Home Finance Could Bitcoin Replace Gold as the New Safe Haven? – Yahoo Finance

Could Bitcoin Replace Gold as the New Safe Haven? – Yahoo Finance

Could Bitcoin Replace Gold as the New Safe Haven? – Yahoo Finance

A growing number of people believe Bitcoin could soon replace gold as a safe haven against a depreciating dollar. This, of course, is just speculation, but it is curious to see the exuberance of people regarding Bitcoin.
Aside from the fact that there are a multitude of digital coins (assets), what’s unique about Bitcoin is the fact that its supply is truly fixed. Only 21 million bitcoins will ever be produced. So, considering there are an estimated 47 million millionaires in the world, if each of them wanted just one bitcoin, they couldn’t all acquire one. These supply limitations make Bitcoin bullish.
SEE MORE How Do I Spend My Bitcoin? (And Where?)
Gold on the other hand, has been a means of storing wealth for 5,000 years and is a real physical asset. It has always had value in times of geopolitical uncertainty and has many commercial uses. It is inert, making it for the ages, and with mining declining and demand on the rise, we can only assume that prices would increase.
Whether you lean digital or physical, at the core of the debate is a universal distrust of government, and rightfully so, in my opinion. We have seen governments spend and print money at levels so outside of the lanes of being responsible that all we can do is observe and wait to see what happens next.
It is maddening as we watch currencies around the world collapse and regimes fail, it only fuels the appetite for finding ways to store wealth outside of governments’ grips. You have to ask yourself, what is the tipping point?
When it comes to gold, we only need to look at history to know its viability, but aside from the historical price of gold, the historical events that influenced those prices are where our focus needs to be as we see things beginning to come full circle.
Gold has a very long history ,but we will pick up with the signing of the Federal Reserve Act in 1913. At the time, the country was facing a money supply shortage at the local bank level, and the idea of centralizing the banking system seemed the answer for controlling the elasticity of the money supply.
SEE MORE Why Are Bitcoin Prices So Volatile?
Then in 1934 the government was running short on money. So, to increase the supply at the Federal Reserve, they raised the spot price of gold by 69% to $35 per ounce. (It is important to note here that the dollar was backed by the gold standard at the time and in order to have more money, the price of gold would have to be higher.) It wasn’t the printing we see today, but it shows the government’s ability to manipulate the currency.
I wrote about something similar the Romans did in my book, Common Sense. Caesar Augustus trimmed the edges of the gold coins to harvest the gold in order to create a new set of coins. The result was a smaller coin with less gold but more coins to circulate. Well, we know how that turned out.
Jumping to 1964, we see the Dow Jones average was around 800, and 16 year later was still hovering around 800. The reasons for the flat line were many: the Vietnam War, a heavy tax burden, rampant inflation and the lingering possibilities of a nuclear war between the Soviet Union and the United States. The convergence of all these things was preventing the economy from improving, and the markets remained stagnant.
In 1971, the government found itself with yet another money supply shortage, and their answer was to rid themselves of the one thing holding them back: the gold standard. So, the government debased our currency from gold and converted it to a fiat currency. This allowed what we refer to today as the ability to print money without anything backing the stated value other than the government’s creditworthiness.
After this conversion to a fiat currency, gold began a steady climb in value as the dollar began depreciating, reaching an average price of $614 in 1980, up from $35 in less than a decade.
Then came the Economic Recovery Tax Act of 1981, which began an explosion of wealth that stretched through the 1990s. The act reduced taxes and regulations. Later in the decade came the fall of the communist Soviet Union, which sparked optimism about the future and provided relief from the prospects of a nuclear threat or communist takeover. With a more optimistic view of the economy, as demand shrank, we saw gold prices decline, bottoming out in 2001 at an average price of $271.
Then in the early 2000s we saw a shift back to a loss of confidence when a series of events turned the tides and resurfaced insecurities of the past. The tech bubble burst, the 9/11 terrorist attack, and the mortgage meltdown all occurred within an eight-year period. The government once again turned on the printing presses, and free money began to circulate in an unprecedented fashion and hasn’t really stopped since.
