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Horizontal row of silver coins and gold coins.Getty
As the US budget situation continues to deteriorate as foreign countries contract their purchases of US Treasury securities, many investors are rightly worried about where they can go. hide from a possible decline in the value of the dollar. seeking to invest in a reliable "store of value".
A store of value is an badet that can be stored and retrieved reliably at a later date, while preserving its purchasing power. Some investors looking for this protection prefer gold and others bitcoin. Some even prefer gold and bitcoin.
Unlike the stock market, bonds and real estate, gold and bitcoins share several common features. Neither generates any income. Both are perceived as being limited in number. Both are bought by investors worried about the depreciation of fiduciary currencies. But as a store of value, gold is much more likely to be the best-performing option over the next five to ten years for the following reasons:
- propertiesGold is tangible, transportable and can be bought or sold anonymously. As a precious metal, gold has unique properties due to its scarcity, durability, fungibility, beauty, corrosion resistance, divisibility, and malleability. Gold is easy to hide and store in any place and is a very liquid badet. The threat of gold theft is certainly a risk, but losing gold is difficult, and it is impossible to lose gold against a hacker. Unlike gold, bitcoin is not tangible and, for this reason, it can be sent worldwide transparently and cheaply. It can be bought or sold anonymously via decentralized transactions that do not require any intermediaries. Like gold, bitcoin is also fungible and divisible. However, it is possible to lose your bitcoin by losing the private key of a bitcoin storage address. Hackers can also steal bitcoins, especially if they are stored in an exchange. Indeed, there are epic stories in which bitcoin owners have lost millions of dollars in bitcoin because of inability, hackers or both. & Nbsp; Most recently, Gerald Cotten, CEO of QuadrigaCX, died with the pbadwords of 115,000 investors worth an estimated $ 140 million in cryptocurrency.
- Limited supply: The gold offer is limited, which reinforces its role as a store of value. The global gold supply is increasing by about 1.5% each year. The unique properties of gold, mentioned above, make gold a store of value superior to that of other precious metals such as silver, palladium and platinum. Gold has become the winner win store after thousands of years of competition with other currencies. There is a futures market for gold, which increases the gold supply in paper, but futures contracts can be settled with physical gold, which limits the gold price. Influence of the futures market on the price of physical gold in the long run. The increase in the supply of Bitcoin is also limited, in theory, but bitcoin can be "transformed" by unsatisfied Bitcoin developers. A fork is a point of divergence in the blockchain and, in the extreme, can result in the permanent split of a currency in two. Until now, bitcoin has spawned several children, including money and gold, and other activities could take place in the future. In addition to the possibility of a series of future forks for Bitcoin, a seemingly endless number of new crypto-currencies has been launched in recent years, one of which could eventually replace bitcoin as investors' favorite cryptocurrency. Unlike gold, bitcoin has not suffered thousands of years of competition with other crypto-currencies. Finally, a cash-settled futures market for bitcoin has been launched, which means that an unlimited supply of fiat bitcoin can be created by futures market participants.
- History and stability: Gold has been used as a store of value for thousands of years. Since the Roman era, the power of buying gold is stable enough that one can always use an ounce of gold to buy a good suit. Although the definition of "good party" can be debated, the idea behind this adage is that the purchasing power of gold has remained constant over a long period. Except for the discovery of a huge deposit on Mars, the purchasing power of gold should not change significantly. Meanwhile, bitcoin investors are investing for the most part in technological upheavals. Bitcoin investors hope to make fantastic profits, hoping that they will replace gold and the US dollar as the world's largest monetary badet. If the Bitcoin bulls are correct, Bitcoin will generate fantastic returns. However, this investment thesis makes bitcoin a speculative badet rather than a store of value. That's why the price of bitcoin has risen by 1,331% in 2017, before falling by 72% in 2018. Although bitcoin can be a profitable investment in the long term, the price of bitcoin is too volatile to constitute a reliable store of value.
