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A question for the forum gold bugs. @Bill and @craig perhaps.  I can't find the gold thread so I'll just ask here.

 

What to you think about the possibility of gold being replaced as the safe haven asset?

 

Some, for example, talk about a cryptoasset like Bitcoin replacing gold as a store of value.  Since I last looked at the thread Bitcoin has outperformed gold by quite some distance.

 

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1 hour ago, ranger_syntax said:

A question for the forum gold bugs. @Bill and @craig perhaps.  I can't find the gold thread so I'll just ask here.

 

What to you think about the possibility of gold being replaced as the safe haven asset?

 

Some, for example, talk about a cryptoasset like Bitcoin replacing gold as a store of value.  Since I last looked at the thread Bitcoin has outperformed gold by quite some distance.

 

I have personally been looking at cryptocurrency in the last few weeks and have allocated a portion of my investable assets into them.  Will speak about that shortly.

 

You are completely correct in that crypto, bitcoin in particular, has drastically outperformed gold of late.  Gold will never go old as a wealth storage asset, but the question is whether or not it will remain THE asset of safe haven.  Proponents of gold are still talking about gold being the standard bearer and that crypto is merely a fad.  The crypto guys would contend that the proponents of gold are disparaging crypto because of fear.

 

What gold has currently that crypto doesnt is stability.  Gold goes up and down, sometimes in double digit %ages, but it is still both stable by comparison and also acts as a diversification against traditional stock market investing.  Bitcoin, for example, tanked by 16% on Saturday.  So crypto has massive volatility still.  So presently, gold would probably still be the better option as a diversification against traditional investment.

 

Everyone will have their own opinion on this - but I personally think that crypto has enormous potential to become the next big thing, properly big, like Amazon or Apple.  Bitcoin is really interesting to me - built on the blockchain where people mine it and solve algorithmic puzzles to add more blocks to the chain - but every 4 years bitcoin has what is known as a "halving event" whereby half of the blocks in circulation get halved - which lessens supply and increases demand.  I have read from both sides of the divide that bitcoin could go to zero (ouch for anyone in bitcoin) but have also read from bitcoin proponents that it could go as high as $3 million per bitcoin (which is a 60x multiplier from where it is).  The crypto market is currenty a $2 trillion market but there is lots of research that suggests it has the potential to be a greater than $100 trillion market.

 

There is also a lot of talk about the volatility of cryptocurrencies - as above, Bitcoin has seen its price crash by 85% before and it could do so again.  But Apple were nearly bankrupt, look where they are now.  Microsoft, Amazon etc have all seen their stock price tank by 75% in their past.  One of the reasons why cryptocurrency experts now believe that the days of 85% drop volatility might be over is because we are now starting to see mass adoption of cryptocurrency.  Elon Musk has invested $1.5 billion into Bitcoin (He has also heavily invested in Dogecoin), Mark Cuban has invested heavily in bitcoin too.  But probably even more interesting than that, to me at least, is that the hedge funds and the banks are now investing in cryptocurrency - there are a number of hedge funds, a number of banks, and a number of large corporations who now are putting cryptocurrency onto their balance sheets.  Bank of New York Mellon actually just changed their investment charter to allow them to add cryptocurrency to their balance sheet.  There is also a bitcoin ETF on the Toronto Stock Exchange, and Fidelity (an enormous investment firm) are building out a Bitcoin ETF that will go on the US Exchange too - there are actually a number of firms who are trying to get a Bitcoin ETF to market - and if they do that then you can expect bitcoin to go up in value as they will need to securitise bitcoin in order to satisfy collateral requirements.

