Another week, another record high for the price of gold. And another blow to the bitcoin fan club’s hopeful thesis about owning “digital gold”. This year has been hard for the bitcoin brigade: while real gold soared in value, their cryptocurrency didn’t. Correlation went out of the window. Gold is up 70% so far in dollar terms; bitcoin is down 6%.
In theory, conditions should have been perfect for bitcoin if, like gold, it is supposed to be a store of value in uncertain times. Geopolitical tensions have been high all year, with Donald Trump’s unclear intentions towards Venezuela now added to the mix. Or, if you take the view that bitcoin is a hedge against currency debasement by governments, the news flow ought to have been encouraging. The US budget deficit remains enormous: the International Monetary Fund predicts the country’s debts will climb from 125% to 143% of annual income by 2030, or more than Greece and Italy.