- Official& nbsp; Assistance: Central banks and governments around the world possess gold as a reserve badet. In addition, since the financial crisis, central banks and governments have been buying more gold to diversify their foreign exchange reserves and reduce their reliance on the US dollar as a reserve badet. Gold purchases by central banks have recently accelerated, suggesting that the use of gold as a settlement badet between countries is expected to increase in the coming years. If central banks buy gold because they believe it can be a store of value, why should investors act differently? Meanwhile, central banks and governments have no bitcoin or other decentralized cryptocurrency. Indeed, the Bull Bitcoin case badumes that the use of Bitcoin will destroy central banks and the banking system. Bitcoin working perfectly without any central authority, even the IMF has acknowledged that cryptographic badets represent a potential threat to the central bank's currency. In response, central banks have considered introducing bank-issued cryptocurrencies, such as FedCoin. It seems impossible for central banks to buy or hold cryptocurrency that they would not issue or control on their own.
Although bitcoin may be an attractive opportunity for some investors, it should not be considered a valuable reserve of value in your portfolio. & Nbsp; With bitcoin, you should only invest what you are willing to lose if the price of bitcoin should reach zero. If bitcoin fails to override gold as a store of value, bitcoin will probably have no value, if any. This warning alone prevents bitcoin from being considered a store of value.
Meanwhile, gold does not seem to be going anywhere at the moment, except in the coffers of foreign central banks. As the US dollar may depreciate in the next five to ten years, the price of gold denominated in dollars would likely appreciate accordingly. For many reasons, gold deserves a place as a reliable and valuable reserve of value in most people's investment portfolio.
Disclosure: & nbsp; This article is provided for informational purposes only and is not in any way a recommendation to buy or sell a title. Adam Strauss owns & nbsp; gold trusts in some of its funds. & Nbsp; The opinions are those of & nbsp; Adam Strauss on the date of publication and are subject to change and disclaimers of Pekin Hardy Strauss Wealth Management and Appleseed Capital.
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Horizontal row of silver coins and gold coins.Getty
As the US budget situation continues to deteriorate as foreign countries contract their purchases of US Treasury securities, many investors are rightly worried about where they can go. hide from a possible decline in the value of the dollar. seeking to invest in a reliable "store of value".
A store of value is an badet that can be stored and retrieved reliably at a later date, while preserving its purchasing power. Some investors looking for this protection prefer gold and others bitcoin. Some even prefer gold and bitcoin.
Unlike the stock market, bonds and real estate, gold and bitcoins share several common features. Neither generates any income. Both are perceived as being limited in number. Both are bought by investors worried about the depreciation of fiduciary currencies. But as a store of value, gold is much more likely to be the best-performing option over the next five to ten years for the following reasons:
- propertiesGold is tangible, transportable and can be bought or sold anonymously. As a precious metal, gold has unique properties due to its scarcity, durability, fungibility, beauty, corrosion resistance, divisibility, and malleability. Gold is easy to hide and store in any place and is a very liquid badet. The threat of gold theft is certainly a risk, but losing gold is difficult, and it is impossible to lose gold against a hacker. Unlike gold, bitcoin is not tangible and, for this reason, it can be sent worldwide transparently and cheaply. It can be bought or sold anonymously via decentralized transactions that do not require any intermediaries. Like gold, bitcoin is also fungible and divisible. However, it is possible to lose your bitcoin by losing the private key of a bitcoin storage address. Hackers can also steal bitcoins, especially if they are stored in an exchange. Indeed, there are epic stories in which bitcoin owners have lost millions of dollars in bitcoin because of nonsense, hackers or both. Recently, Gerald Cotten, CEO of QuadrigaCX, died with the pbadwords of 115,000 investors worth an estimated $ 140 million in cryptocurrency.
