Despite a strong year so far, gold was down for its first month in 2016 in May. While the fundamentals most goldbugs champion – uncertain economic conditions and central bank policy – remain, demand could fall as younger generations turn to a new type of gold – digital gold.
In particular, millennials have less interest in physical gold. This isn’t necessarily a value statement. They simple have less experience of it. They don’t recall the days when the US dollar were on a semi-gold standard.
Today, they are more interested in digital gold, and Bitcoin has long been marketed as digital gold. Many young people claim that, although it is relatively new, Bitcoin offers similar savings aspects as does gold. Many, however, claim that Bitcoin is merely speculative, and thus very risky.
There are many parallels between Bitcoin and gold. For instance, when he designed the digital currency, Satoshi Nakamoto incorporated a mining aspect, similar to how gold is mined, but for computers.
Many millennials working in the Bitcoin industry, furthermore, are hoping to put gold on a blockchain. Projects like BitGold, Digix and others highlight this.
Older generations have bought gold because of the absolute privacy it offers. One can buy physical bars, and store them in a closet where nobody knows. It’s more similar to cash under a mattress than a gold stock. It seems, millennials interested in versions of digital gold are okay with sacrificing a bit of privacy, although many proponents claim blockchain technologies like Bitcoin and others are private. Still, it’s hard too argue they can be more private than bullion.
According to a survey by Global Metal News, millennials (age 19-35) showed better knowledge about lithium than gold, underscoring young people’s fading interest in gold – they are more interested in lithium.
Lithium is having its own Gold Rush of sorts, with hedge fund managers, pension funds and young retail investors entering investing in the commodity. Lithium is important for ion batteries, needed in the devices becoming more common. Lithium is also important electric vehicles. One need not look further than Tesla’s $5 billion lithium-ion battery subsidiary. The idea is that Tesla is going to be consuming lots of Lithium.
Millennials and younger in the coming years will likely be more enticed by digital gold than they are by gold bullion. There has already been a major motion picture about Bitcoin, Dope, on which the popular musician Pharrell Williams was an executive producer. There is no such equivalent Hollywood film portraying the gold industry. What’s more, it’s currently cheaper to buy one bitcoin than it is to buy one ounce of gold.
On the popular social media website, Reddit, a Bitcoiner expressed his relationship to gold and Bitcoin: “I had both for a while, but the practical aspects of Bitcoin ended up disillusioning me on gold, I no longer believe in it strongly enough to hold it.” Others recounted similar experiences.
Goldbugs who were adamantly against Bitcoin have turned towards it. Peter Schiff, a leading gold advocate who appears regularly on mainstream media, being one. Andrew Hoffman of Miles Franklin, Andy Hoffman and Chris Duane have also warmed up to digital gold as gold prices cooled off following their enticing 2011 price increases.
“My first few investments were in gold bullions back in 2007/2008. My portfolio was ~90% metals at that time,” another Reditor related. :They now make up ~3% of my portfolio while crypto makes up about 75%.”