While people with good monetary understanding have always chosen gold and silver over fiat currencies created out of thin air, a lot of people are confused about crypto-currencies and how they can be used, or how they compare to precious metals.
We have written in the past about Bitcoin and why we consider it a good alternative in the current central-bankers-gone-wild environment (see a previous article here). Today we want to share a very informative short video about Bitcoin valuation and how it compares to gold and silver.
In short, the video discusses an article explaining the stock-to-flow ratio – or how many years (flow) would be needed to replace the whole amount of a commodity (stock). The article contends the more time it takes to rebuild the stock, the higher the market value of that commodity so the higher its price would be.
According to this model which has predicted very well past performance, the price of Bitcoin could reach millions of dollars… but then again, the US dollar is being printed into oblivion so soon enough it will mean nothing. Which is why a comparison between Bitcoin and precious metals is useful.