 

What really interested me when I got into it was how this isnt just currency - I never really understood bitcoin even though I had a small investment in it since 2018 - it was just all too technical for me - now that I have spent a bit of time in it I am amazed at the capability - create a "bank2 transaction on crypto and it has gone instantaneously - but you also, instantaneously, can see exactly where it went to.  It is far, far more secure than a traditional bank account - though one of the drawbacks to it is that if you lose your private key phrase you are screwed because literally NOBODY has access to that, not even the "bank".  But the blockchain environment are looking at things such as "smart contracts" whereby you can buy insurance, conduct business contracts etc on blockchain - and it would be done fairly seemlessly and fairly swiftly by comparison to current methods.  And there are projects in the works to be able to collateralise your tangible assets (car, house etc) to take out loans in crypto currencies.  I find it fascinating - and I find it to be a very interesting, potentially very profitable market.

 

All that said.... crypto is a) still very volatile and b) very susceptible to scam artists. If you get into it you need to be very, very careful.  I am still learning  myself, but I am considering putting some more into crypto - with crypto, presently, never invest more than you can afford to lose - but that statement may start to erode over time as they hopefully find products and projects which make it less susceptible to nefarious players in the marketplace.

 

Gold is never a bad option for security - but crypto, in my humble opinion, does have the potential, though not guaranteed, to overtake gold as the standard bearer of safe haven - but you still need to be careful with which crypto currencies you decide to invest in.

 

Not financial advice - just me rambling and surmising :) 

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2 hours ago, ranger_syntax said:

What to you think about the possibility of gold being replaced as the safe haven asset?

I've really no idea but I doubt it. My interest in gold isn't a systemic one. For me it's just a commodity that from time to time reacts predictably in a general sense to certain economic situations and is therefore a decent occasional investment opportunity. I don't invest in gold because I think it's a safe haven but because other people do and its price reflects that perspective. Like all commodities, it's often difficult to know whether prices reflect genuine demand of whether supply is being manipulated to create of destroy demand. My own view is that hiding money under the bed is probably safer than relying on safe havens. The truly safe action is to invest in what is most likely to prosper in the circumstances that cause a flight to so-called safe havens like gold .... or leave it in cash under the bed.

 

Cryptocurrencies? I'm at a far too conservative stage of life to either want or need to look at that degree of volatility. 

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9 hours ago, craig said:

Elon Musk has invested $1.5 billion into Bitcoin (He has also heavily invested in Dogecoin),

Not sure if he has heavily invested in Dogecoin.

 

I recall him tweeting that he had purchased some for his child. 

 

Dogecoin is, to my eye, completely different from Bitcoin. Doge has an infinite supply for example.

Edited by ranger_syntax
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16 hours ago, ranger_syntax said:

Not sure if he has heavily invested in Dogecoin.

 

I recall him tweeting that he had purchased some for his child. 

 

Dogecoin is, to my eye, completely different from Bitcoin. Doge has an infinite supply for example.

Doge is shite.  It is not much more than a Memecoin.  He literally shot it up by 200% the other day just by making one singular tweet about it.  It has no use case.  Nothing supporting it.

 

Not conclusive evidence, but interesting nonetheless

 

"A recent cryptocurrency enthusiast revealed a Dogecoin wallet that holds around 37 Billion Dogecoins, with a worth of around USD 2.6 Billion. This wallet was seen recently purchasing EXACTLY 28.061971 Dogecoins repeatedly. Does this number seem familiar? Not to you maybe, but for Elon Musk, as this coincides EXACTLY to his date of birth, which is on June 28th, 1971."

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10 hours ago, craig said:

"A recent cryptocurrency enthusiast revealed a Dogecoin wallet that holds around 37 Billion Dogecoins, with a worth of around USD 2.6 Billion. This wallet was seen recently purchasing EXACTLY 28.061971 Dogecoins repeatedly. Does this number seem familiar? Not to you maybe, but for Elon Musk, as this coincides EXACTLY to his date of birth, which is on June 28th, 1971."

Amazing!

 

This is the first time I've seen this.

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On 23/04/2021 at 19:50, the gunslinger said:

isn't cryptocurrency just a huge pyramid scheme. 

You tell me.

 

What are the characteristics of a pyramid scheme?

 

Do other safe haven assets, like gold, share those characteristics?

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