Gold has been a reliable hedge against inflation and financial instability for centuries, while Bitcoin trades more like a high-risk tech stock. With gold up 10% and Bitcoin down 10% in 2024, understanding their differences is more important than ever. Here’s what Australian investors need to know before choosing between gold and Bitcoin.
Many investors ask: Should I invest in Bitcoin or gold?
Bitcoin and gold serve very different purposes in a portfolio. Gold is a proven store of value, while Bitcoin remains a speculative asset in a long-term period of being capitalised. It’s more akin to a volatile tech stock than a safe-haven investment.
While Bitcoin and gold sometimes move in the same direction, 2025 has shown the opposite trend: Gold is up 10%, while Bitcoin is down 10%.
Let’s break down why.
Why have gold in your investment portfolio?
Gold has been used as money for thousands of years. It’s a trusted, finite resource, and universally recognised, qualities that make it one of the most reliable assets for preserving wealth.
Pros of gold:
- No counterparty risk: Unlike cash, bonds, or even Bitcoin, gold doesn’t rely on financial institutions or technology to retain value.
- An inflation hedge: Gold has a long history of protecting wealth against rising prices, much like long-term government bonds, but without the risk of lending to a government.
- Held by central banks: Governments and institutions worldwide hold gold as a reserve asset, with central banks buying record amounts to diversify away from currencies like the US dollar.
Gold’s reliability makes it an ideal defensive asset in times of economic uncertainty.
How does Bitcoin perform?
Bitcoin is often dubbed “digital gold,” with some suggesting it may replace gold in an investors portfolio. In reality, Bitcoin behaves very differently to gold. Rather than acting as a store of value, it trades more like a high-growth technology stock, reacting to shifts in market sentiment and liquidity.
How does Bitcoin behave?
- Driven by speculation and access to cheap money: Unlike gold, Bitcoin’s value is largely based on speculative interest.
- Moves with tech stocks: Bitcoin’s price closely follows the Nasdaq 100 Index, meaning it performs well when liquidity is high but falls quickly when markets tighten and liquidity is drained from the financial system.
- Volatile and unproven in recessions: Unlike gold, which has been tested over centuries, Bitcoin is just 15 years old and has never faced a prolonged economic downturn.
Why Bitcoin and gold don’t always move together
While Bitcoin and gold sometimes rise together, like in 2020, when central banks flooded markets with money, their current divergence highlights a key difference:
- Gold is up 10% in 2025 as investors seek a safe haven amid economic uncertainty.
- Bitcoin is down 10% as liquidity tightens and speculative assets fall out of favour.
- Gold is a defensive asset, while Bitcoin is a speculative one, which is why they don’t always react to market events in the same way.
Should you invest in gold or Bitcoin?
If you should invest in gold or Bitcoin heavily depends on your investment goals.
Are you: looking for inflation protection, stability, and a hedge against financial system risks, gold is the better option.
Are you: comfortable with high volatility and speculative risk, Bitcoin might have a place in your portfolio.
We believe gold is an important asset in all investment portfolios and superannuation, and that’s why we include gold in all of our portfolios and our super product because it provides stability during market downturns. However, we don’t include Bitcoin due to its speculative nature. If investors did wish to invest in Bitcoin, we would suggest exposure as a thematic investment with a small allocation (under 10%).
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