Bitcoin has fallen a long way from its record high of nearly $1,200 late last year. Throughout the first quarter of this year, the digital currency has traded anywhere from $350 to $800 and many bitcoiners, even gold bugs, think it’s headed straight to the moon to as high as $100,000 per coin.
According to a report published Thursday by Agora Commodities, one of the largest precious metals dealers on the web today, a record number of gold and silver is being traded for the cryptocurrency at this time of major pullback.
“While sales of bullion for Bitcoin have ebbed a little with the price decline, interest in Bitcoin as a store of value has not,” said Joseph Castillo, CEO of Agora Commodities, in a statement.
“Many sound monetarists have realized that Bitcoin is essentially digital gold and are seeking a way to diversify into all forms of real tangible wealth as opposed to fiat money.”
In a way, the recent pullback could be likened to last year when gold and silver experienced their very own declines and consumers took advantage because it could have been the last great buying opportunity. In 2013, the yellow metal had one of the worst years in more than a decade, but gold has risen higher than any other asset so far this year.
Although there are numerous bitcoiners that feel bitcoin could increase substantially in value, there are an abundant number of gold bugs that project the yellow metal could be experiencing highs of its own. One of the latest forecasts came from Peter Schiff, president of Euro Pacific Capital, who told CNBC this week that gold could reach $5,000 per ounce, especially if the Federal Reserve continues to keep the printing presses on.
“Central banks are creating too much money, there’s too much inflation, interest rates are too low, and so I want to store my purchasing power in something that central banks can’t print,” Schiff said. “I think we’re headed much higher because they are not going to stop the presses. They are going to run them into overdrive.”
We reported in January that Chris Dixon, a partner with the successful Silicon Valley venture capital firm Andressen Horowitz, thinks bitcoin could head to $100,000 in the future – other proponents of the virtual have been a little more modest by forecasting it to reach $40,000. Dixon likened bitcoin to being the best investment in computer history.
“Probably the best investment in computer history would have been buying domain names in 1993,” said Dixon. “Better than Amazon. Better than Google.”
Of course, there are detractors of both gold and silver. Warren Buffett, Keynesian Nobel Laureate Robert Shiller and other prominent individuals have lambasted the digital currency. Former Federal Reserve Chairmen Ben Bernanke and Alan Greenspan – though Greenspan was quite the advocate of gold before entering the central bank – Paul Krake and other people have been staunch critics of the yellow metal.
At the time of this writing, gold is trading at just over $1,300 per ounce, while bitcoin has dropped to less than $500 per bitcoin.