Gold vs Bitcoin: How tariffs are shifting the store-of-value debate

The United States’ short-lived decision to impose a 39% tariff on imported one-kilogram gold bars, before reversing it days later, highlighted the sensitivity of even the most established stores of value to government intervention. Futures briefly reached US$3,534 per troy ounce, physical shipments slowed, and liquidity on the COMEX tightened. The tariff was intended as a protectionist measure, aimed at reducing the US trade deficit and signalling strength in broader economic debates. Its rapid reversal reflected the delicate balance policymakers must strike, applying pressure on imports without unsettling financial markets.

The episode serves as a reminder that gold, while historically considered a neutral haven, is not immune to sovereign policy shifts. Tariffs, sanctions, and capital controls demonstrate that governments can influence the availability, pricing, and strategic use of traditional commodities.

Not all that glitters: Bitcoin’s borderless advantage
Unlike gold, Bitcoin operates outside the jurisdiction of any single nation. Its decentralised, digital structure cannot be physically tariffed, transported, or seized at a border, earning it a reputation as a “sovereign-proof” store of value.

This distinction is increasingly relevant in a macro environment characterised by rising bond yields, fiscal stimulus, and growing concerns over fiat currency stability, particularly the US dollar. Institutional and non-US investors are paying attention, as Bitcoin’s architecture offers potential diversification benefits that traditional safe-haven assets cannot always provide.

Institutional adoption and the policy risk hedge
Institutional interest in Bitcoin has accelerated. Exchange-traded funds, corporate treasury allocations, and sovereign-level engagement are all increasing. Bitcoin’s growth in this context is notable. While precise allocation data is fragmented, research suggest that approximately 83% of institutions plan meaningful crypto allocations, with the majority focused on Bitcoin and Ethereum. Whereas, gold remains a staple, with 15% of institutions having specific gold positions in their portfolios.

Gold’s enduring role
Gold’s appeal endures for several reasons. It is tangible, globally recognised, and has centuries of credibility as a store of value. Prices in 2025 have traded between US$2,400 to US$3,500 per ounce, supported by its historical role as an inflation hedge and safe-haven asset during periods of market stress. Its stability and low volatility make it attractive for conservative investors, and its physical nature protects it from cybersecurity and digital system risks.

Storage and transaction costs, however, remain considerations. Unlike digital assets, gold requires secure, physical custody and logistical handling, which can limit flexibility compared with Bitcoin.

Bitcoin’s growth profile
Over the past decade, Bitcoin has delivered extraordinary returns relative to traditional assets. While gold returned approximately 186% over ten years, Bitcoin’s cumulative gains approached 49,000%, reflecting both its early adoption and volatility. Over shorter periods, the divergence is even clearer: three-year returns of 429% for Bitcoin, versus 90% for gold.

Bitcoin offers characteristics that gold cannot: portability, divisibility, transparency via blockchain, and decentralisation, which reduces susceptibility to political interference. These traits appeal to investors seeking exposure to innovation and global transferability. At the same time, Bitcoin’s higher volatility, regulatory uncertainty, and technological risks, remain relevant factors to consider.

Why both can coexist in portfolios
Modern portfolios no longer need to choose between gold and Bitcoin. Gold provides stability, tangible security, and historical credibility, while Bitcoin offers higher growth potential, borderless transferability, and resistance to sovereign policy shocks.

This combination addresses different layers of risk. Gold mitigates digital and cybersecurity exposure, while Bitcoin offsets gold’s limited upside and friction in global transfers.

Portfolio approaches vary, and allocations to Bitcoin remain modest. Analysts at major investment firms typically recommend small, strategic allocations, often between 1% and 5%, alongside 5% to 10% allocations to gold.

A Bitwise study examined potential Bitcoin allocations ranging from 0% to 10% of a portfolio and found that improvements in risk-adjusted returns, measured by Sharpe ratios, generally levelled off around a 5% allocation. At the same time, maximum drawdowns began to increase sharply beyond 5%. Similarly, Betashares advises only very small allocations, indicating that risk-return considerations do not support exposures above this level.

A decade of diverging paths
Bitcoin’s trajectory over the last ten years illustrates a new paradigm for stores of value. Gold remains a reliable hedge against inflation and policy shocks, while Bitcoin provides a digital, unbounded alternative. Historical performance data demonstrates that while gold preserves wealth, Bitcoin offers exponential growth potential, albeit with higher risk.

Investors navigating an increasingly complex macro and geopolitical landscape may find value in blending both assets. Gold preserves, Bitcoin innovates. Together, they can address both conventional market risks and emerging vulnerabilities arising from political or digital system shocks.

Looking forward
As the lines between physical and digital stores of value blur, portfolios designed for the next decade may no longer treat gold and Bitcoin as competitors. Instead, they are likely to be viewed as complementary instruments, each addressing different dimensions of risk and opportunity. Policy shocks, protectionist trends, and digital transformation are shaping the landscape for store-of-value assets.

It is worth noting, however, that Bitcoin remains vulnerable to potential negative policy changes under future administrations that may be less crypto-friendly than previous ones. Investors who understand these dynamics can structure allocations that balance preservation and growth, tradition and innovation, and stability and resilience, using both assets to address a wider spectrum of economic, political, and technological risks.

https://www.coinbase.com/en-gb/blog/rising-allocations-broadening-use-cases-new-research-from-EY-parthenon-and-Coinbase

https://www.gold.org/goldhub/research/use-gold-institutional-portfolios

https://s3.us-east-1.amazonaws.com/static.bitwiseinvestments.com/Research/Bitcoins-Role-in-a-Traditional-Portfolio-062025.pdf

https://www.betashares.com.au/files/collateral/Whitepapers/QBTC-whitepaper.pdf