Bitcoin takes a bite out of gold markets

Bitcoin takes a bite out of gold markets

Speculation on bitcoin appears to be hitting the bullion markets, with investment in gold from first-time buyers falling to its lowest since the metal's bear-market price lows of 2015.

With bitcoin valuations roaring above the $11,000 mark, Internet searches for 'buy bitcoin' overtook the phrase 'buy gold' last month as investors scented the chance for hot profit from the cryptocurrency's soaring popularity.

Stock and precious metals markets are also enjoying a bull run, with figures from metals exchange BullionVault showing gold volumes rising 30.5% by volume last month.

But the number of new first-time investors fell again, recording its lowest monthly level on BullionVault since December 2015, when gold, silver and platinum prices hit five, six and seven-year lows respectively before turning sharply higher.

Over the last 12 months, the number of first-time precious metal investors has now fallen by 20.1% compared to the previous half-decade. Only Germany is ahead of its 5-year average among BullionVault's top 10 markets, with the number of new users from the Eurozone's largest economy rising 10.5% in the 12 months to November 2017.

Adrian Ash, director of research at BullionVault, says: "Whether or not Bitcoin ever achieves common use as money, the crypto-currency plainly offers investors a hot speculation and not a safe haven right now. Bitcoin's fresh record highs have come alongside new historic highs in the stock market, led by stretched valuations in tech shares. The ultimate investment insurance of physical gold in contrast is trading flat in line with its 5-year average.

"Only German investors have so far used this opportunity to start building their gold holdings, but a sharp New Year's correction in 2017's hottest assets will surely see investors elsewhere rush to follow Germany's lead, albeit at higher prices. The best time to buy insurance remains when it isn't urgent."

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