Weary Bitcoin Investors Chase Shiny New Object—Gold

Mr. Day and a number of his cryptocurrency compatriots have since turned to the asset favored by pharaohs, pirates and Scrooge McDuck, helping drive an outbreak of gold fever.

“For a long time, I kind of figured, ‘Oh gold and silver?’ That’s kind of the old guy-thing,” said Mr. Day, a 27-year-old college student in Kelowna, British Columbia. “Sure, I’m not necessarily going to get rich buying gold, but it will hold that money in uncertain times better than a lot of other things.”

Bruised by steep declines in a variety of cryptocurrencies, some investors who preached about crypto’s independence from banks and national currencies have diversified into gold.

Web searches for “crypto” and “gold” in the same query last year hit their highest levels since 2018, according to an analysis by Nick Martin of Hootsuite, social-media marketing platform based in Vancouver. Google searches for the phrase “how to buy gold” have hit their highest recorded level so far this month, according to Google Trends data going back about two decades.

The SPDR Gold Shares exchange-traded fund, the largest ETF backed by physical gold, has gained about 20% in the past six months. Sales of American Eagle gold coins in January hit the highest monthly tally in more than a year, running close to last year’s pace through the first quarter, according to the U.S. Mint.

Bitcoin has lost about half its value since late 2021, as well as much of its mystique. The collapse of cryptocurrency exchange FTX further crushed enthusiasm, along with the paychecks of such big-name promoters as Tom Brady, Kim Kardashian and Shaquille O’Neal. Crypto firms spent more than $70 million last year to air Super Bowl ads. This year, not a single one played.

Gold prices, by contrast, remained nearly flat last year, while stocks and bonds posted double-digit losses. In recent weeks, fears about turmoil in the banking sector have driven gold-futures prices above $2,000 a troy ounce for the first time in a year, near record highs.

Crypto, touted by fans as investing’s future, has a lot of ground to cover. The current market value of all cryptocurrencies stands at about $1.2 trillion, according to CoinMarketCap. As one of the world’s oldest assets, gold has a total estimated value at $14.5 trillion, according to data from the industry group World Gold Council estimating the amount of gold mined worldwide.

Gold was prized by ancient Egyptians and Incans. It lured European explorers to the New World and the original 49ers to California. The precious metal remains a staple in investors’ portfolios, prized for its stability and as a hedge against inflation. It also can be easily melted into bars or coins, a valuable benefit for criminals now that authorities have breached the anonymity of digital wallets.

Rob Saudelli, of Chilliwack, British Columbia, is among those diversifying away from digital holdings. His investments in a crypto mining firm increased 10-fold from late 2020 to early 2021. Since then, he has become disillusioned with cryptocurrencies, and tweets saying they will save the world and bring peace.

“I hope it comes true, but none of that is going to help my retirement account appreciate in value, as a lot of people found out the hard way, myself included,” said Mr. Saudelli, 56.

At the beginning of 2022, Mr. Saudelli’s portfolio contained about 10% bitcoin and Ethereum. Those holdings have since fallen to 5%. “People had a party, and they’re leaving now,” he said of the crypto boom.

Mr. Saudelli, like some others in the cyber crowd, say they are willing to trade the meteoric gains—and stomach-churning plunges—of cryptocurrencies for the relative stability of gold prices. His portfolio includes about 10% in gold and 14% in silver, he said.

Daniel Fisher, chief executive of a Physical Gold Ltd., a precious-metals dealer in London, said crypto’s decline and stock-market turbulence has kept him busy selling gold and silver coins in recent months. Many people think “I could keep this running and lose everything,” he said, “or I can start taking chips off the table.”

Luis Sousa started narrowing his cryptocurrency holdings to bitcoin in late 2021, he said, and began adding gold Britannia coins in early 2022. “Even in the worst possible time in the market, gold’s worst will be better than bitcoin’s worst,” said the 29-year-old veterinarian of Cardiff, Wales.

Mr. Day knows gold isn’t going to take him to the moon, echoing the lingo of traders who believe a particular cryptocurrency will skyrocket in value. He buys gold coins to preserve his wealth.

Bitcoin shares common qualities with gold: Both are mined. Neither is wallet-friendly. And they are virtually useless for buying gas, groceries or a movie ticket.

But gold has a distinct advantage compared with digital currencies. “It looks beautiful in and of itself,” Mr. Day said, “and you can densely hold wealth in your hands.”