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The so-called “crypto winter” has carried into 2023 and, as for now, there is little indication that the industry is going to rebound anytime soon.
Until recently, the prevailing assumption was that Bitcoin and other cryptocurrencies would largely track the price of gold and respond positively to inflationary environments. We know now that this assumption was false.
Only gold and silver have proven themselves to be stable stores of value when markets are upended and fiat currencies depreciate. Over the past 12 months, the U.S. stock market, as defined by the S&P 500, is down over 17 percent.
Bitcoin and Ethereum are down by similar margins.
Meanwhile, the three most widely-traded precious metals—gold, silver, and platinum—are all in the green year-over-year.
In the short term, precious metals have fared considerably better than other asset classes too. Here’s a quick snapshot of how the top alternative assets have performed relative to the S&P 500 over the past 30 days:
- Gold: +4.1%, [$1,861.04]
- Silver: +4.4%, [$23.78]
- Platinum: +7.4%, [$1,083.24]
- Palladium: (-3.5%), [$1,786.01]
- Bitcoin: (-1%), [$16,814.62]
- Ethereum: +0.5% [$1,259.75]
- S&P 500: (-2.1%) [$3,857.66]
The only real winners over the past month, amid hawkish interest rate hikes, high inflation, and geopolitical instability, are precious metals. As these market conditions carry over into 2023, many analysts expect gold, silver, and platinum’s momentum to continue.
In fact, experts from Saxo Bank and Asia Swiss Capital suggest that market conditions in 2023 could see the price of gold eclipsing the $3,000 and $4,000 mark, respectively, before year-end. While these are bold claims, there’s a broad consensus among industry insiders that ideal conditions for a gold bull run are shaping up for the year’s end.
For now, market conditions and social buy-in for Bitcoin and other cryptocurrencies remain low. December’s arrest of Sam Bankman-Fried and the collapse of his multi-billion dollar crypto exchange, FTX, have spoiled public and institutional appetite for the digital currency—at least for the time being. Considerable work needs to be done, including regulatory development, to mend the reputational damage to the industry.
For these reasons, we at Sophisticated Investor at bullish on gold and silver’s price potential in the year ahead, while remaining cautiously optimistic that the cryptocurrency industry can find stable footing later in the year.
As we head into the new year, savvy investors should reevaluate their positions in alternative assets. Those wanting a stronger position in gold and silver should make sure they invest through a reputable, FDIC-insured company. To get started on your precious metals investing journey, check out our list of the top 10 precious metals IRA companies in America.
Mark Turner is an author and editor at Sophisticated Investor. He has over two decades of experience in the financial industry as a broker in both Chicago and New York and has written for several top tier publications. He currently covers the topics of alternative investments, geopolitical events, US economy, portfolio diversification and others.
