As Bitcoin’s price breaks one record after the other, it currently trades at $46,520.10, we want to know whether the crypto’s price will continue along the same path and why bitcoin price will continue to rise?
Tesla Endorses and Invests in Bitcoin
Happy days for bitcoin are now as the crypto’s price continues to rise. Tesla’s announcement that it will invest $1,5 billion in bitcoins. In addition to that Tesla is willing to accept bitcoin as a form of payment for its products in the near future.
Tesla believes the $1,5 billion bitcoin investment will provide “more flexibility to further diversify and maximize returns on our cash” according to the company’s announcement on Monday.
Tesla’s announcement is not only good news for digital currency investors but it is also good news for gold investors as well. The electric car manufacturer said its updated investment policy includes investing in gold bullion and gold exchange-traded funds (ETFs). According to Tesla’s filing, the company’s new investment policy includes investing in alternative assets such as digital assets, gold bullion, gold exchange-traded funds, and other assets.
Tesla’s bitcoin investment is a fundamental reason for the investor to understand why bitcoin price will continue to rise.
After the Tesla announcement, Bitcoin saw a substantial rise in its value.
Tesla PayPal and Bitcoin
Tesla’s commitment to invest $1,5 billion in bitcoin and accept the crypto as a form of payment is a huge step forward similar to onboarding with PayPal in October.
Michael Novogratz the founder of Galaxy Digital sees bitcoin’s value skyrocketing to $100,000 by the end of the year.
When Elon Musk the richest and most powerful businessman in the world endorses bitcoin as a form of payment and at the same time puts his money on it then, more will follow.
Novogratz is certain there will be more corporations to follow Tesla. They will accept bitcoin as a form of payment for their products and at the same time, chances are they will also invest their reserve funds in bitcoin to deal with inflation and the falling dollar.
Bitcoin is on a roll. The small number of bitcoins mined every year and the increased demand is a positive sign for bitcoin’s future value. Furthermore, in three years’ time, bitcoin’s mining will be halved again. The public has embraced it, especially the younger people. It has become mainstream and more and more corporations accept it as means of payment.
So what to think? There are lots of very bullish projections for the bitcoin price in 2021. Tyler and Cameron Winklevoss, the creators of leading crypto exchange Gemini, are both adamant that bitcoin will eventually hit $500,000 while a Citigroup analyst suggests a price of $318,000 by December 2021.
I think the evidence explaining the reasons for bitcoin’s price increase is overwhelming. If you still have doubts here is more.
When something as big as Elon Musk endorses and invests in it then something is cooking. $1,5 billion dollars is a lot of money and the big sharks do not like to lose.
My opinion of bitcoin is that it is set to change global payments forever but we all must be careful and see it more as a currency that could help us with our everyday lives rather than an asset for investment. Bitcoin will become a stable asset when people start seeing it first as means of payment and then as an asset. Then it will become a stable digital currency with very small risks.
There is no doubt bitcoin becomes mainstream and, the companies who accept crypto as a form of payment increases every day so the people who use it for their everyday activities. The transformation has already started.
Ps. Latest unconfirmed reports indicate Apple is considering investing in bitcoins as well.
Investing in gold and coins could be a headache for the new investor. There are many ways to invest in gold but not all of them are recommended. In this article, I will present to you all ways of gold investing and I will explain why investing in physical gold is the best way to invest in gold and coins.
In today’s economic environment, it is crucial for the investor to have part of his/her portfolio invested in gold. In these troubled times, there should not be an investment portfolio that does not include gold.
Investing in Gold and Coins
Gold in the Past and Gold Now
In the past, humans used gold as a way to facilitate trade and to accumulate and store wealth. In particular, there was a gold standard policy where early paper currencies were generally backed by gold with every printed bill corresponding to an amount of gold held in a vault. This approach to paper money lasted well into the 20th century.