After the worst of 2008, the markets and our economy began clawing their way out of a gaping hole until the Tax Cut and Jobs Act of 2017. From 2017 though 2021 (including COVID in 2020) the markets rose by 56% as a result of the tax cuts and deregulation, allowing businesses to expand and hire more employees.
Fast forward to today, we see the government aggressively spending money, and if we look at other countries that have traveled the road we are on (not unlike the Romans), we see that it ends badly.
We must also be mindful of the fact that there is a serious rise in global tensions between China and the United States, and Russia and the United States that have an eerie resemblance to the Cold War.
I mentioned earlier that we were coming full circle. What we have learned through this history lesson is that the government’s appetite for spending money is insatiable and has proven to erode our currency to what end? This leaves the future of the markets, our currency and the future of our country uncertain as we venture deeper and deeper into unchartered waters.
Which brings me back to the question, will Bitcoin replace gold as the new safe haven? Lacking a crystal ball, I do know if this will happen, and neither does anyone else. Quite frankly, I am not even sure if this is the right question to ask, but it is a lingering question and one that cannot be answered without understanding the history of our currency.
With all this uncertainty around us, we are certainty seeing a flight to safety, but if you are a diversified investor, perhaps you should own both gold and Bitcoin instead of debating about which is better. By focusing on things you can control, such as your allocation, you can participate if there are gains and limit your exposure if something goes south. Hence, diversification.
Proponents believe that Bitcoin and its blockchain might very well rewire the entire global financial network based on the fact that bitcoin and blockchain, along with smart contracts and NFTs, are the most revolutionary technological innovations since the internet itself. With that, it is safe to consider that it stands alone as its own asset class separate from gold.
But if one is steadfast in comparing the digital asset to gold, you could say that Bitcoin is the more convenient of the two to own, being that it is accessible via the internet at any time. However, as a physical asset, gold can be held securely in hand free of internet outages or a hacking threat.
I will conclude with this: Gold has always been a storage of wealth, and Bitcoin may very well be that in the future but is too volatile to replace gold at this time. Instead look at Bitcoin as the technology of tomorrow, knowing that tomorrow is closer than you think.
One of the most important things to consider before buying gold, Bitcoin or other investments is knowing your risk tolerance. Many people are unsure about how to articulate their feelings about risk and will often resort to using ambiguous words to describe their tolerance. That doesn’t have to be the case for you. You can have a precise score to describe your risk tolerance for free by taking my risk score quiz here.
SEE MORE What Executives Can Learn from Odell Beckham Jr.’s Bitcoin Decision
Your Guide to Roth Conversions
The 22 Best Stocks to Buy for 2022
Amazon Raising Annual Fees for Amazon Prime Membership
We’re more than 6 weeks into 2022, and the market uncertainty that characterized January has, if anything, deepened. The sharp drops have turned instead to higher volatility, giving a chart of February’s trading a sawtooth look. The volatility comes as a series of headwinds continue to impact trading sentiment. Stealing the headlines is the Russia-Ukraine situation. Foreign policy pundits are openly speculating on the prospect of war, in the event that Russia invades its neighbor and the US obje
Cathie Wood’s flagship ARK Innovation ETF fund is down 30% year to date, and the Twitter consensus shows the CNBC interview didn’t inspire much confidence.
President Biden said late Friday that Putin has decided to invade Ukraine. Apple leads five stocks that don't suck.
Uncertainty and the impending Fed rate hikes clobbered shares again this past week. Time to buy the dip? Or stay on the sidelines?
General Motors is doing its big spring cleaning sooner than expected. The Detroit giant, which no doubt wants to avoid being distracted in the coming months when it delivers the Cadillac Lyriq — its competitor to Tesla's Model Y and Ford's Mustang Mach-E — has decided to empty his drawers right now. The automotive group has decided to disconnect this app, which allowed owners of GM vehicles (Chevrolet, GMC, Cadillac and Buick) to order and pay for goods and services while driving.
Shares of DraftKings (NASDAQ: DKNG) plunged 21.6% on Friday, after the fantasy sports and online betting company warned of larger losses in the coming year. DraftKings' revenue climbed 47% year over year to $473 million in the fourth quarter. DraftKings is also getting better at monetizing its customer relationships.
