Analyst, Chris Mancini claims governments are increasingly turning to gold, and not Bitcoin, in order to hedge against economic uncertainty. Motivated by geopolitical wranglings, as well as a desire to reduce dollar reliance, the Chinese and Russian central banks are driving demand for gold. Is Bitcoin now out of the picture?
Gold Trumps Bitcoin
In a Kitco News interview, Analyst at Gabelli Gold Fund, Chris Mancini said that gold is the ultimate power move during times of uncertainty, and not Bitcoin, as evidenced by government actions. He said:
“the Chinese and Russian central banks have been buying gold. What they’ve been doing is selling dollars, selling [US] treasuries, and buying gold.”
Mancini breaks this down further by talking about the political tensions with the US:
“It’s really hard to imagine a scenario where they want to lend, the Russian government, or the Chinese government, wants to lend to the United States. So they’re buying gold. So in a similar circumstance, they don’t want to have their economies to the US dollar.”
And so, as a universally recognized safe-haven asset, with centuries of data to back it up, gold trumps Bitcoin. And as Mancini points out, investors are slowly coming around to that realization.
Indeed, given the severity of the debt bubble this time around, it’s expected that gold will post substantial gains during the next recession. Editor at Sunshine Profits, Arkadiusz Sieron said:
“Actually, the next downturn may be even more beneficial for gold. This is because the global debt is higher, while the monetary policy options on the table are broader, and real interest rates are lower.”
Mass Protests Worldwide
All the same, Bitcoin is not without its advantages. Unlike gold, Bitcoin is easy to sell, easy to store, and has no problems with reliability or quality assurance. But will this count for anything during a global recession?
At present, given Bitcoin’s short life, no-one can answer that question. However, Bitcoin does hold an additional ace up its sleeve in its non-sovereign nature. Which, when tested in real-world situations of hyperinflation and political uncertainty, showed soaring demand and usage.
Indeed, the question is more than about performance during a recession. For these are revolutionary times in which we find ourselves. Mass protests against inequality, political corruption, and denial of political freedom are sweeping across the planet. From Lebanon, Chile, and Spain, not forgetting France, where a mainstream news blackout attempts to hide the fact that the Yellow Vest Movement has been active since October 2018.
And so, the real advantage of Bitcoin over gold lies in its censorship-resistant properties. Which is a quality that becomes increasingly sought after as the world wakes up to government tyranny. On that note, Tahi Gichigi said:
“Money created by governments, like all fiat money, can be confiscated, destroyed and seized at will. Governments are doing this more and more, especially as fiat money becomes increasingly digital. Bitcoin payments, however, can’t be stopped by any person, company or government.”
With that in mind, while gold is a proven safe-haven asset, Bitcoin still holds investor appeal via its non-sovereign nature.