Nowadays the gold standard policy has been replaced by fiat money therefore, the link between gold and paper money has long been broken. Nonetheless, investors and central banks, still consider the yellow metal a paramount investment tool. For example, central banks still own huge amounts of gold.
Who Buys Gold?
It is not only investors who buy gold. In fact, 50% of gold demand comes from jewelry. People love to wear gold.
Another 40% comes from direct physical investment in gold bullion, gold bars, and coins, including all collectible numismatic gold coins, medals, and so on. Physical gold investors include central banks and individual investors. The Chinese and Russian central banks are some of many central banks who invested in physical gold recently.
Gold is considered to be a safe haven asset. Every time there has been political and economical instability, gold has been called upon to save the day. When a paper currency loses its value and global inflation starts rising, gold offers security and acts as a safe haven for the investor.
Last but not least, industrial demand for gold is on the increase, especially in technology. Computers have gold and so do mobile phones. Gold is also used in electrical appliances, medicine, and so on.
Reasons to invest in gold
To protect and preserve wealth from unexpected events.
A hedge when the stock market is not expected to do well.
The weak dollar
Loss of confidence in central banks
Geopolitical uncertainty (Middle East, Brexit, ISIS, North Korea, Hong Kong.)
The US-China trade war.
The covid-19 caused recession
Low or negative interest rates
Dot Com Crash2001
Stock Market Decline
Gold Price Results
Gold Outperformed Stocks By Ratio
Investing in Physical Gold
Gold Bullion Bars
Gold bullion bars are a popular way to invest in gold. They are available in various sizes, 12kg, 1kg, 100gr, 50gr, 10gr, 1gr, etc. Gold bullion bars must be certified for weight and purity. A serial number is attached to all certified gold bars for security purposes. Bars’ purity must be 99.5% (24 karats) at least, whereas there is a number of manufacturers producing bars at 99.9% purity. (24 karats too)
Gold bars can be sold easily at any given time. However, it is best to own smaller size bars rather than the 12 kg or 400-ounce bar. Imagine, owning a 400-ounce bar and wanting to sell it. It’s not easy to find an investor willing to fork out $650,000 overnight. If you want to liquidate 10% of it you can’t exactly saw off 10% and sell it. The best option is to own smaller size bullion gold bars, as most gold investors do. They offer much better liquidity.
Gold Bullion Bars Pros
High liquidity (small size bars)
Gold Bullion Bars Cons
Gold bullion coins is another popular way to invest in gold. Bullion coins are priced according to their fine weight plus a small premium, based on supply and demand, as opposed to numismatic gold coins, which are priced mainly by supply and demand, based on rarity and condition. If you are willing to invest strictly in gold, focus on widely circulated coins and leave the rare coins to collectors.
Bullion coins are mostly minted in smaller than one-ounce sizes, making them a more convenient way to invest in gold compared to larger bars. Reputable dealers can be found almost anywhere, even your local bank might be able to help you.
Gold Bullion Coins Pros
Gold Bullion Coins Cons
Gold ETF’s and Mutual Funds
Gold exchange-traded funds, (ETF’s) is an interesting way to invest directly in gold. Each share of these specialized tools represents a fixed amount of gold, such as one-quarter of an ounce. These funds can be purchased or sold like shares, in any brokerage. This is a simple and cost-effective way to invest in gold, especially for small investors. ETF funds hold gold bullion as their own asset therefore, you will not have to actually store your own bullion.
Mutual funds hold gold bullion and actually own gold companies. They are part of their own investment portfolios. Investors should be aware, only a few mutual funds focus solely on gold investing. Most of them own a number of other commodities, which have nothing to do with gold.
Gold ETF’s and Mutual Funds Pros
A simple way to own gold
Suited for small investors
Gold ETF’s and Mutual Funds Cons
No upside beyond gold price changes
If you believe that, because you possess a lot of gold jewelry, you own a small fortune, then you are wrong. In jewel manufacturing the amount of gold is small. The purity of gold is measured in carats. The purest amount of gold you can find is 24 carats. However, in jewelry 14 or 18 carats is common. Keep in mind, that a low amount of gold in jewelry does not mean that it is not good enough, as gold in its purest form (24 carats) could bend or deform quite easily.
