Many of the investors in gold and Bitcoin agree that money printing by central banks should stop.

They also agree that governments should help people with special programs during a crisis but that once a crisis ends the government should repay the money it borrowed.

No one who owns these investments wants to see governments borrow money every year forever (which is what they have done and plan to do still). Below is a graph of the gold price and Bitcoin since the beginning of the year.

Gold V/S Bitcoin Chart

The above paragraph is a list of what investors in gold and Bitcoin agree upon.

However, most of this year the price of gold and Bitcoin have moved in opposite directions – when gold is rising bitcoin is declining and vice versa.

Although there are some agreements among investors that both investment choices offer the same alternative to central bank cash, there are many that strongly believe that one is better than the other. 

Gold Vs. Bitcoin

Some bitcoiners like Michael Saylor are using social media to tell everyone that gold and silver are going to zero because bitcoin ‘replaces’ them.  Demographics play a big factor in determining if someone owns bitcoin versus gold (or silver).

Younger generations tend to own bitcoin because technology is more trusted by them than by old people – and they are looking for a quick rise and outlandish returns.

Baby boomers have more wealth to protect, they understand that wealth must be passed down to generations and that gold and silver has stood the test of time. They also have experience with declining markets and tax changes.

Baby Boomer gold bulls like Peter Schiff understand governments cannot easily tax physical metal holdings, but that digital blockchains are completely open for governments to study and tax.

Also, let’s now talk about things Bitcoiners and physical metal owners disagree about.  Electricity is a big one! How can bitcoin be a storage of wealth if a simple blackout means you cannot spend it, or buy it, or even prove that you ‘own’ it?

And what exactly does it mean to ‘own’ bitcoin?  If your bitcoin gets stored on an app offered to you by some platform company or brokerage, you don’t actually own anything.

And there is no way to convert Bitcoin into any type of physical form. Physical metal is the only thing that you truly own because it requires no broker, government, or app, not even electricity to be wealthy. Moreover, this argument was made by Peter Schiff in a Twitter reply to Elon Musk.

Peter Schiff Tweet

 And one further tweet on the electricity issue and Bitcoin.

Electricity Issue and Bitcoin Tweet

And then there is the problem of forgotten passwords or destroyed drives that make Bitcoin unretrievable – and with other cryptocurrencies that have seen sharp rises, such as Shiba, there is the question on where it can even be converted into a usable form.

As stated above, many Bitcoin and gold investors hold these assets for many of the same reasons. However, there is the main distinction that Bitcoin is entirely digital, and gold is a physical asset.

There can be a place for both Bitcoin and gold in a portfolio, but the volatility and digital nature of bitcoin do not make it a substitute for gold in a portfolio.

Besties Or Enemies?

Globally, Central Banks have two levers in their quiver to assist in guiding an economy, fiscal and monetary policy.  Fiscal policies (such as the recently passed Infrastructure Bill in the U.S.) seek to boost employment and economic activity through increased spending by the government.

Through monetary policy, Central Banks see to stimulate activity by lowering or increasing policy interest rates. It is our view that global governments and Central Banks will never allow independent cryptocurrencies to gain traction to the point that their monetary or fiscal policy levels are weakened. 

As an example, the ability for citizens to pay taxes and/or receive entitlements via independent cryptos is highly unlikely. 

However, we do see the government issuing their own digital currencies in the future as the power of these policy levers are maintained.

Central banks buy gold and hold gold to preserve wealth because gold does not belong to anyone else. Central banks will never ‘issue’ their own gold because they cannot make gold, only supernovas do that.

So, it seems bitcoin and gold are besties, standing together against needless money printing. But like brothers and like enemies they disagree loudly when comparing themselves to one another in search of supremacy.