Who Will Win the Battle Between Crypto and Gold?
There’s been a lot of chatter lately about the demise of gold and the emergence of cryptocurrency as the new store of value. To better understand the argument or assertion, you first have to understand what these assets are storing value against.
The answer is…
Similar to the U.S. dollar, the euro, the yen, etc., fiat currencies are backed by nothing more than the full faith and credit of the governments that issue them. In other words, their supply could be unlimited and hence will all head toward zero in value at some point. But zero against what?
That answer is a little more complicated.
They’re compared with hard assets like real estate, timber, collector cars, diamonds, gold, silver and now crypto, just to mention a few. Hard assets have some type of finite value. There is only so much gold or crypto.
I don’t see this as a competition between crypto and gold – not yet anyway. Each has its utility, but they are very dissimilar.
Crypto, like Bitcoin, is subject to vagaries, such as a cloak of secrecy, massive volatility (which makes it hard to use as a currency unless it can immediately be converted to “paper money”), acceptance, social mores, government regulation, cybercrime and of course, the internet crashing. It requires a lot of faith. But it also provides something “rarer” than gold, which can be a reason for an increase in value. This means that crypto can be a great way to make money trading.
Gold, on the other hand, has a longer history and thousands of years of being a currency substitute and a store of value. It doesn’t need the internet to operate… but it’s a heck of a lot heavier. Central banks own thousands of tons of gold and are buying more. It costs more to get gold out of the ground today, and bigger, more productive mines are much harder to come by.
One of the major advantages of gold is not as easily measured. It has huge cultural value in regions of the world like Asia, where it’s considered both a store of value and important jewelry. It’s tough to give someone a Bitcoin necklace as part of their wedding gift!
There is definitely a place for gold and Bitcoin in your portfolio, but don’t mistake them as competitors. Each has a set of customers that can coexist.
Action Plan: We trade gold stocks in The War Room all the time, and our track record is outstanding, with a success rate topping 90%! We’ll trade crypto too as soon as a real market for it (long and short) is developed. Join me in The War Room today and be a part of that trading success in real time!