From an investor’s point of view, jewelry will not reward you with high profits, as retail markups are up to 400% of gold’s value. However, bargains can be found at auctions or estate sales. This way you avoid the retail markup.
Gold Jewelry Pros
Gold jewelry makes you feel good
Gold Jewelry Cons
Mediocre gold investment
Investing in Paper Gold
Gold Futures and Options
Gold futures are contracts to buy or sell a particular amount of an item (gold) on a given date. Futures are traded in contracts, not shares, and represent a predetermined amount of gold. Some contracts settle in dollars, while other contracts may settle in gold. As a result, the investor has to be very careful. Futures are suited to the experienced investor.
Options are also another way to invest in gold. They give you the option to buy a futures contract, without having to pay the contract outright. Instead, you will have the option to buy the futures contract at a preset time frame and price. An option might reduce losses to the price paid but, a futures contract based on a margin might require more capital than originally invested, in case of losses mount quickly. Options are also suited to the experienced investor.
Gold Futures and Option Pros
Small upfront capital investment to control a large quantity of gold
Gold Futures and Options
Indirect gold exposure
Need to be a financial expert
Gold Mining Company Stocks
Another way to own gold indirectly is to invest in gold mining and refining companies. You can do that by purchasing their shares. If gold’s price rises, so will its profits and the value of your shares will follow. Simple as that. However, you have to be thorough and diligent when selecting which gold mining company is worth investing in.
Mines are commercial enterprises, with problems such as flooding, subsidence, structural failure, mismanagement, negative publicity, nationalization, theft, and corruption. Such factors can lower the share value of mining companies.
Gold Mining Stocks Pros
Usually, track the gold price
You may get dividends
Gold Mining Stocks Cons
Indirect gold exposure
Mine operating risks
Exposure to other commodities
What is the Best Way to Invest in Gold?
As you can see there are many ways to invest in gold. They all have their advantages and disadvantages. If you want to invest small, then gold ETF’s could be best for you. You can also invest in gold coins and keep them safe somewhere at home.
For those who are willing to invest a large amount of money into gold, the best will be to invest in bullion bars and coins. Direct gold ownership is best because it has the ability to track gold’s performance. Most investors feel better when owing a tangible asset stored at an independent private facility.
If you are an aggressive and experienced investor with direct access to the markets, the gold futures and options market could be best for you. Beware though, that the risk is high, and so are the profits and losses.
Mining stocks are also an interesting way to invest in gold. Jewelry though isn’t worth considering at all.
Investing in gold offers several benefits including portfolio diversification and protection from unexpected events. A prudent investor always includes gold in his portfolio, usually around 10%.
There is no one size fits all investment however, you are now armed with the knowledge of how the industry works, and all you need to do now, is to consider all the available options and make the decision that’s right for you.
During these troubled times, ordinary folks have seen their life savings decimated. It is imperative for an investor to diversify his/her IRA investment in order to protect it. A Self Directed gold IRA investment could safeguard and protect your savings.
What is gold bullion, and what are its characteristics? Bullion is gold bars, silver bars, or other bars, or ingots, of precious metals. The word bullion comes from the French Minister of finance Claude de Bullion. The value of the bullion is determined by the value of the precious metal content, which is defined by its purity and mass.
What is Gold Bullion-Definition
The specifications of bullion are regulated by market bodies or legislation. In the European Union, the minimum purity for gold bullion which is treated as investment gold with regard to taxation is 99,5% for gold bars and 90% for gold coins.
The price of gold bullion is influenced, by demand from companies who use gold to make jewelry, and other products, and by perceptions of the overall economy. For example, political, or financial instability, affects the price of gold bullion.