Gold vs Bitcoin

When was the last time you saw gold post new highs?

Three months ago? Six? Maybe it was early 2012?

Nope. You’re way off.

Sparked by the eurozone crisis, the August 2011 rally marks the high point for gold. If you’re keeping score, that means 20 months have passed since gold has posted new highs.

Sure, we’ve seen a few rallies (gold has failed at US$1,800 three times since late 2011). But not once has gold made an honest attempt at US$1,900, let alone US$2,000.

Right now — while the world is smitten with the meteoric rise of Bitcoin — the yellow metal is perilously close to another key inflection point.

Gold's Precarious Position

Late last week, gold dropped briefly below US$1,550 for the first time since 2012. This is the area you have to watch closely. Since gold slipped from its highs in 2011, buyers have always come in to support the price at US$1,550. If this support zone fails, panic selling could send gold as low as US$1,400 in a matter of weeks.

For the record, I don’t see this playing out as a battle between gold and Bitcoin. While Bitcoin is a fascinating story, there’s just no way flipping gold for the decentralized currency is a legit trade. I’m sure some speculators are doing it. But that’s not why gold is dropping…

The simple fact is that after a 13-year run, investors are selling. Spare me your central bank stories. The market doesn’t care how you feel about monetary policy right now. Selling is contagious. And right now, it’s getting close to a pandemic.

Investors are selling gold ETFs at a record pace. Approximately 106 tonnes of bullion was dumped in February, according to CNNMoney. That’s the biggest monthly sell-off ever. That’s where your selling pressure is coming from — whether you like it or not.

The gold cycle is turning. Avoid the ETFs and miners. If you own them, get out now. These will be the most vulnerable investments as the drop approaches.

‘The astonishing rise in the use of Bitcoins may be an indication that gold and silver, as stores of value, are losing their cachet,’ writes a reader. ‘Bitcoins allow people to bypass conventional methods of paying for goods and services no matter where they are in the world; that’s rather difficult to do with gold and silver.

‘As such they act as a replacement for the US dollar as a medium of global exchange. Bitcoins are essentially just another fiat currency and require a similar faith among users that their value will not be deliberately debased, as has not been the case with the dollar.’

One day, Bitcoin might find its place in the world as a portable reserve currency. But right now, it’s just too early to tell.

I understand the attraction-but there are far too many unknowns to begin calling Bitcoin a store of value. By the looks of its chart, I have to label it a wild speculation at the moment:

A Bitcoin Bubble?

I’ve seen plenty of charts like this. All of them play out the same way eventually. Buyer beware.


Greg Guenthner
for Markets and Money

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8 Comments on "Gold vs Bitcoin"

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small cap

“The gold cycle is turning. Avoid the ETFs and miners. If you own them, get out now”

I thought at TDR it was ‘we love gold.’????????????


Um..So are you suggesting that investors should think about selling gold stocks even those that are in your publication like say Diggers and Drillers currently have in their portfolio?

Dear Greg Guenthner, I hope the sheeple avoid your panicked drivel. Gold will be the last man standing and once the elites have shaken people like you out of the tree they will be all in on the long side of the trade (That is in the Physical Market,NOT paper) and the people of this world as the great Jim Sinclair says “will have a spiritual experience watching the upside move of gold” Please,…. gold is moving toward the system not away from it and it is the only thing that will balance the books of the hopelessly indebted nations… Read more »
slewie the pi-rat
quoting CNNMoney for “hard data” that ~ 106mT was “dumped” from ETFs? WHERE did they “dump” it? i’m serious. Comex Gold Inventories Collapse By Largest Amount Ever On Record gold inventories? held by banksters? because the “world gold council” tells us so? or the crimex? or some pundit claims to be able to “figure out” china or india? ever hear of “backdating options”? banking fraud? failures to deliver shorts? incomprehensible accounting lies? problems in the “back room”? insolvency? my point? “data” about PMs is kinda quicksilverish, at best. ditto banks, nations, and their corpo-fascist “gotcha” games, settled by gunfights.… Read more »

I’m sure you are very clever Slewie but I could not understand what you were saying. Have you ever tried using the English language?
PS I have just checked and they did not dump the gold in my back yard!
Wasn’t so long ago that TDR were spruiking $5000 gold, now it’s sell before the crash!!!
Meanwhile, my rental properties are still paying for my groceries, fuel etc with enough left over for a pleasant red or two.


Yep, gotta laugh, David. Fancy exporting journos from the US and UK to try to crash property seven years ago…


David do you sometimes call yourself Peter ?

small cap

Hell Greg, you got that move right (deadly accurate). What do you see coming next? I’m still in as i am that much behind, seems like sticking with the ride is the best policy but hey!

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