Gold has joined the proverbial blood bath both traditional and crypto markets have faced over the last few days. The sudden drop is reminiscent of the volatility seen in Bitcoin markets, but we’re still waiting for the likes of Peter Schiff to dismiss the yellow metal’s “store of value” qualities.
The markets seem to be reacting to the worsening situation regarding the coronavirus. The increasing numbers of cases around the world appear to have investors well and truly spooked.
Gold Price Drops Suddenly, Can it Really be a Store of Value?
After spending much of 2020 growing in value, the price of gold has suddenly tanked hard. At the time of writing a single ounce of the yellow metal will set you back around $1,580.
The precious metal traded for around $1,640 per ounce yesterday. This represents a more than 3.6 percent dip in a matter of hours. Such moves might be common in crypto asset markets but for gold, the move represents the biggest one-day plummet in more than three years.
Gold has joined other markets in tanking. As reported in the New York Times, stock markets around the world are reeling from the uncertainty surrounding the coronavirus pandemic, as are Bitcoin and crypto markets.
After some even more spectacular gains over the opening six or so weeks of 2020, Bitcoin has been declining for the last days of February. The leading crypto asset traded above $10,000 on the 20th, then above $9,000 until the 25th.
The price has since tanked again to around $8,650. With the sudden drops, many called into question the narrative that BTC functions well as a store of value. NewsBTC reported as such this week.
Naturally, the likes of Peter Schiff and other prominent Bitcoin naysayers rejoiced at the plummeting BTC price. With other assets already dropping, Schiff proudly tweeted that gold prices were holding up well yesterday:
Gold is living up to its reputation as a store of value, as a safe haven. Money continues to flock into gold as a result of what's happening. https://t.co/mWp2XABudB
— Peter Schiff (@PeterSchiff) February 27, 2020
Given today’s heavy drop in gold, it only seemed fair to many Bitcoiners to take the dropping price as an opportunity to return the favour to Schiff:
Is $GOLD a much safer store of value?
– Think again!
– Buy #Bitcoin ?? pic.twitter.com/wBgIWbb6O1
— CryptoBit ?$VRA??? (@bitcoin_whales) February 28, 2020
Someone check on @PeterSchiff …. His precious rocks are falling in value FAST!#MustNotBeASafeHavenAsset pic.twitter.com/VYl5DZ9jdc
— Pomp ? (@APompliano) February 28, 2020
Neither Bitcoin, Gold, or Anything Else is an Infallible Store of Value
Of course, it’s entirely ridiculous to write off gold as a store of value, even after a relatively major price dip. The precious metal still offers a level of scarcity currently impossible in fiat currency.
Nothing has changed about gold over the past 24-hours apart from investors’ opinions. Similarly, nothing has changed about Bitcoin since it started dropping either.
Realistically, it’s pretty foolish to think that any asset will either perpetually increase or stay at the same fiat dollar value. The term store of value really just means that the asset in question possesses qualities that make it better suited to retain value than a other assets.
National currencies are routinely subject to inflationary pressure at the whim of central bankers and gold is not. Gold represents a harder money, and, therefore, a better store of value than fiat.
Bitcoin, with its much more limited end supply, represents a better store of value on paper than gold. Its divisibility and programmability, as well as ease of storage and transportation, make it a much more fitting store of value for the twenty first century too.
Related Reading: While The Rest of the Market Tanks, One Cryptocurrency Is Above All-Time High
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