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Bitcoin vs Gold for Investment
BITCOIN DANGER?
With all the buzz about investing in the cryptocurrency Bitcoin, some long standing investors are cautioning against doing so, while others think it will be around longer than fiat currency. For example, Yale economist, Stephen Roach says, “ This is a dangerous speculative bubble by any shadow or stretch of the imagination. I’ve never seen a chart of a security where the price really has a vertical pattern to it. And bitcoin is the most vertical of any pattern I’ve ever seen in my career.”
However, the best selling author of “Rich Dad Poor Dad”, Robert Kiyosaki believes fiat money will lose its significance to precious metals and cryptocurrencies over the coming decades. Recently Kiyosaki said, “It’s really about what’s real. When I talk to people, I say, what do you think will be here in 2040? Will gold still be here? Well, it’s been here since eternity. Will the dollar be here? I don’t think so. Will blockchain be here, I think so. That’s really the way I look at the world of money and currencies is what’s going to be here in 22 years.”
And, as far as market crashes Kiyosaki also stated, “There are two kinds of bubbles, equity bubbles, and debt bubbles, and we’ve been in a debt bubble since 2004. When a debt bubble comes down, they come down in an avalanche.”
Kiyosaki is one of the few investors to be bullish on both Bitcoin and gold. Kiyosake beleives that gold attracts wealth, “If I want $10,000 a month, I hold $10,000 in gold; gold is an attractor and people need to understand that if you buy more gold, your income goes up,”
WHAT IS BITCOIN AND BLOCKCHAIN?
Wikipedia explains, “Bitcoin is a digital asset designed to work as a currency. It is called a cryptocurrency and is a worldwide payment system. Bitcoin is the first decentralized digital currency. The system works without a central bank or administrator. The network is peer-to-peer and translations take place between users directly, without an intermediary. “
“Blockchain is a public distributed ledger where Bitcoin transactions are recorded and verified by network nodes through the use of cryptography.”
CAN BITCOIN BE USED AS MONEY?
According to a report by Goldman Sachs there are many obstacles in cryptocurrency’s way to transform into viable real money. Zach Pandl of the foreign exchange and emerging markets strategy said that Bitcoin could succeed as a form of money “if it proves capable of facilitating transactions at a low cost and / or providing better risk-adjusted returns for portfolios. In practice, Bitcoin and other digital currencies face significant practical hurdles to wider adoption – including potential government regulation and excessive volatility.”
Pandl also wrote “Bitcoin (and cryptocurrencies more generally) may offer viable alternatives in countries and corners of the financial system where the traditional services of money are inadequately supplied.” However the report also indicated that it would be a challenge for Bitcoin to overcome the barrier posed by established currency systems.
Pandl also referred to Bitcoin’s extreme price volatility as being a major factor working against the cryptocurrency being accepted and used for larger monetary purposes. The report stated, “The recent fluctuations in Bitcoin and its relatives suggest they are much too volatile to serve as money. Volatility would likely need to come down dramatically (either naturally or through the widespread adoption of cryptocurrencies designed to better stabilize purchasing power via supply adjustments) before we see broader adoption.”
SOME BITCOIN OBSTACLES:
EXCESSIVE VOLATILITY
REGULATORY RISKS INCLUDING GOVERNMENT BANS
CRYPTO SPACE LACK OF ‘DEPTH’
SECURITY AND HACKING RISKS IN BLOCKCHAIN
GOLD FOR A GOLDEN FUTURE
Rob McEwen, CEO of McEwen Mining is optimistic about gold prices for 2018. He believes that the U.S. dollar is likely to weaken in later 2018 due to growing U.S. deficit concern builds. “Gold priced in U.S dollar terms is going to be the biggest factor for the mining sector in 2018. Gold priced in other major currencies are near their all-time highs, so I think it’s only a matter of time before we see a big run-up in gold against the U.S. dollar.”
McEwen also thinks that gold move higher will also be triggered by investors searching for value in an overvalued marketplace. “If you compared the Goldman Sachs Commodity Index to the S& P 500, commodity prices are at their lowest point since 1971, on a risk/reward basis, there is not much more left on the downside and lots of potential on the upside.”
McEwen believes people will start to question diversification into cheaper assets for protection “People are going to start asking themselves if they should start to take money out and put it into cheaper assets that will help them out during a correction. “
Frank Holmes, CEO and chief investment office for U.S. Global Investors has said the thinks the real currency model in the future is going to be Ethereum because it will be contracts and they settle every 10 seconds. He also thinks gold should be part of wise investors portfolios at this time for many good reasons including:
EXPLODING SOVEREIGN DEBT
DEEP CUTS TO GOLD EXPLORATION BUDGETS
BARGAIN PRICE OF GOLD COMPARED TO STOCKS
TRILLIONS IN GLOBAL BONDS RISK LOSS IN VALUE
CHINA AND INDIA’S CONTINUING GROWING CONSUMPTION OF GOLD
GOLD HAS BEATEN THE STOCK MARKET 2:1 THIS CENTURY
Neil Wilson, senior market analyst at London-based ETX Capital says, “ Gold remains the safe haven of choice for investors. Bitcoin would have to become considerably less volatile and, as such, a far better store of value for it to affect interest in gold. Bitcoin is also open to fraud and hacking, which makes it less than secure. Most investors don’t particularly want a decentralized, unregulated network to be their safe haven. They want something tangible and understood and that is gold.”
If you are considering adding gold to your portfolio for safety and diversification, call us today for your free gold consultation. We look forward to serving you:
THE GOLD IRA COMPANY 855-554-4853 www.thegoldiracompany.com