Even if Bitcoin Is The Rising Star, Gold Is Still King


Even if bitcoin – known to some as digital gold – is stealing the metal’s spotlight, one analyst points out that the cryptocurrency has a longs way to go before it catches up to bullion, at least in market cap.

In dollar terms, bitcoin has surpassed gold prices by a landslide, recently hitting an all-time high above $4,000; meanwhile, gold prices continue to hover near $1,300 an ounce.

However, if we look at the market cap of both these markets, gold is still king.

“It’s gold that could still mop the floor with bitcoin if we compare the two based on market cap,” wrote Sean Williams, a Motley Fool contributor since 2010, in a post Thursday.

“Despite its recent strength, this writer continues to believe that avoiding bitcoin is a smart move…We’ve witnessed numerous assets increase in value like this before throughout history, and practically every one wound up having its bubble burst eventually. My suspicion is bitcoin will be no different, and uninformed investors are going to be taken to the digital woodshed if they aren’t careful.”

Williams looked at data from Thomson Reuters GFMS and other sources to decipher just how much gold there is in order to determine the gold market’s market cap.

Based on a GFMS 2013 report, it is believed 171,300 tons of gold had been mined or was still in the ground. Based on current prices, that would mean gold’s implied market cap would land at a whopping $7.07 trillion.

“That’s more than 100 times the market cap of bitcoin at its all-time high!” Williams said.

However, according to other sources, the number could even be higher, he continued.

“It’s also worth pointing out that numerous reports exist on the world’s total gold supply, and some suggest as much as 2.5 million tons may be present (that’s over 14 times what Thompson Reuters has predicted),” he said. “This would imply a $103 trillion market value for gold, or nearly 1,500 times that of bitcoin. Long story short, bitcoin still has a very long way to go to truly catch gold.”

Williams also compared the digital currency’s market cap to that of the S&P 500 and the U.S. dollar, and found that bitcoin is trailing far behind.