Is bitcoin a better investment than gold?


An autumn rally has put bitcoin on track to finish the year in the green. Gold, meanwhile, is on track for a loss.

The digital currency rose to a fresh 2015 high on Monday, when one bitcoin bought $338.72, according to the Coindesk bitcoin price index. It has gained 5.8% so far this year.

Meanwhile, gold slumped to its lowest price in nearly a month on Monday, closing at $1,135.90 an ounce. Gold futures traded on Nymex have shed about 4.6% of its value this year.

Read: Bitcoin is now officially a commodity

Gold typically has an inverse trading relationship with the U.S. dollar. This year, the prospect of a coming interest-rate hike by the Federal Reserve has robbed the precious metal of its luster, benefiting the dollar instead. Higher interest rates would increase the return on dollar-denominated deposits, making the currency more attractive to foreign investors.

Here’s a chart of bitcoin’s year-to-date gains:

And a chart of gold’s 2015 performance:

Bitcoin was the subject of one of the largest asset-price bubbles in recent memory when, in late 2013, investors pushed the price of a single coin as high as $979, according to the Coindesk index.

The price rapidly deflated in 2014 after Mt. Gox, then one of the world’s largest bitcoin exchanges, announced that customer bitcoins, worth hundreds of millions of dollars, had been stolen by hackers. Bitcoin shed about 75% of its value that year.

Bitcoin prices have been much more stable over the last 12 months, primarily trading within a range between $250 and $300.

Gold is probably the easiest physical corollary to bitcoin, which has been referred to as “Digital Gold” in the title of a popular book about the rise of cryptocurrency.

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