Imagine having $100,000 to invest and your choice was one of the two. Buy gold or buy bitcoin? Now that is definitely an headache. Bare in mind a number of people have to deal with this problem as they sense that the world’s banking system is at risk and are thinking about alternatives. The fact of the matter is that gold and bitcoin, at the moment look very attractive to investors.
1) Gold has always been a store of value. In fact for thousands of years people used it to preserve their wealth.
2) Gold is indestructible, all gold from the ancient times to now, is available right now!
3) Gold is anonymous and easy to transport and carry. A gold kilobar easily fits in the pocket, and is worth about $40,000.
4) The markets expect gold to climb over the $1,400 mark by the end of the year.
5) Gold is risk free for the long term investor.
6) All investment funds recommend to investors at least 5% to 10% of their portfolio to be invested in gold.
7) Due to its stability gold can be used as a basis for pricing or long term contracts.
1) Gold is not easy to transact. You cannot send gold bars to someone’s bank account.
2) Gold is taxed.
1) Bitcoin can be subdivided and is easy to transact and use for short term contracts.
2) Bitcoin could offer high profits because its supply is over. There will be no more bitcoins mined anymore.
3) It looks as bitcoin is becoming the reserve currency for other cryptocurrencies such as Ethereum, Ripple, Litecoin, etc.
1) Bitcoin is unstable. It could be worth thousands of dollars now, and in a couple of months it could lose 80% of its value.
2) Many analysts argue bitcoin has peaked and the time for correction is approaching.
3) Governments will crackdown on bitcoin. Drug dealers, terrorists, and other groups are using bitcoin to finance their activities.
Many analysts argue for a consolidated approach based on gold with bitcoin serving as the means for small transactions. My opinion is for the investor to play it safe. Yes investors have poured hundreds of millions of dollars into the digital currency market this year alone, with the dollar value of the 20 biggest cryptocurrencies around $150 billion, according to data from Coinmarketcap.com.
At the moment bitcoin is close to $4,000. Now this is three times over an ounce of gold. And yes bitcoin could rise even higher. If we take a closer look at bitcoin, its price shot up 328% this year alone. To my mind this could be a sign to worry. If you wish to invest in bitcoins then my advice would be not to put all your eggs into one basket.
On the other side, gold’s prospects look good with the yellow metal set out to climb over the $1,400 before the end of the year. There could be a short term correction, but the fundamentals are all there for gold.