According to a May 26 tweet from a Messari researcher, goldbugs like Peter Schiff have been missing a trick. Over the past year, returns on stocks in gold mining companies have massively outperformed the return on actual gold.
Fans of Bitcoin (BTC) however, can rest safe in the knowledge that stock in Bitcoin mining companies has tended to underperform the genuine article.
Love gold? Buy a mine
At first glance the performance of gold over the last twelve months seems quite impressive, with gains pushing close to 40%.
That is, until one considers the stock of gold mining companies like Newmont, Franco-Nevada, Wheaton Precious Metals and Barrick.
These four companies have averaged almost 120% returns in the past year, effectively acting as a leveraged position on physical gold, with three times the gain.
Love Bitcoin? Buy Bitcoin
In contrast, Bitcoin price is up around 25% compared to a year ago, although if we only consider figures since the start of 2020 it is outperforming gold by a factor of two.
Stock in Bitcoin mining companies, however, has not fared so well. Looking at Riot, Canaan, Hut 8 and Hive, only Hut 8 has had positive returns over the last 12 months, being roughly similar to BTC’s 25%.
The other three stocks averaged a drop of over 40% each, underperforming Bitcoin by a large margin.
Bad news for goldbugs
So for all of their evangelism, it seems that the goldbugs’ desire for physical gold is blinding them to the potential of investment in gold mining companies.
And the Bitcoiners? Well they could always wrap the Bitcoin, use it to take out a DeFi loan, and spend that on gold mining stocks, thereby exposing themselves to both leveraged gold gains and BTC gains.
You can’t do that with a bar of gold.