The Obvious Faults With Gold as Investment Asset

Godfrey  |  Feb 12, 2021

There was a time in history when Gold was the asset or possession that separates the elite from the common men. The asset held the tag for wealth and status with some even seeing it as the symbol of royalty. For decades to this day, Gold has played the role of a perfect hedge against inflation, as the use of the precious metal increases irrespective of the economic situation at the time.

Much recently, the status of Gold as a great store of value and a hedge against inflation appear to be vaporizing based on the stiff competition Bitcoin (BTC). The potential Bitcoin is wielding gives tight combat against every one of the strong features that gold was once admired for. These features are now being aggravated and are largely making Gold not as viable as we have known it to be.

Some of the obvious faults of Gold in comparison with Bitcoin are highlighted below:


The portability of Gold, which was once relished as those with the largest reserves, has suddenly become the feature that is making many drew away from the asset today. When profiled against Bitcoin, which is virtual and is easy to be handled, Gold is clearly not efficient as a store of value, not just for its bulkiness but for the cost involved in safeguarding the assets in banks.

Price Contraction

The price of Gold over the past six months has been contracting, reducing its strength as a viable store of value. While it is true that most assets do not necessarily maintain an upward price trajectory 100% of the time, the fact that Bitcoin has soared within that same time period has weakened the argument of gold as a trusted asset.

False Finite Supply of Gold

Gold is a natural resource, and as nature’s gift, the asset notably has a limited supply. This is in contrast to Bitcoin whose maximum supply is pegged at 21 million coins. However, Gold has been mined for ages past and it’s still being mined today, giving the impression of a false finite supply.

As is common for assets with an infinite supply, scarcity is hard to come by, and the potential for future scarcity is why many institutional investors like Tesla and MicroStrategy are stocking up on Bitcoin today. The fact that gold’s supply appears to be infinite makes it less of an attractive asset in today’s world.

Is Gold Still Relevant Then?

Yes. Gold is still used in many areas including jewelry manufacture, and it will always remain relevant. Viability as a preferred asset choice is still relative in our world today as it is still the go-to asset for the Gen X class of investors.

As Per his word:

“If institutions want to move billion-dollar blocks of money around the globe, gold is a million times more expensive than #bitcoin, and a thousand times slower. We can’t build a modern economy on antiquated technology.”

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