After a powerful rally that lasted several months, gold crashed on October 21. It was the biggest drop in gold prices in more than a decade, from $4,330 to $4,030 in just a few hours. Gold’s market cap fell by $2.1 trillion in one day. Considering this amount is more than half of the total cryptocurrency market capitalization, it raises the question of whether digital gold is a more reliable long-term investment than physical gold.
Summary
- On Tuesday, the spot price of gold fell 6.3% after hitting an all-time high of $4,381 the day before. Other precious metals, such as silver and platinum, had a similar flop.
- Gold futures settled at $4,087. That was the biggest drop since 2013.
- The downturn was preceded by more than two months of strong rally, with people leaning toward a safe haven amid staggering U.S. debt, political turbulence and speculation about Federal Reserve interest rate cuts.
Black Tuesday
Gold is having an immense 2025. Even now, after a historic downturn, its value is the same still up 55% compared to the year-end price of 2024. That is more than in the years of the September 11 attacks, the financial crisis of 2008 or the shutdown due to COVID-19 (disasters that usually stimulate demand for gold).
Some analysts warned investors that gold prices had overheated. For example, a few days before the crash, Coin Bureau CEO Nick Puckrin said in response to Benzinga’s questions that gold could be in a recession. He said that the current gold rush is a “momentum trade” and that “momentum trading tends to die out.”
Several analysts predicted a continuation of the upward trend. Goldman Sachs saw gold is expected to reach $4,900 per ounce in December 2026, while UBS as long as a more bullish forecast: $4,700 in the first quarter of 2026.
Bloomberg quotes Several strategists, including Charlie Massy-Collier, say the price could consolidate at the $4,000 level in the coming weeks. Banks will need gold to continue diversifying against the US dollar, but “at current levels there is no rush to take a position on that.”
Donald Trump’s Monday comment on planned trade talks with China (“we’ll both be happy,” Trump said) and the rise in USD strength are cited as major factors for the decline in gold prices. These optimistic events encouraged investors to take profits.
Gold vs Bitcoin
Bitcoin is usually compared to gold as another scarce safe haven. The hard cap of 21 million units, ever-decreasing supply growth, and costly mining create a long-term valuation comparable to gold.
Both Bitcoin and gold are seen as debasing trading assets. Decline trading refers to avoiding investments in government bonds and fiat currencies because their value is too dependent on the actions of financial and political institutions.
Although there is agreement, there is mutual irritation and banter between gold bugs and bitcoiners. For example, veteran stockbroker Peter Schiff is a prominent Bitcoin critic, advocating for gold.
Schiff’s verbal attacks on Bitcoin somewhat turned him into a gold mascot and a target for jokes in crypto
Michael Saylor of Strategy, Chris Burniske of ARK Invest, the Winklevoss brothers of Gemini and Mark Cuban said Bitcoin is better than gold. They cite Bitcoin’s faster price appreciation, its ease of management, and the near impossibility of a scenario where the total supply increases. The latter is not the case for gold, as new sources of gold can be found outside Earth. Scientists experiment with producing gold in a laboratory. While the results are not impressive millions of dollars anyway subsidies and investments power scientists to continue the path to creating gold.
While gold is on a tear this year, outperforming the S&P 500, Nasdaq 100, Bitcoin and basically every other high-cap asset, its long-term investment potential lags behind Bitcoin and these indexes.
Scott Melker, an investor and host of the podcast The Wolf of All Streets, pointed out that compared to any other top asset, gold has far underperformed and that “a good year doesn’t erase decades of catch-up.”
Melker offers to look at several charts comparing gold to other top assets, which clearly show gold’s underperformance. On the Bitcoin vs Gold chart, gold is absolutely flat, as it only gained about $3,000 during Bitcoin’s existence, while Bitcoin rose over $100,000.
Melker points to several charts comparing gold to other top assets, which clearly show gold’s underperformance. On the Bitcoin vs. Gold chart, gold is essentially flat as it only gained about $3,000 during Bitcoin’s existence while Bitcoin rose over $100,000.
“Nominally, on paper, you would have more dollars, but those dollars would buy less, meaning gold underperformed inflation for years. Yet it’s not that cash outperformed; the dollar itself lost significant value over that same period.”
In standout years like 2025, gold casually beats top indexes and Bitcoin. However, it doesn’t happen often. Sometimes gold takes even bigger hits than what we saw on Tuesday. For example, after a decline in 2012, it took eight years for gold to reach the same level again.
However, gold still serves as a social and political barometer as its price tends to rise during turbulent periods and has been less volatile overall than most of the top assets.
#Golds #trillion #wipeout #revives #digital #physical #gold #debate