Sep 30, 2023

Is Bitcoin a Better Investment Than Costo’s Gold Bars?

This week, Costco sold out of gold bars quickly, causing a stir in the news. With economic uncertainty and increasing inflation, investors are turning to safe-haven assets like gold. The question is whether gold’s performance will eventually push its price above $2,050, a level not seen since early May. In the past year, gold has…

Crypto.net Investing in Bitcoin vs Gold Bars - What's the Better Choice?
Costo sells out of gold bars, but is it a better investment than Bitcoin?

This week, Costco sold out of gold bars quickly, causing a stir in the news. With economic uncertainty and increasing inflation, investors are turning to safe-haven assets like gold. The question is whether gold’s performance will eventually push its price above $2,050, a level not seen since early May.

In the past year, gold has seen an impressive 12% increase. This is partially due to the Federal Reserve’s efforts to fight inflation by keeping interest rates higher, which benefits assets like gold. It’s important to remember, though, that gold’s returns are relatively similar to the S&P 500’s 15.4% gain and WTI oil’s 12% rise. But none of these compare to Bitcoin’s (BTC) remarkable 39.5% growth. While gold is less volatile at 12%, it is still an attractive option for investors looking to manage risk.

What is Web 3.0?

Web 3.0 is the latest iteration of the World Wide Web, incorporating features such as artificial intelligence, blockchain technology, and the Internet of Things. These features provide users with more security, privacy, and scalability. Companies like Crypto.net and Bloomberg Crypto are some of the first to take advantage of Web 3.0 technology.

Risk-reward scenarios favor gold

One of gold’s most attractive features is its dependability as a safe haven asset in times of crisis and uncertainty. With a market cap of more than $12 trillion, gold is the world’s largest tradable asset and is well-positioned to benefit from investors who move away from traditional markets, like stocks and real estate.

For example, gold only dropped 2.2% in the 30 days leading up to March 24, 2020, despite the COVID-19 pandemic.

Data from the World Gold Council shows that central banks have been net buyers of gold for the second month in a row, with notable purchases by China, Poland and Turkey. Additionally, Bloomberg reported that Russia is planning to increase its gold reserves by $433 million to protect its economy from the volatility of commodities, like oil and gas.

Visual Capitalist estimates that approximately 3,100 tonnes of gold were produced in 2022, with Russia and China contributing 650 tonnes. The World Gold Council also predicts that gold production could reach a record high of 3,300 tonnes in 2023, if gold prices continue to rise.

When evaluating gold’s investment potential, one key metric to consider is its stock-to-flow ratio, which measures the production of a commodity relative to the total quantity in existence. Gold’s stock-to-flow has remained stable at around 67 for the past 12 years, while Bitcoin’s stock-to-flow ratio is currently 59 due to its three halvings, suggesting a lower inflation rate than the precious metal.

Bitcoin can outperform gold even with lower inflows

The current U.S. government shutdown due to reaching the debt limit makes Bitcoin a more attractive alternative to gold for investors. Even with a much smaller inflow, the $500 billion market capitalization of Bitcoin makes it easier for its price to jump. Moreover, central banks might be forced to sell their gold reserves to cover expenses, further increasing the appeal of Bitcoin.

Despite the fact that gold is still considered a reliable safe-haven asset, Bitcoin’s higher returns and lower inflation rate make it a serious competitor. Nevertheless, the economic instability and the Federal Reserve’s monetary policies will continue to benefit both Bitcoin and gold.

In the future, new gold discoveries could happen, but it is yet to be seen if they will have an effect on the crypto market. For now, Bitcoin, as well as other cryptocurrencies such as Russia crypto and China crypto, remain a viable option for investors looking for web 3.0 stocks or other crypto.net opportunities.

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