Why gold is a very different investment than cryptocurrencies

Source: World Gold Council

Gold and Cryptocurrencies are often compared. But gold – something you can hold – is very different from non-tangible, digital cryptocurrencies.

  • Demand for gold is more diverse
  • The supply of gold is also more diverse
  • Cryptocurrencies have so far behaved like speculative investments
  • Gold has repeatedly proven itself as a safe-haven investment, including during times of high inflation

In short, cryptos are no substitute for gold.

Demand for gold comes from many places

Gold is different from almost every other asset because it is used in so many ways. Investors and central banks own gold to generate returns and protect their wealth. Jewelry is a major part of gold demand. Gold is also a key component of electronic devices, from cell phones to TV sets. (Figure 1).

As gold has multiple uses, its’ price can be more resilient than prices of many other assets. When financial markets are under stress, investors buy gold as a haven. When economies are doing well, consumers buy more gold jewelry and electronics.

Cryptocurrency demand is less varied

For our discussion, we refer to bitcoin statistics when we talk about cryptos, since it has the largest market capitalization of all cryptocurrencies.

The demand for crypto currencies is largely limited to investment, as compared to gold, which is bought for many reasons.

Some consumer research shows that investors are more likely to view cryptos as a high risk, high return, speculative bet compared with gold[1]. (Table 1) Cryptos can experience big price swings. Bitcoin, for example, has soared and tumbled in value over the past year, as speculators have piled in or sold out.

Gold production and ownership are diverse

Gold is mined across the world and no continent accounts for more than 30% of global production[2].

Ownership of gold is diverse. The US Treasury is the largest known holder of gold, but it owns just 4% of all the gold above ground. Almost 50% of this stock of gold is in jewelry owned around the world, while and more than 20% is owned by investors as gold bars and gold coins[3].

Cryptocurrency computing power and ownership is less widespread

In 2021, entities in five countries controlled, on average, 80% of computing power on the Bitcoin network[4]. Bitcoin ownership is also highly concentrated – just 2% of Bitcoin holders own 95% of all available Bitcoins[5].

Gold and Bitcoin behave differently as investments

Gold tends to come into its own when equity markets are under stress. Bitcoin, however, does not follow this pattern. From November 2021 to May of 2022, for example, Bitcoin more than halved in value, as the S&P 500 index and the Nasdaq both fell back. Gold, by contrast, held steady[6].

As cryptocurrencies are much more volatile than gold, our analysis suggests that investors who own cryptos would benefit from adding gold to their portfolios, to reduce overall risks and increase long-term underlying returns.

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Key takeaways

  • The crypto market is still in development. It is highly volatile, and cryptocurrencies can be hard to buy and sell.
  • Gold is a tried and tested investment asset.
  • Gold has delivered returns rivaling the stock market over the past 20 years and more.
  • Gold performs well during periods of inflation.
  • Gold is easy to buy and sell, even during periods of extreme stress.
  • Investments in gold help diversify portfolios, by outperforming other assets during economic and financial downturns.

About the World Gold Council

About the World Gold Council

We’re the global experts on gold.

Leveraging our broad knowledge and experience, we work to improve understanding of the gold market and underscore gold’s value to individuals, investors, and the world at large.

Collaboration is the cornerstone of our approach. We’re an association whose members are the world’s most forward-thinking gold mining companies. Combining the insights of our members and other industry partners, we seek to unlock gold’s evolving role as a catalyst for advancements that meet societal needs.

We develop standards, expand access to gold, and tackle barriers to adoption to stimulate demand and support a vibrant and sustainable future for the gold market. From our offices in Beijing, London, Mumbai, New York, Shanghai, and Singapore, we deliver positive impact worldwide.

For more information

Please contact: [email protected]

World Gold Council WGC USA, Inc. 685 Third Avenue, 27th Floor New York, NY 10017, United States of America

WGC (UK) Limited 15 Fetter Lane, London, EC4A 1BW United Kingdom

  1. Results of an online quantitative survey of 10,000 retail investors across five markets (Germany, US, Canada, India and China) run by Hall & Partners in October 2021
  2. As of December 2021. For a detailed breakdown of mine production by region and country, see Chart 12b in The relevance of gold as a strategic asset (US edition) as well as the mine production by country section in
  3. See central bank statistics and above-ground gold stocks in
  4. Statista,
  5. Top 100 Richest Bitcoin Addresses and Bitcoin distribution (
  6. From November 1, 2021 to May 31, 2022, gold prices gained 1.9%, rising from $1,804.40 to $1,838.70 as measured by the LBMA PM Price

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This information is for educational purposes only and by receiving this information, you agree with its intended purpose. Nothing contained herein is intended to constitute a recommendation, investment advice, or offer for the purchase or sale of gold, any gold-related products or services or any other products, services, securities or financial instruments (collectively, “Services”). This information does not take into account any investment objectives, financial situation or particular needs of any particular person.

Diversification does not guarantee any investment returns and does not eliminate the risk of loss. Past performance is not necessarily indicative of future results. The resulting performance of any investment outcomes that can be generated through allocation to gold are hypothetical in nature, may not reflect actual investment results and are not guarantees of future results. WGC does not guarantee or warranty any calculations and models used in any hypothetical portfolios or any outcomes resulting from any such use. Investors should discuss their individual circumstances with their appropriate investment professionals before making any decision regarding any Services or investments.

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