David Higgins,
Head of Trading,
Merrion Gold
Long touted by proponents as a digital alternative to gold, or even as digital gold itself, Bitcoin has failed to match the bull market in precious metals this year, despite rallying in the aftermath of the US presidential election and as a result of Trump’s pro-crypto comments. At the time of writing, Bitcoin is down on the year. €100 invested in Bitcoin at the beginning of 2025 would today be worth less than €83, while the same amount invested in gold would be worth more than €146. While gold has had a spectacular year, silver has performed even better, having doubled (in US Dollar value) since the beginning of September 2024. Bitcoin and other cryptocurrencies have failed to hold their value against precious metals as fiat currencies devalue even further.
Against this backdrop, Central Banks have continued to purchase large amounts of gold this year. Their large orders have provided an effective floor for the yellow metal. Despite pullbacks throughout the year, the strong demand for gold from such large buyers has provided strong support for the price at times when other investors have been taking profits. Central Banks themselves are seeking to protect themselves from currency debasement as much as consumers are. With foreign currency reserves being eroded by money printing, gold looks set to become an increasingly important part of the portfolio of Central Banks.
The spotlight on precious metals has led to friction in the Eurozone. Italy’s Central Bank has the third highest declared gold reserves—although China’s reserves may be much larger than declared figures. In recent weeks, the Italian government has sought to assert ownership of the metal for their own national central bank, an assertion which has been resisted by ECB officials. The dispute has highlighted the importance of holding a physical asset in your own possession, rather than relying on counterparties or promissory notes for access.
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