The total market capitalization of the cryptocurrency market recently exceeded $300 billion. This figure is both inspiring and frightening.

The world of digital currencies, which emerged less than a decade ago, has grown astronomically in a short period of time. The rapid growth of new cryptocurrencies in the wake of the ICO boom has interested investors all over the world. Thus, in 2017 alone, Bitcoin soared from $800 to almost $10,000. There is a month left until the end of the year, and Bitcoin has a chance to outpace the most daring forecasts of analysts and set a new record .

So it turns out that Bitcoin is the most impressive asset that is getting ready to take over the world? You can look at the cryptocurrency market with fear, but you can approach it soberly and understand that Bitcoin is only at the very beginning of its development. For now, Bitcoin is a small fish.

Cryptocurrencies vs gold

If you compare the $300 billion capitalization of the cryptocurrency market with the commodity asset market, it immediately becomes clear that digital currency is still splashing in shallow waters.

Gold, which Bitcoin is supposed to compete with, has a market capitalization of $6 trillion. In addition, it must be taken into account that only a fifth of gold is traded on the market as an investment product, the rest is in the form of jewelry, and is also located in government vaults or is still underground.

Thus, the capitalization of investment gold is about $1.2 trillion. Considering that the value of all gold is just over $7 trillion, about $1.6 trillion is used for private investment, which is more than 5 times the total capitalization of cryptocurrencies.

Let's take a closer look at the investment markets. Stocks, another investment asset, have a market capitalization of $55 trillion; another $94 trillion in mortgage securities (securitization) and $162 trillion in residential real estate.

Bitcoin is not overpriced

Of course, the price of Bitcoin is breaking records in speed, but the capitalization size is low compared to the global market. Looking at the capitalization of various investment-related areas, it is difficult to call Bitcoin a bubble. The cryptocurrency market represents only 0.3% of the total market for real estate, securitized debt, equities, commercial real estate, farmland and gold.

Based on the above indicators, Bitcoin and other cryptocurrencies can hardly be called a huge bubble.

When it comes to bubbles and overvaluation, investor and ardent Bitcoin supporter states:

“There is now $200 trillion in the world - in cash, stocks, bonds and gold. These four assets are overvalued in my opinion. If 0.5% of that $200 trillion is in Bitcoin, you will have a capitalization of $1 trillion, which will be higher than Apple Computers, the most valuable company in the world.”

According to experts, gold is one of the most effective and stable instruments for saving capital. What is the price of metal today and what are the forecasts regarding its dynamics in the future? What factors influence it? In our article you will find answers to all these questions.

Gold price today

You can find out today's price of gold by calling the operator or on the official website of Sberbank of Russia. It is the largest bank in our country in terms of the volume of metal purchase and sale transactions.

It should be taken into account that the price of gold in the Russian Federation Council may vary in small and large cities in the region.

The form of purchase also matters: bullion, coin or bank account in metals. The first two types are higher in cost, as they include another 18% VAT. In addition, the cost of a gram of gold, for example, in a five-gram bar, will be 20 or 30% higher than in a kilogram bar.

How to calculate the price per gram of 585 gold

585 gold is used to make jewelry. It is natural that with an increase in demand for them, the cost of the metal also increases.

To calculate the price of 1 gram of 585 gold you need:

the price for 1 gram of gold is 999.9 fine at the rate of the Central Bank of the Russian Federation, multiplied by 0.585

Factors that increase its cost:

1. Calendar holidays and celebrations;
2. Economic instability, inflation;
3. Increasing the share of imports in foreign economic activity;
4. Jumps in prices for raw materials: gas and oil;
5. Weakening dollar exchange rate.

However, recently there has often been a trend whereby the rise in the dollar exchange rate is accompanied by an increase in the cost of gold.

Gold price forecast: will the price increase or decrease?

The price of this precious metal has increased almost 7 times over the past decade. It follows that in the long term, gold will only grow and bring stable profits to its investors. Minor short-term drops in the exchange rate associated with a decrease in demand are acceptable, but they will not play a significant role.

Gold purchased at the beginning of the year will bring a profit of about 6-13% per annum at the end of the year, not counting bank commissions. With increasing demand for this precious metal, its profitability may increase even more.

Gold capitalization in the short term

In the short term, gold will bring excess profits during a period of economic instability in the country producing the precious metal. Political and financial crises, natural disasters will cause a reduction in the volume of supplies, which, accordingly, will increase the cost of gold.

Advice from Sravni.ru: To get more profit from investing, it is better to choose an impersonal form of gold - a metal account. In this case, VAT will not be included in the purchase price and additional costs for conservation and security will not be required. The main thing is that selling such gold will be much easier and faster.

Jacey Collins, an economist, geopolitics expert and founder of Philosophy of Metrics, believes that the gold market in the future will be completely absorbed by cryptocurrencies as financial technologies expand and develop in various areas of the economy and the production of new financial products. According to the expert, “nothing can stop the digital asset market.”

Below are Jacey Collins' thoughts on the topic.

According to the World Gold Council, at the end of 2017, the total gold market capitalization was approximately $7.8 trillion. The current price of gold is 1215 USD/oz. Apart from some ups and downs in the past, the price of gold has remained unchanged since 2013. Stagnation in the gold market can be an indicator of many different things, but it clearly runs counter to the Fed's statements about normalizing monetary policy.

The “normalization and stabilization” of monetary policy around the world has been underway for several years, but the gold market is still experiencing stagnation, which indicates the ineffectiveness of the actions taken by the Federal Reserve. This does not bode well for gold either because the world is on the verge of accepting a new asset class that is ready to take off and increase its capitalization. At the time of the last Bitcoin ATH (price record) in late December 2017, the total market capitalization of the cryptocurrency market reached $800 billion. That's small compared to $7.8 trillion, but many believe large institutional investments haven't even set foot in the virtual asset market yet.

