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Dave Kranzler

Is Bitcoin Demand Hurting The Price Of Gold?

This analysis focuses on the retail investor demand for gold and Bitcoin. Institutional investors, for the most part, do not invest in gold or cryptocurrencies.

I want to dispel a false narrative about Bitcoin and the price of gold. The mainstream and alternative medias have been propagating the idea that the frenzied capital flowing into Bitcoin is affecting the price of gold negatively. The idea is that Bitcoin is an alleged safe haven asset (very unproven, untested) that is diverting capital away from the precious metals

This notion has no validity. The U.S. retail investor bought 27 tonnes worth of U.S. Mint gold eagles in 2016 (985k ozs) Year-to-date this year, U.S. retail has bought 20 tonnes of gold eagles (715k ozs) (U.S. Mint statistics). This is less than 1% of the total amount of gold produced + scrap recycling annually. Even including the gold that is purchased in the U.S. over and above US Mint sales, the amount of gold buying in the U.S./EU is so small relative to large buyers of gold that it has little to zero affect on the global price of gold (and silver). Sorry Americans, but you're just not that important.

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