2017 will be the year of explosion of safe-haven assets. Which one will become the "king of safe-haven assets" between Bitcoin and gold?

The comparison between gold and Bitcoin has been attracting a lot of attention from investors, but the two assets are not exactly the same. Although the prospects for both speculative assets look quite good now, it is difficult to predict what the future will be like. However, one thing is certain, in 2017, both gold and Bitcoin will increase significantly in value, and the market demand for non-fiat currency assets is expected to soar.

2016 has been a pretty positive year for both gold and Bitcoin, so one can’t help but wonder if this will continue in the future. All asset classes are likely to see an upward trend in the coming months. With Bitcoin outperforming gold in 2016, the battle lines have now been drawn between the two. Although the gold market has been more volatile than usual in 2016, it is still very strong.

Safe-haven assets will see positive developments in 2017

Things look quite positive for the gold industry in 2017. The newly introduced Sharia gold standard ^[1] will have a positive impact on the demand for physical gold. After all, this new gold standard creates investment opportunities for 25% of the world's population. Secondly, gold is being integrated as a settlement currency between oil-producing countries. A lot of energy sales to China are settled in gold.

As for Bitcoin, 2016 did see a considerable increase in value, hitting a multi-year high. Despite some volatility in 2017, Bitcoin prices have remained stable over the past week. Given the limited margin trading opportunities in China, this volatility will be minimized. That said, you could argue that Bitcoin is outperforming gold because it hedges against geopolitical and currency risks.

According to multiple experts, 2017 will be an overall positive year for Bitcoin and gold. With the Trump presidency, the aftermath of Brexit, and the continued recession of the European Union, the demand for alternative assets will only rise. It is still difficult to predict the impact this will have on the future prices of gold and Bitcoin, but value growth seems likely. Saxo Bank even believes that Russia and China may begin to accept Bitcoin as an alternative to the US dollar.

There has always been a certain degree of competition between Bitcoin and gold for the title of "king of safe haven assets". The two assets can coexist peacefully and together provide investors and consumers with a hedge against future financial turmoil. In terms of spending power, Bitcoin has more use cases than gold, but still only a small number of "business opportunities". Gold, while difficult to use for daily consumption, currently has more mainstream appeal than Bitcoin.

Notes (↵ returns to text)

1. The standard will for the first time define specific rules for gold as an investment vehicle in the Islamic finance industry. The new standard states that gold investments are permitted as long as all relevant Shariah requirements are met. ↵