Gold hit a new all-time high of more than $4,200 an ounce on Wednesday, driven by demand from retail buyers to buy physical gold and central banks hoarding the precious metal as a hedge against currency inflation.
Reports of buyers seeking exposure to gold have ended as more people seek alternative stores of value amid global macroeconomic uncertainty. On Thursday, a line of customers waiting to enter the ABC Bullion Precious Metals Shop in Sydney, Australia, was reported by local outlet nightly news.
Many individuals in the queue, which stretched nearly 200 feet around lunchtime, cited macroeconomic uncertainty, the declining value of the US dollar and mistrust of financial institutions as reasons to hold on to physical gold.
Gold prices are up nearly 61% year-to-date, Data From Yahoo finance shows.
In August, gold overtook US Treasurys as a percentage of central bank reserves for the first time since 1996, and now makes up more than 25% of global central reserves, according to economist Mohamed El-Erian.
The trend emphasized a wider shift towards observable safe assets. As market analysts in the Kobeissi letter write:
“Gold, silver, and bitcoin are all in the top 10 largest assets in the world. These are all generally viewed as safe-haven assets that rise when stocks fall.”
Kobeissi’s letter noted that the US dollar is on track for this Worst year since 1973as bitcoin (BTC) and Gold Form All-Time Highs. Debasement of money and loss of trust in traditional institutions are generally positive catalysts for bearer, store-of-value, and hard currency assets.
Related: Bitcoin-gold correlation rising as BTC follows gold’s path to store of value
Analysts continue to debate Bitcoin’s role as a store-of-value
BTC, a supply-capped and censorship-resistant money, Mirrors Gold’s Store-of-Value Properties, but Continue to trade in high volatility Because of the relatively low market cap of about $2.2 trillion compared to Gold’s market cap of about $2.9 trillion.
A lower market cap means an asset’s price can rise or fall dramatically because there isn’t enough liquidity to cushion big moves, whereas a higher market capitalization means the price is more resilient to volatility and sudden, sharp drops.
The price of BTC dropped by approximately 8.8% at the end of the Friday’s historic market crashwhich saw some altcoins lose more than 95% of their value in 24 hours.
While some market analysts and investors saw the moderate price drop in altcoins as a sign of strengthother analysts point to the price differential between BTC and gold as evidence that BTC is not living up to the store-of-value narrative.
Economist and investor Peter Schiff, who is one of the most vocal critics of Bitcoin, said The recent drop in Bitcoin price to current levels from an all-time high above $125,000 amid gold’s rally to all-time highs shows the BTC Bull market is over.
Magazine: Bitcoin is the ‘funny money of the internet’ during a crisis: Tezos co-founder
