I agree. Cycles and asset bubbles are one of the consequences of playing with money supply in the system. As I said before, whenever fresh money is created, wealth gets transferred from savers to money producers. If you hold your savings in gold, part of your savings goes to gold miners every year. Is that bad for the savers and for the nation as a whole, as we are not gold producers? Yes.
But what other options do we have? We can keep our savings in fiat. But fiat is eventually backed by gold and USD reserves. And that is actually even worse, because fresh USD production is much more than gold production, as can be gauged from gold price gain in dollar terms after US abandoned gold standard. The producers change from gold miners to US government, but we still lose part of our savings, as individuals as well as nation, and in a much larger amount. Then isn’t it better to hold gold?
Holding an ETF is a good idea. But think about what an ideal market index ETF represents. It should be a fixed fraction of entire economy’s resources. So your purchasing power expands at the rate of economic growth, because you still hold the same fraction, but of larger economic supply. But isn’t that exactly what sound money (money whose quantity is fixed) gives? Since sound money has fixed supply, you own a constant fraction of right to consume economic produce. As economy grows and economic produce expands, you get to claim authority over larger amount of resources, though it is the same fraction of total.
Therefore if Bitcoin experiment succeeds, and it becomes the sound monetary unit of accounting for global economy, you no longer need a market ETF. You can get the market returns just by holding on to your bitcoin. One would invest only if they want market beating returns.
On a side note, value erosion from money production is in the ratio of fresh supply to existing supply. For platinum, the existing supply is smaller relative to gold, so even if platinum is harder to produce, the value erosion is higher and hence it is not a better store of value than gold.