Gold is falling in value, and bitcoin may be responsible – by Eric Reguly (Globe and Mail – June 23, 2018)

Gold hit a six-month low this week and is down about 7 per cent since its recent high, in April. Why the retreat?

One obvious answer is that interest rates are rising, or are set to rise, pretty much everywhere. When that happens, gold, which pays no dividend and costs money to store in a vault, loses some of its lustre (on Friday, it was trading at $1,270 an ounce; its 52-week high was US$1,365).

A less obvious answer may be the competition from cryptocurrencies such as bitcoin and ethereum. Gold dug out of the ground and cryptocurrencies created out of thin air seem to have absolutely nothing in common.

The first has physical heft, practical uses, has backed some of the world’s most prominent currencies (the gold standard) and has been a traditional store of value for thousands of years; the second is digital, lives in a computer and has been around for only a decade. According to, the collective value of the 1,600 or so cryptocurrencies it lists is US$268-billion (which is about one third of their peak value late last year).

That’s a lot less than the global stash of gold – worth trillions of dollars – but not bad for fledgling, made-up “currencies” that many argue aren’t even currencies. Fortunes are being funnelled into cryptocurrencies and they are especially popular with young investors.

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