Gold hit a new all-time high above $4,200 an ounce on Wednesday, boosted by demand from retail consumers buying physical gold and central banks hoarding the precious metal as a hedge against currency inflation.
Reports of end users seeking exposure to gold emerged as more people seek alternative stores of value amid global macroeconomic uncertainty. On Thursday, the line of customers waiting to enter the ABC Bullion bullion store in Sydney, Australia was reported local newspaper Nightly News.
Several individuals in the line, which stretched to nearly 200 feet by lunchtime, cited macroeconomic uncertainty, the falling value of the U.S. dollar and mistrust of financial institutions as reasons for holding physical gold.
The price of gold has increased by about 61% year to date, data from Yahoo Finance shows.
In August, gold surpassed US Treasuries as a percentage of central bank reserves for the first time since 1996 and now accounts for more than 25% of global central bank reserves, according to economist Mohamed El-Erian.
The trend underscored a broader shift toward assets that are considered safe havens. As market analysts The Kobeissi Letter wrote:
“Gold, silver and Bitcoin are now in the top 10 largest assets in the world. All of these are usually considered safe assets that rise when stocks fall.”
The Kobeissi Letter noted that the US dollar is on track for its worst year since 1973, while Bitcoin (BTC) and gold are making all-time highs. Currency depreciation and declining trust in traditional institutions are usually positive catalysts for bearer, store of value and hard cash assets.
Related: Bitcoin-Gold Correlation Increases As BTC Follows Gold’s Path To Store Of Value
Analysts continue to debate Bitcoin’s role as a store of value
BTC, a supply-limited and censorship-resistant money, mirrors the store-of-value properties of gold, but still trades with high volatility due to its relatively low market cap of around $2.2 trillion compared to gold’s market cap of around $2.9 trillion.
A lower market cap means the asset’s price can rise or fall dramatically because there isn’t enough liquidity to cushion big moves, while a higher market cap means the price is more resilient to volatility and sudden, sharp drops.
The price of BTC is down roughly 8.8% after Friday’s historic market decline, in which some altcoins lost over 95% of their value in 24 hours.
Although some market analysts and investors saw this modest price drop against altcoins as a sign forceother analysts have pointed to the price divergence between BTC and gold as evidence that BTC is not living up to its store-of-value story.
Economist and investor Peter Schiff, one of the most vocal critics of Bitcoin, he said that the recent drop in the price of Bitcoin to current levels from its all-time high of over $125,000 amid gold’s rise to all-time highs shows that the BTC bull market is over.
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