A Bitcoin or A Gold Bar: What Holds More Value for Our Future?
By: Kyle Wunderli
Tags: Investment, Gold, Btc, Bitcoin, Inflation

If you could go back to 1971 and purchase a bar of gold, would you do it? Sorry to start off with such an obvious rhetorical question, but there’s a point I need to drive home here. I’m talking about one of those gold bricks; the big ones they’ve got stacked in Ft. Knox. They weigh 400 ounces. Of course it sounds like a “no-brainer” because a gold bar today is worth around $720,000, and back then it would have only cost you around $16,000.

But how hard was it to come by $16,000 back in 1971? Was it easier to buy a gold brick back then? In other words, what was the purchasing power of the dollar back then? How hard would you have to work to make a dollar and what could that dollar buy you? To figure this out, there are free inflation calculators online and they will show you that $1 back in 1971 bought you as much as about $6.74 does today. Edward Snowden recently tweeted a snapshot of what the dollar was worth to those using it in 1970.

To make the math simple, let’s round up from $6.74 and just say a dollar today is worth 7 times less than it was in 1971. This decrease in the purchasing power doesn’t apply across the board evenly to everything. For example, the average price of a new house in the U.S. is currently $375,000 today. That is 16 times the cost in 1970. So if you would have just held $23,000 in a bank account rather than buy a home in 1970, you would have lost 16X the value of those dollars in terms of Real Estate purchasing power. On the other hand, a movie ticket in 1970 at $1.55 is very similar to the average price of a movie ticket today at $9 accounting for the decrease in purchasing power of the dollar. In other words, movies cost us about the same, but the purchase of a home today is far less affordable.

Have fun and try not to get too depressed playing around with the cost of different goods from 50 years ago. The takeaway from this exercise is to see how much weaker the purchasing power of the dollar is today than it was before it was removed from the gold standard. Speaking of gold, let’s get back to my question about gold bars.

Was Gold More Affordable in 1971?

The cost of gold in 1971 was about $40 an ounce. A gold brick is 400 ounces, so the cost to buy a brick back then was roughly $16,000. If the purchasing power of the dollar is 7 times less today than it was in 1971, and gold just held its value rather than appreciate over the last 50 years, you’d be able to buy a gold bar today for $112,000. The reason that is not the case is because gold has appreciated over the last 50 years. Today a brick would cost you $720,000. If you had just kept $16,000 in the bank rather than buy a brick of gold in 1971, you would have lost 45X the value of those dollars in terms of gold purchasing power. So, to answer the question: “was it easier to buy a gold bar back then?” The answer is, Yes indeed! 45 times easier.

Dollar Savers Penalized

The moral of the story here is don’t let your dollars sit in the bank. Over the last 50 years, the best that would have done for you is decrease your purchasing power by 7X. The question I keep asking myself is “why was I taught from a very young age to save, save, save, when the game I was playing wasn’t set up to reward savers?” The fiat monetary regime of the United States incentivizes and rewards risk-takers and penalizes savers. With the constant pressure of inflation stripping the purchasing power away from the dollar year after year, we are forced to become risk takers. It’s no wonder most Americans take on way too much debt and have very little savings. We have become a nation of degenerate gamblers. The game we’re playing here creates that type of behavior.

“Bitcoin Fixes This”

Many have probably heard this ad nauseam at this point but, Bitcoin fixes this. I am purchasing Bitcoin today with my dollars because I believe it is the only sound money our world has ever known that is immune from inflation. My desire is to preserve the purchasing power of my money and increase this ability over time just as purchasing a gold brick back in 1971 would have done for me. There are a number of comparisons being made between Bitcoin and Gold, and for good reason. Bitcoin has all of the attributes of gold that make it a valuable asset and inflationary hedge and then some. Here’s a quick table demonstrating:

The question is often asked, “Why not just buy Gold”? I don’t think it has to be one or the other, but here are a few of the reasons I favor purchasing Bitcoin:

Its supply is fixed. If the price goes up, they’ll dig up more gold and increase the supply. Bitcoin’s price can go up and the supply remains the same.

It’s easier to spend Bitcoin. I can carry it around in my phone, on an app, on a plastic card, or on a hardware wallet. Gold is heavy, bulky, and no one wants it as a form of payment.

I don’t know anyone my age or younger that is buying gold. Gold has served its purpose for thousands of years, but we are in a technological age that requires money over the internet. I don’t want to buy something valued so little by future generations.

Bitcoin is tamper proof, government resistant, and requires nothing more than an internet connection to access. Gold can be confiscated, controlled, and manipulated by centralized authority.

I can send Bitcoin in an instant to anybody almost anywhere in the world for next to nothing. Just not possible to do that with gold.

The government can’t create more of it and devalue my money.

If any of this sounds too extreme or far-fetched to you, I’d recommend reading the book “The Bitcoin Standard: The Decentralized Alternative to Central Banking” by Saifedean Ammous found here on Amazon: https://amzn.to/39558Nt

Bitcoin is Our “Golden (bar) Opportunity”

This comparison is so common that the first result on Google when searching “Market cap of gold” provides the following:

My prediction is that the value of Bitcoin will far surpass the market cap of gold in the coming years. The market cap of gold is currently around $11T after thousands of years in existence. Bitcoin, in only 12 years, has already reached $1T. When it reaches $11T, a singular Bitcoin will cost over $500,000.

So let’s think about this as our gold bar opportunity. If you could purchase a gold bar today for $47,000, would you do it?

There is 244,000 tons of gold in the world. That’s the equivalent of 19,611,500 gold bars. That number is eerily similar to the circulating supply of Bitcoin today at 18,811,500 BTC. The max supply of Bitcoin that will ever exist is 21,000,000. With lost addresses, laptops, death, etc, there’s a very good chance the world ends up with a supply of Bitcoin basically the same as the supply of gold bars.

A gold bar today will cost you around $720,000. A Bitcoin? $47,000.

I wish I could say I bought a gold bar in 1971 for $16,000, but I wasn’t born yet. I was born into a digital age where gold looks antiquated and appears irrelevant in the new world. Bitcoin, on the other hand, is my “golden (bar) opportunity”. I’m stacking the gold bars of tomorrow, today!