But does gold actually behave that way?
The real story is more complicated, according to Campbell Harvey, Duke professor and senior advisor to Research Affiliates. Over a time frame of hundreds of years, gold may retain its value. But over shorter periods of time, it’s highly volatile and very unpredictable.
Despite this, gold certainly fills a role as a security blanket for investors who are anxious about the state of the world. Gold’s most recent hayday, for instance, was between 2011 and 2012 when the U.S. was stumbling through its post-Great Recession recovery and the Euro Zone was teetering on the brink of currency disaster. For much of the past eight years, as stocks have zoomed, gold has been a dead weight, though.
It appears, then, that institutional investors are hoping to get on the ground floor of the new gold. Bitcoin’s current rollercoaster ride may track the bullish, risk-on appetites of stock traders, but eventually it might replace gold as a safe haven.
“The Bitcoin network currently stores $350 billion,” McKeon said. “In contrast, several trillion dollars are stored in the form of gold. So, Bitcoin is still comparatively small. As the narrative around, and acceptance of, Bitcoin as digital gold grows, the network will store substantially more value. This translates to a higher price for Bitcoin since supply growth is capped at about 2% annually, and supply increases will further decline over time.”