More Gold, Less Bitcoin! Uganda’s Treasure Discovery is the Proof

If Uganda is sitting on 31 million metric tons of gold ore, might not that substantially boost the world's gold supply

These are fraught times for the cryptocurrency and blockchain sector, so it isn't surprising that industry proponents might seize upon any promising news to help charge flagging markets. A Reuters report out of Uganda last week about a massive gold ore discovery supplied just this kind of fuel.

Bitcoin has periodically laid claim to being digital gold largely on the strength of its strict 21 million supply limit, which makes it non-inflationary and a good store of value — in theory. Gold, of course, is the store of value par excellence, with a limited supply and a solid track record that goes back millennia. But, if Uganda is sitting on 31 million metric tons of gold ore, as the government declared, might not that substantially boost the world's gold supply? That in turn could lower the price of gold — and make it a less secure "store of value" generally. Gold's loss could be the cryptocurrency's gain.

But, perhaps there is less here than meets the eye. The 320,158 metric tons of refined gold that the Ugandan mining ministry spokesman said could be produced from the new deposits in the country's northeastern corner would far exceed the 200,000 metric tons of above-ground gold that exist in the entire world today. One gold mining trade publication went so far as to suggest the Ugandan government may have been confusing metric tons with ounces in its projections. The World Gold Council was asked for comment about the Uganda discovery and the plausibility of its numbers. The Council doesn't typically comment on media reports of gold discoveries, a spokesperson told Cointelegraph, but added: "In the absence of formal ore reserve/resource declarations, we would not expect these 'discoveries' to contribute materially to mine supply in the foreseeable future."

But, to the larger issue, Saylor may have a point. The fact is that more gold can always be mined, whether in Uganda or somewhere else, especially with advances in surveying and mining technologies, including aerial exploration. And, if so, doesn't this make Bitcoin, with its strict 21 million BTC limit, look non-inflationary by comparison — and a potentially better store of value?

Garrick Hileman, head of research at Blockchain.com, told Cointelegraph: "The Ugandan find underscores why the approximately 200 million holders of Bitcoin believe that 'digital gold' — Bitcoin — is superior to the actual gold in terms of its scarcity and reliability as a store of value in the decades to come." As was the case with other major gold discoveries in history, like the 19th century South African gold rush, the introduction of this much new gold — or even just growing awareness of the Ugandan find — "could have significant negative price implications for gold over the coming years," Hileman said.

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