There has been a lot of talk about cryptocurrencies killing gold and sucking away a lot of the speculative money. Most of this, in my opinion, is completely false.Bitcoin did not kill gold. In fact, gold is not even dead!
Gold is up 9% in 2017, and last I checked, for a safe store of value and non-business investment, that’s not bad at all.
The precious metal role is not for speculation, it’s for insurance – it’s real money.
As for the commentary that Bitcoin is crushing gold’s luster, that’s absurd.
Look at the investors and institutions that are flooding into Bitcoin. I would bet that almost none of them have ever had any interest in gold.
For one thing, people under the age of 40 are the biggest retail buyers of the cryptocurrencies.
When I go to blockchain conferences, it’s all young people and entrepreneurs trying to change the world.
At gold conferences, it’s a sea of grey, white, and bald heads, and I don’t mean that in a negative way at all. My point is that it’s a completely different crowd.
Yes, there are libertarians who love gold and Bitcoin and were responsible for much of the early days of the cryptocurrency, but the people coming into the cryptocurrency space in 2017 are not gold bugs at all!
According to Deutsche Bank, 40% of cryptocurrency trading is denominated in Japanese yen, which isn’t exactly gold bugs flooding into the cryptos.
If anything, the cryptocurrency space is sucking money from the biotech space and the Dow Jones Industrial Average.
In my own life (which isn’t a scientific study, but I am sure many readers can relate), I’ve had neighbors, my gardener, and many friends ask me about Bitcoin this year, and I can guarantee you that if these people weren’t buying cryptocurrency, the alternative would NOT be gold.
It may be the Dow Jones, a marijuana stock, or some sort of micro-cap company, but the speculators entering the crypto space are not gold speculators – it’s nowhere on their radar.
As for the store of value that gold and Bitcoin offer, there is just no comparison.
Physical gold has a 5,000-year history and isn’t supposed to be exciting or revolutionary. It’s gold; it’s a safe haven asset.
Bitcoin is a new currency that has a revolutionary future. It’s very exciting because it can potentially free humanity from the death grip these bankers and governments have on their citizens.
In Puerto Rico, where the power doesn’t work right now, gold can be used as money, and holders of the metal can unlock the real value of having that type of asset.
In India, where the government is using capital controls to steal from its citizens, Bitcoin is allowing people to do peer-to-peer transactions without having to worry about their reserve bank diluting their currency on a daily basis.
I think gold investors that are depressed about gold have mistakenly tied Bitcoin to gold, as if Bitcoin is stealing gold’s rally. It isn’t.
Bitcoin is a tech play if you’re a speculator, which most in the West are when investing in the crypto space.
Our recommendation: own some gold and own some Bitcoin, but for completely different reasons and uses.