The ongoing conflict between Israel and Hamas, which began three weeks ago, has stirred significant turbulence in financial markets. During such geopolitical tensions, assets like gold and Bitcoin often come into focus as potential safe havens.
Gold’s resurgence
At the outset of the Israel-Hamas conflict, the price of gold was languishing at around $1,830 per ounce. The precious metal had experienced a decline of 7% in just two weeks, erasing its yearly gains. However, as political uncertainty began to grip the market, gold embarked on a remarkable rally. It swiftly reclaimed the $1,900 mark and continued its ascent, eventually surpassing the coveted $2,000 milestone late on a Friday night. In total, gold has surged by approximately 10% since October 6.
Bitcoin’s rollercoaster ride
Bitcoin’s performance during this period has mirrored that of gold to some extent, although there are speculations that its surge may be linked to the possibility of a Bitcoin exchange-traded fund (ETF) being approved in the United States. Nevertheless, such a product has not yet materialized.
When the conflict commenced, Bitcoin’s price hovered around $28,000 per coin. Initially, it dipped to sub-$27,000 levels. However, it quickly gained traction, occasionally influenced by fake news reports. The most substantial surge occurred on a Monday and Tuesday when Bitcoin skyrocketed by several thousand dollars within hours, reaching a 17-month high at over $35,000 per coin.
Despite some subsequent price corrections, Bitcoin currently trades above $34,000, representing a remarkable three-week gain of 23%.
ChatGPT’s insights
In an attempt to gain insights into the future performance of Bitcoin and gold amid the ongoing Israel-Hamas war, we consulted ChatGPT. However, the AI chatbot declined to provide a direct answer. Instead, it emphasized that both assets can be influenced by a “wide range of factors, including political events, economic conditions, investor sentiment, and more.”
Furthermore, ChatGPT stressed that every investment tool carries inherent risks. While gold has a long history of serving as a hedge against inflation and political uncertainty, it cautioned against forecasting future performance solely based on past movements.
Regarding whether Bitcoin or gold is the superior safe haven asset, ChatGPT offered the following perspective:
“Gold has a proven track record of being a reliable hedge against inflation. It tends to maintain its value over long periods, even in times of high inflation.
Bitcoin is often referred to as ‘digital gold’ and is considered by some as a potential hedge against inflation due to its limited supply and the belief that it could act as a store of value in the digital age. However, it’s important to note that Bitcoin’s relatively short history, compared to gold, means it hasn’t yet been tested through multiple economic cycles.”
As the Israel-Hamas conflict unfolds, both gold and Bitcoin have exhibited notable price increases, attracting the attention of investors seeking safe havens. While their recent performances have been somewhat similar, it remains uncertain how they will fare in the coming weeks.
Gold’s historical role as a hedge against inflation and political uncertainty is well-established, providing a sense of security to many investors. On the other hand, Bitcoin’s potential as a digital store of value and hedge against inflation is still evolving, given its relatively short existence.
In times of geopolitical turmoil, diversifying one’s portfolio and carefully assessing risk factors remain prudent strategies. As ChatGPT wisely emphasized, predicting the future performance of these assets during the Israel-Hamas conflict involves considering a multitude of variables, making it essential for investors to exercise caution and conduct thorough research before making investment decisions.
