Gold Against Cryptocurrencies: Why You Don’t Have to Choose
Gold has been taking a back seat for some investors who have gravitated toward acquiring cryptocurrencies. Goldman Sachs doesn’t believe investors should abandon gold as a store of value, as it’s proven for thousands of years it’s the best at protecting assets.
Proponents of cryptocurrencies on the other hand, note that the coins have acted in similar ways as gold in regard to scarcity, and Bitcoin and others have responded to geopolitical events in a similar way as gold has.
Having said that, it’s not really accurate to compare the two as if they’re of the same asset class, even though there are some similarities between them.
Goldman pointed out that cryptos are very volatile and are easy to hack.
On the volatile side of the issue, that’s really not that much different than gold in general, as it has moved up and down in response to inflation and decisions by the Federal Reserve for years. It will continue to do so.
Of course at this stage of development, cryptocurrencies make a much wider swing than gold does, but the underlying principles are still there.
As for faith in gold versus cryptocurrencies, and then including the U.S. dollar, which the world continues to trust, even though it has lost about 97 percent of its purchasing power since 1913.
When you come right down to it, the imputation of value to gold, cryptocurrencies, and the U.S. dollar, is something people do. And if they trust in it, they’ll embrace it for what its purpose is.
Digging deeper into the blockchain and bitcoin: Mastering Bitcoin: Programming the Open Blockchain
You can talk about store of value with gold, but you also have to look at the upside potential of the quality cryptocurrencies, which will create generational outcomes for many people.
I’m not saying you should invest in cryptocurrencies at this time, because there are over a 1,000 of them now, and most of them are worthless or scams. Bitcoin still has a long way to run, and Ethereum is solid as well.
Essentially, what you want to do when analyzing cryptocurrencies is look at whether or not they provide an answer to a specific problem, and look into whether or not the underlying code is vulnerable to being hacked.
Gold will be the best store of value and protection for generational wealth for some time, and quality cryptocurrencies will produce a lot of wealth for those that get into them.
Look at smaller gold coins: 2017 1/10 oz Gold American Eagle BU Gold Brilliant Uncirculated
Don’t go rushing off and buy some crypto because you think it’s passing by you. We’re in the early innings of the asset class, and it’s just getting going.
As for being hacked, I’m not aware of those that maintain personal control of their keys even having been hacked. Those that give up control to exchanges could lose everything, which is why you should only keep your key in a cold wallet, meaning something that isn’t connected to the Internet; such as writing it down on a piece of paper.
If you’re interested in investing in cryptocurrencies at this time, a good option is Overstock (OSTK), which has been one of the early investors in the sector, and has been doing well lately, and should continue to.
The best way to take positions in it is to wait until it pulls back and then buy up some shares. It’ll be volatile because investors are taking positions based primarily on its investment in cryptos, rather than its small e-commerce business.
The sector also prefers using Nvidias’ chips in it because of their speed, but since the company has other divisions as well, you don’t get the type of exposure you do with Overstock.
There are some new publicly traded companies that are starting to attract interest, but I really don’t want to talk about them because you need to know the market some, and understand the blockchain enough to make an informed investing decision.
I’m invested in them, and I’ll let you know about them if you’re interested. Let me know in the comments.
As for gold, it’s not going anywhere, and it will, for now, remain the best store of value the market has to offer.
The best way to tackle this in my view is to be invested in both sectors. You can protect your assets while having the potential for enormous gains.