Shelley Goldberg, Columnist

Bitcoin, Gold and the Risks of Bum Comparisons

Their relative values don't reveal much of anything except the thrill of speculation.

March 6, 2017 at 6:04 PM UTC

Shelley Goldberg is an investment adviser and environmental sustainability consultant. She has worked as a commodities strategist for Brevan Howard Asset Management and Roubini Global Economics.

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One simple chart is creating a lot of buzz in markets. It shows that for the first time in history, one bitcoin is worth more than one troy ounce of gold. Despite the flurry of discussion this factoid has generated, many are stupefied, not quite knowing what to do with this information or how to trade on it. Maybe it’s because they have little to do with each other.

In fact, gold and bitcoin don’t even represent the same asset class. Comparing them is not like apples and oranges (both fruit). Better said, it’s akin to comparing the prices of soybean futures and Intel stock. Many may argue that both gold and bitcoin are currencies as they can be used to purchase goods and services. Or, they may say both are commodities in that they have strict rules around meeting specified minimum standards and have associated futures and options contracts. But economics 101 argues that gold is a commodity and bitcoin and blockchain are technology.