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The Gold vs. Bitcoin Debate Is Only Getting Started and It's Getting Ugly

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Cryptocurrencies and precious metals are fundamentally different, as one is man-made and the other is not, this according to Chris Mancini, analyst of Gabelli Gold Funds.

"Bitcoin has been corrupted because it's a creation of man, and gold cannot be corrupted because gold is a creation of God," he said.

He said that bitcoin is a means of payment, but is not necessarily a great investment.

Another problem with bitcoin is its limited use by major financial institutions and central banks, Mancini said.

"Global central banks are not going to buy bitcoin, so the Chinese central bank is buying gold and the Russian central bank is buying gold, they're not going to buy bitcoin," he said.

To compound the issue, bitcoin can be easily replicated, which erodes its value as a store of money, he added.

"The other thing that's crazy about bitcoin is the concept of these forks that are created off of bitcoin. So there's Bitcoin Cash, or Bitcoin Gold that's been created off of bitcoin, so the concept of coming in and buying a gold coin down the street, putting it in my sock drawer and then having another gold coin one day, that's crazy, that just can't happen, but with bitcoin it can," he said.

On gold, Mancini said that the yellow metal's weakness in 2019 could have been attributed to the dollar's strength on the back of diverging monetary policies, but should the Fed cut rates and interest rates around the world head lower in tandem, then the dollar could reverse course, creating a bullish environment.

"The real play, again, is when you have all three currencies doing poorly, so if you have the dollar, the yen, and the euro in a scenario where they're all printing money, then the dollar should hopefully weaken and gold should do well," he said.

More on the Bitcoin vs. Gold Debate

This article is commentary by an independent contributor. At the time of publication, the author held TK positions in the stocks mentioned.

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