Investing is never a solitary endeavor for humans. Our decisions are shaped by psychological factors just as much as by hard data. As Tony Robbins points out, five fundamental forces drive human behavior: certainty, variety, significance, love and connection, and growth and contribution.
For investors, three of these forces are particularly impactful:
- Certainty – the desire to evade the pain of financial loss;
- Variety – the thrill of discovering something novel; and
- Significance – the drive to stand out or be associated with something remarkable.
These influences provide insight into why individuals interact with markets in diverse ways, leading some to consider alternatives such as gold and bitcoin.
Markets and Behavior
Eugene Fama’s Efficient Market Hypothesis (1970) suggests that assets trade at their fair value over time as buyers and sellers continually engage.
However, this theory relies on investors having varying perspectives – some viewing assets as undervalued, while others see them as overpriced.
When there are changes in prices, policies, or growth expectations, uncertainty emerges, prompting varied reactions.
Those in search of certainty often act quickly to reduce risk, whereas those drawn to variety might explore new avenues through alternative strategies. Investors motivated by significance may intentionally choose unconventional assets to set themselves apart, akin to early bitcoin adopters who gained recognition as pioneers when their investments thrived.
Gold: A Perennial Store of Value
Gold has served as a form of currency for ages, evolving into the gold standard and later backing national currencies. At the Bretton Woods Conference in 1944, gold still played a vital role, with the US dollar convertible at a rate of $35 per ounce. This changed in 1971 when President Richard Nixon terminated convertibility, ushering in the era of fiat currencies.
Unlike stocks, bonds, or real estate, gold does not generate cash flow and resists valuation through earnings, income yield, or net asset value. As Howard Marks of Oaktree Capital noted in 2010, assets without income, like gold, “are only worth what buyers are willing to pay for them.”
While demand for gold in jewelry enhances its value, most mined gold sits idle in vaults, making it difficult to determine whether current prices reflect fair value, a bargain, or a bubble.
Bitcoin: The Digital Challenger
Launched in 2009, bitcoin is often labeled a “cryptocurrency,” yet it struggles to meet the essential criteria of a currency.
The Reserve Bank of Australia identifies three main shortcomings:
- Limited Acceptance: A minimal number of businesses accept it as a form of payment;
- Volatile Value: Price fluctuations undermine its role as a reliable store of value; and
- Not a Unit of Account: Goods and services are not priced in bitcoin.
Research supports this assessment. Professor Maggie Chen from Cardiff University found that 85% of bitcoin transactions are executed by high-frequency trading algorithms instead of regular consumers purchasing goods. Thus, bitcoin functions less as currency and more as a speculative asset.
Similar to gold, bitcoin generates no cash flow, meaning its value ultimately hinges on what other investors are willing to pay.
Correlations and Contradictions
Historically, alternative assets were believed to behave independently of mainstream markets, providing diversification benefits. However, recent evidence challenges this view.
Alpine Macro (September 2025) observed that speculation influences both gold and bitcoin, with their price movements showing a near-perfect correlation (0.94). Both also closely track the S&P 500, with coefficients exceeding 0.9.
This undermines the notion that gold or bitcoin are reliable hedges against uncertainty; instead, their price behaviors increasingly reflect the broader market risk appetite.
Behavioral Drivers in Action
Why do investors persist in gravitating towards these assets?
This ties back to Robbins’s behavioral drivers:
- Certainty: Investors seeking certainty may hold back, viewing potential losses as daunting;
- Variety: Those drawn to variety embrace volatility as an exhilarating journey; and
- Significance: Individuals aspiring for significance view unique assets as a pathway to distinguish themselves – whether by investing in gold during uncertain times or embracing bitcoin’s outsider narrative.
Value or Illusion?
As Warren Buffett famously stated, “Price is what you pay; value is what you get.”
When it comes to gold and bitcoin, separating price from value is particularly challenging. Lacking predictable cash flows, neither asset provides an objective reference point.
For some, this uncertainty renders them uninvestable. For others, it is precisely the reason to engage.
Ultimately, whether gold or bitcoin is a prudent addition to a portfolio depends less on models or metrics, and more on an investor’s tolerance for uncertainty, craving for excitement, and yearning for significance.
These motivations highlight that investing is anything but purely rational. It is as much about psychology as it is about returns.
Beyond the Luster: What Truly Influences the Decision
Markets will inevitably allure us with shiny assets. Yet, the decision to pursue them is guided not only by performance but also by our behavioral drivers.
For those desiring certainty, traditional investments may remain the most attractive.
For those seeking variety or significance, the allure of gold or bitcoin persists, regardless of their intrinsic value.
References
Efficient Capital Markets: A Review of Theory and Empirical Work; Eugene Fama; Journal of Finance, Vol 25, May 1970.
Discover the 6 Human Needs; tonyrobbins.com/blog. All that Glitters; Howard Marks; Oaktree Capital; December 2010.
The Calculus of Value; Howard Marks; Oaktree Capital; August 2025.
Chris Jordan is a client relationship manager at Sasfin Wealth.
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