Bitcoin appears to be an increasingly better store of value than Gold, as time goes on in 2020.
  • The lines throughout the entire period show a consistent trend in the dollar price, relative to both gold and Bitcoin. The blue line is consistently moving upwards throughout. This is evidence that the dollar is consistently losing value, as expected. The dollar values of Bitcoin are rising at a greater rate than the gold rate of bitcoin, throughout.
  • The divergence we see becomes more profound towards the current date. We see a possible exponential effect beginning around there. Logically, continuance of that exponential will indicate a runaway dollar price of both Bitcoin and Gold, which could quickly result in nonsensical dollar prices for either. Hence the reason we should begin monitoring these relative to one another, as has been done here, to enable identification and removal of unstable, rapidly devaluing fiat currencies from meaningful valuations.

A Closer look at the recent Bitcoin Gold Price

The graph below shows only the Bitcoin Gold price, from the beginning of 2020, to the current date.

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Bitcoin vs Gold Investment Bulletin #1_1, Medium @eric.bott, 22 June 2020 (CC BY-SA 4.0)

Translating the Analysis to Every Day Effects

Where we see the Gold price of Bitcoin increasing, we are seeing the value of Bitcoin increasing, relative to Gold.

In the face of failing economies, the gold price of anything is far more important than the dollar price.

This is whilst the dollar price of Gold itself has grown only 40% in the previous seven years.

Confidence

What matters is how much confidence we have in it.

Solarpunk

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