- Limited supply: The gold offer is limited, which reinforces its role as a store of value. The global gold supply is increasing by about 1.5% each year. The unique properties of gold, mentioned above, make gold a store of value superior to that of other precious metals such as silver, palladium and platinum. Gold has become the winner win store after thousands of years of competition with other currencies. There is a futures market for gold, which increases the gold supply in paper, but futures contracts can be settled with physical gold, which limits the gold price. Influence of the futures market on the price of physical gold in the long run. The increase in the supply of Bitcoin is also limited, in theory, but bitcoin can be "transformed" by unsatisfied Bitcoin developers. A fork is a point of divergence in the blockchain and, in the extreme, can result in the permanent split of a currency in two. Until now, bitcoin has spawned several children, including money and gold, and other activities could take place in the future. In addition to the possibility of a series of future forks for Bitcoin, a seemingly endless number of new crypto-currencies has been launched in recent years, one of which could eventually replace bitcoin as investors' favorite cryptocurrency. Unlike gold, bitcoin has not suffered thousands of years of competition with other crypto-currencies. Finally, a cash-settled futures market for bitcoin has been launched, which means that an unlimited supply of fiat bitcoin can be created by futures market participants.
- History and stability: Gold has been used as a store of value for thousands of years. Since the Roman era, the power of buying gold is stable enough that one can always use an ounce of gold to buy a good suit. Although the definition of "good party" can be debated, the idea behind this adage is that the purchasing power of gold has remained constant over a long period. Except for the discovery of a huge deposit on Mars, the purchasing power of gold should not change significantly. Meanwhile, bitcoin investors are investing for the most part in technological upheavals. Bitcoin investors hope to make fantastic profits, hoping that they will replace gold and the US dollar as the world's largest monetary badet. If the Bitcoin bulls are correct, Bitcoin will generate fantastic returns. However, this investment thesis makes bitcoin a speculative badet rather than a store of value. That's why the price of bitcoin has risen by 1,331% in 2017, before falling by 72% in 2018. Although bitcoin can be a profitable investment In the long term, the price of bitcoin is too volatile to constitute a reserve of reliable value.
- Official Support: Central banks and governments around the world possess gold as a reserve badet. In addition, since the financial crisis, central banks and governments have been buying more gold to diversify their foreign exchange reserves and reduce their reliance on the US dollar as a reserve badet. Gold purchases by central banks have recently accelerated, suggesting that the use of gold as a settlement badet between countries is expected to increase in the coming years. If central banks buy gold because they believe it can be a store of value, why should investors act differently? Meanwhile, central banks and governments have no bitcoin or other decentralized cryptocurrency. Indeed, the Bull Bitcoin case badumes that the use of Bitcoin will destroy central banks and the banking system. Because Bitcoin works perfectly without any central authority, even the IMF has recognized that cryptographic badets represent a potential threat to the central bank's currency. In response, central banks have planned to introduce cryptocurrencies issued by central banks, such as FedCoin. It seems impossible for central banks to buy or hold cryptocurrency that they would not issue or control on their own.
Although bitcoin may be an attractive opportunity for some investors, it should not be considered a valuable reserve of value in your portfolio. With bitcoin, you should only invest what you are willing to lose if the price of bitcoin should reach zero. If bitcoin fails to override gold as a store of value, bitcoin will probably have no value, if any. This warning alone prevents bitcoin from being considered a store of value.
Meanwhile, gold does not seem to be going anywhere at the moment, except in the coffers of foreign central banks. As the US dollar may depreciate in the next five to ten years, the price of gold denominated in dollars would likely appreciate accordingly. For many reasons, gold deserves a reliable and valuable reserve position in the investment portfolio of most people.
Disclosure: This article is for informational purposes only and does not constitute a recommendation to buy or sell a title. Adam Strauss has gold trusts in some of his funds. The opinions are those of Adam Strauss as of the date of publication and are subject to change and disclaimers of Pekin Hardy Strauss Wealth Management and Appleseed Capital.
