Gold reached a record high of more than $4,200 per ounce on Wednesday, fueled by a surge in demand from retail consumers purchasing physical gold and central banks accumulating the metal as a defense against currency inflation.
Reports indicate that end consumers are actively seeking exposure to gold as many search for alternative stores of value amid global economic uncertainty. On Thursday, a large crowd of customers waiting to enter the ABC Bullion precious metals shop in Sydney, Australia, was noted by local news outlet Nightly News.
Several people in the line, extending nearly 200 feet during lunchtime, attributed their interest in physical gold to macroeconomic uncertainty, the waning value of the US dollar, and a lack of trust in financial institutions.
Year-to-date, gold’s price has increased by approximately 61%, as reported by Yahoo Finance.
In August, gold surpassed US Treasurys as a percentage of central bank reserves for the first time since 1996, now accounting for over 25% of global central bank reserves, according to economist Mohamed El-Erian.
This trend highlights a growing shift towards perceived safe-haven assets. As market analysts at The Kobeissi Letter expressed:
“Gold, Silver, and Bitcoin are now all in the top 10 largest assets in the world. These are all usually seen as safe-haven assets that increase in value when stocks decline.”
Kobeissi Letter noted that the US dollar is on track for its worst year since 1973, as both Bitcoin (BTC) and gold achieve all-time highs. Currency debasement and eroding trust in traditional institutions typically act as catalysts for bearer, store-of-value, and hard money assets.
Related: Bitcoin-gold correlation rises as BTC mirrors gold’s trajectory as a store of value
Analysts persist in discussing Bitcoin’s position as a store-of-value
BTC, a capped and censorship-free currency, reflects gold’s qualities as a store of value, yet continues to experience significant volatility due to its relatively smaller market cap of around $2.2 trillion compared to gold’s market cap of approximately $2.9 trillion.
A lower market cap can lead to dramatic price fluctuations due to insufficient liquidity to absorb large movements, while a higher market cap generally provides greater price stability against volatility and sudden downturns.
Following Friday’s historic market crash, the price of BTC is down approximately 8.8%, with some altcoins plummeting by over 95% in 24 hours.
While some market analysts and investors interpret this slight price decline in relation to altcoins as a sign of strength, other analysts highlight the price divergence between BTC and gold as indicative that BTC is falling short of its store-of-value narrative.
Economist and investor Peter Schiff, a notable Bitcoin critic, commented that Bitcoin’s recent decline from its all-time high above $125,000 amidst gold’s rise to new highs indicates that the BTC bull market has concluded.
Magazine: Bitcoin is ‘funny internet money’ in a crisis: Tezos co-founder