Here's the best way to play the pop in gold prices.
Europe could cut its dependence on Russia’s natural gas by looking to liquefied natural gas in the U.S., which has more gas in the ground than it can use domestically.
The market is turning sour on Roblox (NYSE: RBLX) stock. A darling of the pandemic, Roblox shares are down 47% year to date in 2022. Indeed, the company faces headwinds as economies reopen, but the market value has been cut in half while the negative impacts from reopening are nowhere near that magnitude.
(Bloomberg) — The Nasdaq Composite Index tumbled into an ominous “death cross” technical formation Friday for the first time since April 2020, when the pandemic battered the global economy and U.S. equity markets swooned.Most Read from BloombergBigger Than Wuhan, H.K. Outbreak Defies Covid Zero PlaybookBiden to Meet With Top Security Aides on Sunday: Ukraine UpdateEthereum Founder Buterin Says Crypto ‘Welcomes’ Another WinterRussian Media Reports Fire at Gas Pipeline: Ukraine UpdateFormer Model
Is SpaceX a victim of its own success? The stock price was at $560 per SpaceX share at the time. According to a report from CNBC, SpaceX is proposing to its privatel-held shareholders to split their shares in a 10-for-1 ratio.
My wealthiest clients pay themselves first by systematically putting money into savings with no intention of using it for day-to-day living. Let’s take a closer look at some of the strategies deployed by my millionaire clients that can help anyone improve their financial wellness in 2022. Whether it’s in stocks, bonds or exchange-traded funds (ETFs), my wealthiest clients are diligent and organized about investing.
Gold is often thought of as a hedge against inflation, but it’s really protection against chaos—and the deepening Russia-Ukraine crisis certainly counts as chaos.
Roku stock gets hammered after a brutal outlook. Here's a quick hot take.
Groups are reportedly preparing to file paperwork with the National Labor Relations Board (NLRB).
(Bloomberg) — In just a matter of weeks, $3.7 billion suddenly entered and then exited a BlackRock Inc. exchange-traded fund that barely had any day-to-day action over its 15 year life-span, leaving traders scratching their heads for clues as to what’s behind the move.Most Read from BloombergRussian Media Reports Fire at Gas Pipeline: Ukraine UpdateMorgan Stanley Relationships on Wall Street Snared in ProbeBigger Than Wuhan, H.K. Outbreak Defies Covid Zero PlaybookIndia Protests Against Singapo
Donald Trump's new social media venture, Truth Social, appears set to launch in Apple's App Store on Monday, according to posts from an executive on a test version viewed by Reuters, potentially marking the return of the former president to social media on the U.S. Presidents Day holiday. "We're currently set for release in the Apple App store for Monday Feb. 21," the executive responded. The launch would restore Trump's presence on social media more than a year after he was banned from Twitter Inc, Facebook and Alphabet Inc's YouTube following the Jan. 6, 2021, attack on the U.S. Capitol by his supporters, after he was accused of posting messages inciting violence.
Intel Corp's latest focus on making chips to meet rising demand will give Advanced Micro Devices Inc, its biggest rival in the server and PC market, a chance to build a greater foothold in the segment, analysts said. Intel, which plans large investments in chip technologies in the next four years, said on Thursday it expects revenue from its segment housing PCs to grow in low to mid single digits, and its datacenter and AI business to grow in high teens from 2023 through 2026. AMD's market cap briefly breached Intel's earlier this week when it closed its $50 billion Xilinx deal.
Finnish telecom giant Nokia unveiled a wide-ranging restructuring plan last year, resetting its cost base to invest in 5G as well as cloud and digital infrastructure.
Shares of Redfin (NASDAQ: RDFN) lost 20% of their value on Friday, following the release of the real estate company's fourth-quarter earnings report. Redfin continues to take share in the $43 trillion U.S. housing market, thanks to its proven ability to help its customers sell their homes faster and for higher prices. The rising popularity of its website and mobile apps — average monthly users rose 10% to 47 million in 2021 — resulted in houses on Redfin's platform selling roughly five days faster and for $1,600 more than comparable homes listed by rival brokerages.



Please enter your comment!
Please enter your name here