Switching focus — Gold isn’t like Bitcoin
By: Philip Fletcher
Tags: Bitcoin, Gold, Forex, Forecasting, Money

Philip Fletcher | Director & Co-Founder

Our price prediction tool has been proving its worth so far.

With our first key quarter over, we’re starting to add all new features for you. These additions seek to reward you even more and provide you with more scope to flex your brain and demonstrate your predictive skill.

Our goal at Pynk is to improve our offering as much as possible, with the view of improving every crowd members understanding of financial markets and, more importantly, your own financial futures.

There are two key things we’re going to talk about in this article: The different ways in which Bitcoin and Gold move; and how different times frames are important. These two important considerations will help to inform your predictions on both Bitcoin and Gold.

You’ll have no doubt noticed that we have recently added Gold to the Pynk Price Prediction tool. We’ve already seen many thousands of you having fun predicting, learning and earning with this new asset!

Gold has some characteristics that make it different to the likes of Bitcoin and therefore require you to switch your focus and look at this asset from a new perspective and understanding.

A key measure to understand is Standard Deviation (ST.DEV)

Standard Deviation is a measure of how spread out numbers are (versus the mean average)

Let’s take a look at the price of Bitcoin and Gold and see which displays a higher ST.DEV from the raw charts:

Bitcoin Price Action

Gold Price Action

Initially, you may think the price of Bitcoin and Gold are somewhat similar in their movements — but that would be an incorrect conclusion. Take a look at the dates listed along the X-axis; and you can see that the Bitcoin chart starts from 2015, whereas the Gold chart starts from 2007.

Let’s now consider how much movement there has been in the price of Gold compared with that of Bitcoin using the ST.DEV of each asset class:

Gold

26.54

Bitcoin

1427.6

You can see Bitcoin’s standard deviation is much higher… 53 times higher in fact.

Between 2007–2019, Gold has risen 108% in value. Between 2015–2019, Bitcoin has risen 979% or approximately 9 times that of Gold.

From this simple perspective, you can see that Bitcoin is more volatile than Gold but, since the ST.DEV accounts for the time period, the former calculation tells us the truer picture i.e. BTC is significantly more volatile than at first glance.

Why have I written about this?

It is really important that you appreciate the difference between these assets. While you can often expect many hundreds of dollars in volatility for Bitcoin on a daily basis, the same is not true for gold. Gold will typically move a few dollars, often no more than 1 or 2% on a daily basis. Therefore, you cannot apply the same aggressively volatile predictions to the movement of Gold as you can with Bitcoin.

With that, you may want to take some time to internalise and understand Gold.

Not only that! We have edited the timeframe you are predicting for Gold! You are not predicting tomorrow’s price, you are predicting for 7 days ahead! So be aware of the higher timeframes, potentially important news (fundamental analysis), and anything else that might impact the price of Gold.

The charts shown above demonstrate high timeframes, looking years back at the prices of each asset. Obviously we don’t suggest using these timeframes for making predictions within a 24-hour window or even a 7-day one!

But, we would recommend looking at those slightly higher timeframes for gold, potentially looking at the last 3 months. A variety of timeframes will help to properly inform your prediction. With this view, you will be able to see that Gold is more likely to move maybe $50 dollars in a week, potentially ending up where it started, rather than moving many thousands like Bitcoin does.

We’re excited to see how our impressive crowd handle this updated challenge and remind you to predict according to characteristics of each asset to have the best hope of moving to the top of the leaderboard!

We really hope you enjoy this addition and do not fear… There are many more in the pipeline!

Summary

Remember when predicting that Gold is significantly less volatile than Bitcoin Although you can predict Gold’s price every day, you’re predicting what the price will be in 7 days time

Thanks for taking the time to read, I look forward to seeing how you guys and girls enjoy this new challenge, and how your prediction accuracy will improve overtime as it has done with BTC price predictions.

Enjoy earning those WP’S!!

PF

Disclaimer: Please bear in mind that this information does not constitute any form of advice or recommendation by Pynk One Ltd. and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Appropriate independent advice should be obtained before making any such decision. When investing, your capital is at risk and you may recover less than the initial investment.