Bitcoin and gold price’s dual surge has buyers scrambling for profits

Price records are tumbling for bitcoin and gold as buyers dive in, and investors are wondering whether to buy or take some profits.

There’s a battle of the booms right now, with both the gold price and bitcoin price near record highs as enthusiasm soars among speculators and investors.

Gold reached $US2300 an ounce last week and is up about 40 per cent since late 2022, boosted by rising geopolitical risks that enhances gold’s reputation as a global safe haven.

Bitcoin’s rise has been much steeper over the same period since late 2022, from around $US17,000 to more than $US67,000 (A$102,000).

However, Bitcoin – dubbed “digital gold” amid claims it could be used as a store of wealth independent of traditional money and banking – came from a much lower base after plunging about 75 per cent between late 2021 and late 2022.

Both bitcoin and gold’s rise may have flown under many peoples’ radars because many other assets have been at or near record highs – think Aussie shares, US shares and house prices.

Gold has been in demand for centuries, bitcoin less than 20 years. Picture: Jackson Flindell

But unlike those traditional asset classes, neither gold nor bitcoin pay their owners any income, so people must rely purely on capital growth.

For many, that’s OK.

If you invested enough before the last cryptocurrency boom in 2021, and sold out before the latest crypto winter in 2022, you could conceivably be already retired and rich – as long as you got your timing right.

Experts say bitcoin is 13 times more volatile than US shares, and it’s the big fish in the cryptocurrency pond with a market share near 53 per cent.

I bought a small amount of bitcoin and several other cryptocurrencies a few years ago as an experiment in fear and greed, and admittedly a little FOMO – fear of missing out. My crypto holdings duly dropped about 80 per cent before bouncing back recently.

This personal experiment will continue – and hopefully the next wave of crypto mania doubles my money, so I can sell half of them and ride the remainder of the rollercoaster effectively for free.

If it doesn’t double, or it crashes again, it won’t worry me because I followed a golden rule of investment: never speculate with more money than you are prepared to lose.

Buying Bitcoin and gold has become easier, and the recent introduction of crypto-focused exchange traded funds (ETFs) seen as a key reason for the latest Bitcoin strength, giving it more legitimacy as large investment houses funnel hundreds of millions of dollars a week into it.

Bitcoin has bounced back strongly from its latest crypto winter. Picture: AFP/Justin Tallis

Gold can be bought directly in bars or bullion, through ETFs, or indirectly through goldmining company shares, although those stocks don’t always reflect gold price movements.

A big question around Bitcoin is still that it is effectively created from thin air, through complex computational machinations. The blockchain technology that underpins it is seen as hugely promising, but its long-term growth depends on people continuing to pay higher prices.

However, its ability in the past decade to recover incredibly strongly from huge falls suggests it will continue to create positive, and negative headlines.

Gold has a physical presence as we dig it out of the ground and decorate our bodies with it, but like bitcoin it doesn’t pay an income in the form of interest, dividends or rent.

So should you buy into bitcoin, gold, or both?

By all means, pump in a small portion of your money if you are okay with the risk, volatility and potential for big losses as well as big gains.

Just don’t bet your house on them.

Originally published as Bitcoin and gold price’s dual surge has buyers scrambling for profits