Why is price of bitcoin less than gold if it is worth more?
First, what makes it worth more than gold is that there is no investment reason to choose gold over bitcoin even when their values will match. But to answer the question, it takes time for prices to adjust. Many people have ended up with 90% of their wealth in bitcoin, and even if they understand that its worth much more than its current price, some diversification, debt paydown, and life changing spending all contribute to supply meeting the adoption demand. More importantly, bitcoin supply is currently growing by 4% (gold is only 2%), and miners need to take some profit to pay for electricity and equipment.
Also, the complaint that many people are rushing into bitcoin for fear of missing out, actually serves to reduce the volatility of the price, and slow down its price rise. Most in this group who do not understand bitcoin are happy to get 20% return in a week, and then wait/hope that the price comes back down.
The fear spreading by financial industry deadenders that bitcoin price has risen too quickly can be motivated by hope of buying at a lower price, but its false on several counts. First, when looking at a parabolic chart it is not appropriate to compare it to stocks (or NASDAQ tech indexes in late 90s), but instead to technology adoption curves.
Not listed on this chart is the deregulation of stock brokerages in the 1980s that allowed self-directed brokerages and lowered trading costs by 90% and increased trading volume by 2500% (just by 2004). This democratized stock investment to attract people with much smaller wealth levels. More wrongly than rightly, this allowed exhuberance in penny stocks with players having a few thousand dollars hoping to reach life changing goals with it. Bitcoin as an investment has the powerful advantage of having large and small investors in the same asset, as opposed to segregating worst scams for small investors than lesser scams for large. Most ICOs and many alternate cryptocurrencies are unfinished projects that include a portion of coins for management and marketing, and so not only lack the fairness of bitcoin, but the financial industry's mantra of "blockchain not bitcoin" is one of forming the same bribery promotion agreements for other projects. The ICO markets are more prone to overhype and fraud than is bitcoin, and may lure in the smaller less sophisticated investor.
A little known key adoption metric is that daily crytocurrency trading volume has surpassed that of the NYSE. Crypto trading is also for 7 days/week not just 5.
The intrinsic investment value of gold and bitcoin
At their core, both have value because they are expensive to mine. Gold keeps its value (after inflation) because the mining expense mostly goes up with energy and labour inflation. Bitcoin's mining expense goes up every 2 weeks (20% over last block period), and every 4 years, doubles in cost with a halvening-reward event. Bitcoin will have a natural tendency to keep increasing in price due to the human nature of trading: Miners being predisposed to accept only prices higher than their cost (and even if out of desperation they'd violate the rule, they would stop producing), and buyers accepting that a reasonable and fair offer should consider those costs. Once you are willing to accept that a mathematically formulated number is worth more than a penny or a dollar, there's no longer that argument that it should be worth less than a trillion. You can't wear either price's "object" around your neck.
Other reasons that gold price upside is limited is that as price increases, more supply expanding mining ventures are made, and people with jewelry "cash it in" to also contribute to supply increases. Even central banks can be net sellers of gold (2016 world bank reserves were 5500 tons below 1965 levels). They don't yet have bitcoin to sell... only to buy.
The historical case for 10% of wealth in gold
Gold as part of a portfolio offers diversification benefits to stocks and bonds in that the latter's value are highly dependent on strong banks that do not require to withdraw from their client-frontrunned positions to bail out the relatively frequent failures of one of their other scams. Weak banks can't keep funneling money too prop up the two main financial markets, and they tend to be net sellers of gold (to clients) as they usually seek holdings opportunities for earning interest or fees.
Similar to financial panics, gold is insurance against government failures/panics related or not to financial system failures. This broadly affects banks, housing, and business throughout a nation, and gold at least goes down much less than the other asset categories, and if the problem occurs in a relatively unimportant far away land, gold will usually go up as it is demanded by those affected.
Gold is insurance against war and uninsurable housing destruction. War is usually a much worse form of panic than simple government financial collapse. Gold tends to go up in value due to demand for it being the only form of wealth in the area affected.
Gold is insurance against official asset seizure/freeze. You might be able to escape bankruptcy or governments without there being an official trace of holdings.
The 10% of portfolio in gold advice is admittedly much higher than the 0.6% of global wealth in private investment gold sector. It is also advice that is based/suitable for people highly concerned with preserving wealth as opposed to reaching for expected returns under the best case optimistic future scenarios. The rationality line that separates these 2 groups is whether they consider themselves already rich. For the latter group, lottery tickets are better investment choices than gold which is appropriate for reducing wealth variance over the broadest range of scenarios.
Bitcoin is a better investment than gold because
- Continued adoption as an investment consideration, and money inflows.
- ETFs on major stock markets that hold/buy bitcoin.
- China (and minor countries) unbanning cryptos again.
- Central bank reserves and corporate long term asset holdings.
- Banking system integration and custody/payment services.