Kotok On Bitcoin, Gold & Trump’s Approval Ratings

November 07, 2017

Bitcoin Topping Gold In Google Searches

“We looked at Google Trends, which counts the number of searches for key words, to see the relative interest in ‘buy gold’ and ‘buy bitcoin’ to see which asset is more popular around the world. Google searches should be a reliable indicator of purchase intent, or at least interest.
“Here’s what we found:

“• On a worldwide basis, “Buy bitcoin” is a more popular search than “buy gold”. The crossover happened in mid-May of this year. As of today, bitcoin Google query volume is 17% higher than that for gold on a global basis.
“• Google Trends also allows you to zero in on what countries search more for bitcoin than gold. Over the last 90 days, for example, bitcoin beats gold across all of Europe and Russia. Even gold producing countries like South Africa and Canada show more bitcoin searches than for gold.
“• Based on Google searches, the United States is undecided on the bitcoin-gold debate. Search volumes are similar over the last 90 days. They do, however, show regional biases. For example , bitcoin wins in New York, Illinois, and California. Gold still holds the lead pretty much everywhere else.

“The upshot of this analysis: in just a few short years bitcoin has caught up with gold in terms of global interest. Does that mean it has the staying power of gold? Of course not. It needs about 4,995 years to get there.
“Our perspective on this debate: both bitcoin and gold serve a similar purpose, namely to provide investors with a liquid asset outside the global banking system. If that’s your thing, there’s no need to choose one over the other.”
Many thanks to our brilliant reader who triggered today's discussion with a sharply perceptive question.

And many thanks to Nick and Jessica for permission to quote their research work. (Please note that they will be present at the GIC discussion of crypto on Jan. 12, 2018 in California. For details, see the GIC website at www.interdependence.org. You will find the date listed under coming events. Registration is about to open. The meeting will feature Boston Fed President Eric Rosengren. A special conversation with Harry Markowitz is also planned, along with the discussion of crypto.)

Only time will reveal the answer to our reader’s question about Trump’s approval rating and the gold price. If Trump’s approval deteriorates further below 40% and if gold rises in price, the history we documented with the Nixon and Bush Jr. eras will be repeated and validated. As for the effect on gold of crypto substitution, that remains impossible to determine today.

At Cumberland, we do not hold any bitcoin or other crypto positions for our clients. We do have clients who are speculating in cryptocurrencies on their own. They have told us they are doing it. We wish them well.

We continue to maintain a small position in the gold-mining ETF in our U.S.-based ETF portfolios. And we continue to hold some cash reserve in the U.S. portfolios. We are not fully invested.

Of course, any of those decisions and strategies may change at any time.

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