(Before It's News)
trueeconomics.blogspot.com / by Constantin Gurdgiev / Friday, March 3, 2017
Marketwatch reported earlier that Bitcoin is currently being priced at above the price of gold in USD terms: http://www.marketwatch.com/story/bitcoin-is-now-worth-more-than-an-ounce-of-gold-for-the-first-time-ever-2017-03-02?siteid=bnbh
The comparative is somewhat silly, because, as Marketwatch article notes, Bitcoin market cap is much much smaller than that for gold, which implies that any valuation of Bitcoin to-date incorporates a hefty liquidity risk premium compared to gold. In addition – unmentioned by the Marketwatch – Bitcoin lacks key financial properties of gold, including:
- Established safe haven properties: gold acts as a safe haven instrument against large scale or systemic risks. Bitcoin is yet to establish such property with any conviction. There are some indications that Bitcoin may be seen in the markets as a hedge against some systemic risks, e.g. capital controls in China, but this property is yet to be fully confirmed in data. Beyond such confirmation, there is no evidence to-date that Bitcoin acts as a safe haven for other systemic risks (e.g. sovereign debt crisis risks in the Euro area, or political risks in the EU, etc).
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