Before we start it’s important to note that on a technical level Bitcoin/Gold price parity is not really a true comparison when you take into account the much larger supply and market cap of Gold; Approx 183,600 tons (6 billion troy oz) & $8tn market cap V Bitcoins 16 million unit supply and $18bn market cap.
But the Bitcoin/Gold price parity event could have huge psychological impact.
- It will create yet more MSM coverage adding to the hype cycle and boosting the already mega bullish Bitcoin market tone.
- It will add to the conversation that Bitcoin started 8 years ago on the very nature of money and currency and why sound money is so important.
- Bitcoin’s safe haven attributes will be taken more seriously than ever as more and more people hit the pivotal cross over.
- Precious metal investors already frustrated with admitted manipulation and alleged Gold/Silver price suppression may start to diversify into Bitcoin as FOMO builds. Even a small % capital move out of the Gold market could have a huge impact on the Bitcoin price.
— Renegadeinvestoruk (@sharkybit) 2 January 2017
- As a result of the Bitcoin/Gold price parity event, more people will become aware of Bitcoins superior monetary attributes that will drive endless use cases, its utility, its value and its market price.
- And whilst I do not endorse any type of illegal activity, Bitcoin/Gold price parity at the same time EU officials are threatening civil asset forfeiture & capital controls under the guise of fighting terrorism, could make digital assets such as Bitcoin a preferred method for storage without the added risk of holding a physical asset.
As Reuters reports:
‘Authorities will also be able to seize cash or precious metals carried by suspect individuals entering the EU’
‘People carrying more than 10,000 euros [slightly over $10,450] in cash already have to declare this at customs when entering the EU. The new rules would allow authorities to seize money below that threshold ‘where there are suspicions of criminal activity,’ the EU executive commission said in a note’
Although in the long run, I expect Bitcoin to almost entirely replace Gold as a safe haven asset, before its dismissed in the present, its important to take a look at demographics.
With an ageing populace holding a large amount of capital and unfamiliar with new digital currencies with GUI’s that are not yet ready for main stream adoption. Although we could see increased diversification into Bitcoin , I still expect large capital inflows into precious metals as global debt and currency debasement continues unabated.
But Bitcoin/Gold price parity is now a matter of when not if and looking at the chart below it looks like its going to be very soon.