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Bitcoin an Almost Exact Fit to Gold’s Historical Chart

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Bitcoin an Almost Exact Fit to Gold’s Historical Chart

It is often said that history doesn’t repeat itself, but it does rhyme.

Bitcoin, in just nine months, has done something absolutely tremendous in that respect. While increasing in parabolic fashion, it also managed to match up exactly with the 40 year gold chart – even to the most recent correction.

Putting the two charts side by side is simply eerie:

Bitcoin price vs. historical gold chart

In 1980, the gold price peaked at $850 USD during an inflationary environment where the Hunt brothers tried to corner the silver market, the Soviets intervened in Afghanistan, and the Iranian revolution was taking place. In March 2013, Bitcoin began to rally because of the Cyprus bank holiday and subsequent haircut of depositors.

Bitcoin and gold would both come back down to earth, and then start their biggest moves. Starting in 2000, gold had 12 years of consecutive gains. Bitcoin, in November 2013, was stimulated by Ben Bernanke’s comments to create the most significant price rally yet. At an interday high of the rally, one bitcoin was even momentarily equal to one ounce of gold in price.

Subsequently, they would pull back: gold corrected this year 25%. In early December 2013, China barred financial institutions from accepting bitcoin transactions. This prompted a correction as well.

Much has been said about the many similarities between bitcoin and gold. This goes even as far as to include supply, of which even those curves are almost of the exact proportions:

Bitcoin and gold supply stock

The main difference so far between bitcoin’s last nine months and gold’s historical chart: after bitcoin’s latest drop, it has now almost already recovered.

Meanwhile, gold has been consolidating for months – will it be next?

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About the Author:

Jeff is the President of Tickerscores.com and holds a BCom from the Sauder School of Business at UBC.

Discussion

  1. Tim Harry  December 11, 2013

    Very poor comparison. The time coordinate stretch is arbitrary and uncorreleted. One can pull anything by the ears to make it look like a rabbit.

    (reply)
    • Jeff Desjardins  December 11, 2013

      Hi Tim,
      This was just an observation. Does it have any major implications? Probably not. But, it is interesting that since bitcoin has been in the mainstream, that it lines up almost exactly with gold’s entire modern history, ups and downs and all. It could be pure coincidence or it could say something about investor buying behaviour with safe haven assets and the “bubble” aspect of them.

      Besides silver, try finding another graph that can match the entire modern history of gold over any timeframe.

      (reply)
  2. Tyler Todesco  December 11, 2013

    I like the comparison for the old and new contrast between the long standing commodity to the newer “cutting edge” currency. It is pretty interesting I would say.

    However the graph itself is really quite common among new hot stocks. It has the initial buy in from speculators, running up the price temporarily with a small correction; Followed by a term of inactivity, leading into a mass market buy in with a large run up and correction due to over-shooting. An example of a similar but not identical cycle would be Intertainment Media (INT.V) from 2008-20011ish. I reference the cycle itself, not the exact similarities.

    (reply)
    • Jeff Desjardins  December 11, 2013

      Very good point Tyler.

      Yes, it is definitely a cycle that can be seen in other places as well.

      (reply)

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