We may see the time when gold returns to pre-crisis (2008) price levels around $800. The lack of growth in the gold market over the past 5 years should be an indicator to most investors that demand for the precious metal is, at best, experiencing a slight decline. But countries such as China and Russia continue to accumulate gold, and it can be assumed that they are planning to create new gold standards tied to national currencies.

Gold standards are deflationary in nature, but most countries now understand that the new global standard is built around the speed, cost and scalability of the cryptocurrency market, not gold. Perhaps Russia and China will create their own internal architecture based on gold and national cryptocurrencies, who knows.

What is clear is that no nation or bank is interested in turning back technology and giving up an entirely new source of liquidity just to continue propping up a precious metals market that will somehow be absorbed into a new asset class over the next 12-18 months. Surely, the gold market will continue to exist, but will itself become a sub-market of cryptocurrencies, just like the stock market.

Most likely, the end of 2018 will mark a massive entry of institutional investments into the crypto space, as the world's largest exchanges have already created their own systems and conditions for convenient cryptocurrency trading for millions of investors who will flood the digital asset market. Capital will flow into cryptocurrency from the gold market.

The price of gold doesn't matter whether it's $800 or $1800. The real message is that an entirely new asset class will serve as a new source of global liquidity. The existing $7.8 trillion market for the precious metal will somehow be absorbed into the cryptocurrency market as it expands into new areas of the financial sector and financial products. Nothing can stop him now.

It is worth noting that VanEck's director of strategic asset management, Gabor Gurbaks, believes that the value of Bitcoin for traditional investors lies in its ability to become an alternative to gold. Since traditional investors view Bitcoin as “digital gold,” its capitalization can easily increase at least three times more.

The MSCI All Country World Index jumped above 456 points. Thus, the capitalization of the global stock market has grown to $50 trillion. This index includes shares of 23 countries in the developed world and 23 countries in the developing world.

Capitalization of the global stock market (trillion dollars)

Source: Twitter David Ingles

Of the $50 trillion, about $20 trillion comes from the US stock market, equivalent to 40%. At the same time, the nominal volume of US GDP at the end of 2016 amounted to 18.9 trillion dollars or 26% of the world economy. That is, the United States still remains the financial capital of the world and neither Great Britain nor China have yet come close to them.

Warren Buffett's famous indicator indicates that the value of all American companies is about 125% of GDP, which is 4 percentage points lower than it was in the first quarter of 2015. It turns out that, despite the fact that American indices are churning out record after record, they still have room to grow.

Warren Buffett indicator

Source: Federal Reserve Bank of St. Louis

Summary from Invrstbrothers

Let us recall that during the era of the .com bubble, the value of all US companies was one and a half times greater than the volume of the American economy, after which it collapsed to 70%. Since the beginning of the 2000s, the Buffett Indicator has been at a level of 100% of GDP, which is clearly less than today’s indicators, therefore, in our opinion, investing your money in American indices is quite risky; it is better to find interesting corporate ideas that are still present On the market.

If you sum up the stock prices of all the companies in the world, you technically get the market capitalization of planet Earth. So, in just a few months, the capitalization of the world stock market soared to $80 trillion, and continues its systematic movement towards the $100 trillion mark*.

The main points are:

• The capitalization of the global stock market exceeded $80 trillion;
• Such a long “bullish” trend – almost 9 years – took place even before the “Great Depression”;
• Goldman Sachs is convinced that the overall dominance of the bull market is nearing its end;
• According to Goldman Sachs, in the medium term we could expect either a protracted crisis or a sharp collapse in the securities market.

World market capitalization

What's troubling about this rapid progress is that the growth line has been steadily rising throughout 2017. Up to this point, global market capitalization had been like any other stock index: a series of gradual price increases over time, with a pronounced collapse during the 2008 financial crisis and subsequent economic recovery.

In 2017, the graph looked like a straight line moving upward without deviations.

In the medium term, either a protracted crisis or a sharp collapse is expected

International analyst Christian Müller-Glissmann and his colleagues at Goldman Sachs believe that the overall dominance of the bull market will soon end: “Average quantile valuations of stocks, bonds and loans are the highest since 1900,” they write, and this will lead to the two most likely scenarios: a protracted crisis or a sharp stock market crash, leading to a bear market.

In their analysis, they rely on a 60/40 investment portfolio, which means that 60% of the investment is in the S&P 500 Index and the remaining 40% in government bonds - a typical combination found in private pension funds, mutual funds, and also for a 401(k) retirement plan. In other words, these are the type of investments you're likely to rely on in retirement. Government bonds are commonly used as a security hedge because when stock prices fall, the bonds often retain their value.

“The current quantile estimate most closely matches the indicator of the late 20s, which ended with the Great Depression.”

This long rise since 2009—nearly 9 years—follows the same pattern that occurred just before the Great Depression of the early 20th century, and the Goldman Sachs team says:

“The favorable macroeconomic backdrop has boosted asset returns, leading to a broad-based bull market, both due to and despite the fact that inflation in the real economy has been negligible. As a result, relative to previous years, the value of all types of assets has increased, which leads to a decrease in the potential for profit and diversification, in addition, inflated values ​​increase the risk of drawdowns simply because the buffer that absorbs market shocks is reduced. The average quantile valuation for stocks, bonds and loans in the United States is 90%, an all-time high. While stocks and debt were more expensive in the tech bubble, bonds were comparatively attractive. The current quantile estimate most closely matches the indicator of the late 20s, which ended with the Great Depression.

This is what the historical perspective looks like: