ron paul and bitcoins

One of the more prominent voices in precious metals has begun commenting on Bitcoin recently. Dr. Ron Paul, former congressman from Texas and outspoken critic of the post-Bretton Woods monetary system, had much to say about Bitcoin. 1

Twitter Poll

On December 5, Dr. Paul conducted a Twitter poll asking what form of investment people would choose for a $10,000 gift if they had to set it aside for 10 years. Bitcoin came in first with 54 percent versus gold at 36 percent, with Treasury bonds and Federal Reserve notes bringing up the rear.

Dr. Paul expressed his surprise at the fact that Bitcoin topped gold in the survey, a fact he discussed on his online video blog “Ron Paul’s Liberty Report.” (video embedded below) He showed a chart demonstrating how Bitcoin prices took 1,789 days to go from $0 to $1,000 and then each subsequent $1,000 mark took incrementally less time until recently going from $18,000 to $19,000 in three minutes. The good doctor pointed out how this was a strong indication of overvalue and a need for a correction, and contrasted the Bitcoin bubble with the long history of value in gold. Essentially, Dr. Paul feels that loose monetary policy has created too much cash looking for a home, thus artificially driving up demand for Bitcoin.

Bitcoin vs. Dollar

On December 20, Dr. Paul went on CNBC to discuss a Bitcoin challenge to dollar hegemony. He said that the comparison to Dutch tulip mania was insufficient as current Bitcoin prices are more inflated than were tulip bulbs, and that the Bitcoin bubble was a ‘reflection of the disaster of the monetary dollar system.’ He stated that quantitative easing and loose monetary policy had driven this bubble but that Bitcoin would not be in a position to challenge the dollar anytime soon.

Gold Rally

Dr. Paul believes we are in the early stages of a bull market in gold. He lived through the bull markets of 1971 ($75 to $800) and 2000 ($270 to $1,800), and now he sees many of the same signs. As for Bitcoin, he closed out his Liberty Report by saying that with Bitcoin, people are having a lot of fun right now but ‘unfortunately, in events like this, a lot of people end up getting hurt, and then it’s not quite as much fun.’