China’s largest gold deposit in history was discovered in the province of Shandong earlier this week. Local publications reported that the newly found gold mine ...
China’s largest gold deposit in history was discovered in the province of Shandong earlier this week. Local publications reported that the newly found gold mine will add over US$22 billion worth of supply to the gold market.
Shandong Gold Group, a Chinese gold mining company affiliated with the provincial government of Shandong, officially revealed in a press conference held on March 28 that the institution found a gold deposit of over 382.5 tons in the Laizhou-Zhaoyuan region of northwest Jiaodong Peninsula.
The area, which is better known to the public as Xilin, is said to have specific geological characteristics necessary to develop major gold deposit clusters. According to the representatives of Shandong Gold Group, the company will be able to produce gold at full capacity for 40 years, gaining the provide over $22 billion in profit.
Local publications including People’s Daily which attended the press conference of Shandong Gold Group reported:
“Currently, 382.58 tons of gold reserves have been prospected with an average gold grade of 4.52 g/t. And 550 tons of gold resources with more than $22billion (RMB150billion) potential economic value can be expected in two years. If producing on a scale of 10,000 tons every day, the gold deposit can produce gold continuously at full capacity for 40 years.”
Since early 2016, the vast majority of short and mid-term investors of bitcoin have begun to perceive bitcoin as a wealth protection tool that is practical for avoiding economic decline and financial instability. As a result, large investment firms, as well as high profile traders, began to hold bitcoin to prevent potential variables such as increase of interest rate, reserve currency devaluation and stock market performance from affecting their portfolio of assets.
Two of the major reasons investors are appealed to bitcoin are the digital currency’s decentralized nature and fixed supply. Since only 21 million bitcoins can exist and that monetary supply can’t be altered due to the decentralization and governance system of bitcoin, investors consider bitcoin as a reliable store of value in avoiding short-term loss and gaining long-term success.
Due to bitcoin’s strong mid and long-term performance in terms of price, investors have begun to consider bitcoin as a safe haven asset. In other words, an asset expected to retain its value or even increase in times of market turbulence.
Gold, another asset which investors often turn to in economic instability, has proven to be a less efficient safe haven asset in comparison to bitcoin due to its inflationary nature. For instance, the discovery of the Shandong gold deposit immediately added $22 billion to the gold market and supply unexpectedly and such abrupt addition of supply will inevitably lead to the decline of gold price.
However, bitcoin’s supply is fixed and such abrupt expansion of supply isn’t possible in a digital currency like bitcoin that was introduced with a fixed supply from the beginning.
For any safe haven asset or currency, rarity and scarcity are vital for long-term price surge and stability. Bitcoin has proven itself as reliable store of value, settlement network and safe haven asset for over 9 years of its existence. Hence, investors are starting to describe bitcoin as digital gold or gold 2.0.
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