we shouldn't forget about the huge gold derivatives market like gold futures, options, ETF's and whatnot, while Bitcoin's derivatives market is outright pathetic and unlikely to become very popular in the future.
I would never buy paper gold.
The entire investment thesis for gold is that your government may (effectively) devalue currency against gold in a financial crisis by trying to inflate away the debt.
Unless you're a multi-decade holder, the probability of this coming true is low, on a day to day basis, especially in the developed world. But when it does pay off, your gains are likely much better than standard investments like stocks, bonds, and deposits.
But that is the very time when your paper gold will be under the most stress and be most likely to default.
So, as I wrote before, buying gold is like playing a hand of poker where you invest in a small chance of hitting a big hand and winning a lot. But paper gold has a special clause that says, that is the very scenario where you can't collect!
And the same holds for Bitcoin. But I'm willing to bet that paper Bitcoin will take off -- it's early days yet and the authorities are being careful since this new market is so full of shady dealings.
To me this is in the 'sad but true' category. There is even less reason to buy paper Bitcoin than paper gold, since the safe storage and moving of Bitcoin is much easier, in addition to all the other, similar, issues. But, people will pile into them. The sad truth is that people almost seem to want to be taken by the elites, if not by swindlers as well.