Gold’s Been Outperforming Bitcoin, Yet Long-Term Gains Aren’t Comparable

Gold has been on a tear this year amid rising geopolitical tensions, with the precious metal rising more than 30% year-to-date in its best performance in a similar period so far this century, to now trade above $2,700 per ounce. Over the past six months, it’s been even outperforming Bitcoin.

Bitcoin is up around 49% year-to-date, but over the past six months it’s down by 1.3%, while the precious metal managed to rise 16% in the same period. On the microblogging platform X Bloomberg Intelligence’s senior commodity strategist Mike McGlone noted that Bitcoin has been lagging behind gold even as the S&P 500 index makes new records.

The move, he says, could “augur headwinds for risk assets,” with around 24 ounces of gold now being equal to one Bitcoin, while in March that figure was at 34 ounces. During the peak of the bull market, it stood at 37 ounces.

Gold Outperforming Bitcoin and Elevated Risk Assets – #Bitcoin lagging #gold despite the record-setting S&P 500 may augur headwinds for risk assets. At 24 ounces of the metal equal to the crypto on Oct. 22, the Bitcoin/gold ratio is below a high of 34 in March and a 2021 peak of… pic.twitter.com/oqYxi2yZht

— Mike McGlone (@mikemcglone11) October 23, 2024

Russia’s invasion of Ukraine, the conflict in Gaza, and the growing tensions between Israel and Iran have all added to the allure of gold, as the precious metal has been considered a safe haven in times of crisis for over 5,000 years.

Geopolitical instability can weaken local currencies, while central banks often turn to the precious metal in a bid to both diversify their reserves and avoid potential asset seizures. After Russia launched its invasion of Ukraine, for example, $300 billion in foreign reserves were frozen by Western countries. The interest these generated was then used to support Ukraine’s war effort.

As a result, at the end of the third quarter of this year, central banks throughout the world added a total of 483 tons of gold. Demand for the precious metal has nevertheless been strong, with Chinese investors turning to the precious metal amid a slump in stocks and real estate.

The precious metal has, in fact, significantly outperformed the stock market’s benchmark index over a long period, moving up over 900% since the beginning of 2000 against the S&P 500’s near 347% rise.

While gold has been outperforming Bitcoin over a relatively small six-month period, long-term comparisons barely make sense as the flagship cryptocurrency is one of the best performing assets of the past decade.

Bitcoin per gold ounce over time

Historical data shows that the price of Bitcoin stood at around $800 in early 2014, and is now trading at $66,000 after suffering a small correction from a high near $69,000 seen earlier this month.

In early 2014, gold was trading at around $1,200 an ounce, and while the precious metal saw its value more than double since then, BTC’s price increased by around 8,150%. A longer-term comparison shows us that the performance has barely been comparable, with BTC needed to buy an ounce of gold almost in freefall.

The comparison doesn’t have to go that far, however. Bitcoin was trading below $33,000 last year and has more than doubled since then, while gold moved up around 38% in the same period.