Bitcoin, Gold or Silver – Which is the Best Store of Value?

Bitcoin Gold or Silver

Bitcoin’s 60% price drop in 2014 has ruled it out as a reliable store of value. Gold, in contrast is down less than 3% this year.

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Gold Has Been The Best Store Of Value in 2014 Among Gold, Bitcoin and Silver.

Bitcoin Price Action in 2014 Proves Bitcoin Is No Store Of Value.

2014 has not been kind to Bitcoin, gold and silver.

Bitcoin, described by some as the “ultimate store of value” has lost more than 50% of its value since Janauary 1 and is off more than 60% from its high of the year.

Silver has lost more than 15% since Janauary 1 and is off 24% from its high of the year.

Gold has fared better than both, losing just under 3% since Janauary 1 and 14% from its high of the year.

Bitcoin, Gold and Silver By the Numbers – 2014

gold has held its value the best among gold silver and bitcoin in 2014 proving gold's claim as a store of value

Bitcoin has fallen more than 50% since January 1 2014.

Gold has been viewed historically as a store of value and a hedge against inflation.

Silver is also considered a store of value and an inflation hedge. Silver, however, is also more volatile and often rises higher than gold on a percentage basis in bull markets and drops faster and further than gold in bear markets.

Bitcoin’s history as a store of value is limited to its few years as an actively traded currency. While Bitcoin has been provided speculators fantastic gains during most of its short life, 2014 was anything but stable for investors buying at any time during the year.

This year’s 60% downside price drop rules Bitcoin out as a store of value. Bitcoin will need a few years of steady price appreciation or trading withing a narrow range before it can even be considered a store of value.

Gold is the clear winner so far in 2014 in the store of value contest among bitcoin, silver and gold; silver comes in second and Bitcoin a distant third.

BitcoinJourney To the Center of the Earth?

Bitcoin experienced a parabolic rise last year from $117.63 on October 3rd to $1119 on November 29th. Bitcoin has since fallen to $357.00, as of October 3, 2014, thereby destorying any claim to being a reliable store of value.

The chart below shows Bitcoin’s rollercoaster ride – a parabolic rise at the end of 2013 and an inexorable decline during 2014.

The Rise and Fall Of Bitcoin

The rise and fall of bitcoin

Bitcoin rose from $117 on October 3, 2013 to a high of $1131.91 on November 29, 2013.

Prices of Gold and Bitcoin January 1- October 1 2014

Bitcoin has lost nearly 60% of its value since the start of 2014. Gold has lost just under 2.5%

Gold has held its value better than Bitcoin in 2014

Price of Silver January 1- October 1 2014

Chart showing that through October 2014, Silver has lost nearly 16% since January 1 which is better than bitcoin's 60% loss since January 1. Gold has lost under 3%

Silver has lost nearly 16% since January 1, 2014.

Prices are as of October 3, 2014, 6:15 PM EST
Sources: Bitstamp, Kitco

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Further Reading:

Will Greater Bitcoin Adoption Lead to Higher Prices?

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Gold vs. the Dow

Homes Priced in Ounces of Gold

Homes Prices in Ounces of Silver

Bitcoin Analysis

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