Slowly but steadily, gold is reaching new heights and breaking key resistance points. A number of key factors are playing into the strong market for gold: a stock market that no longer looks invincible, rising inflation, and the ebbing obsession over Bitcoin. In fact, it looks like gold is taking back its place as the safe haven asset of choice for a jittery market.
Not that long ago, it seemed like the goal of Bitcoin fanatics was to see the cryptocurrency replace the king of precious metals as investors’ hedge of choice. Today it looks like a whole lot of bluster from the tech-obsessed crowd without much in the way of economics backing it up.
Why Bitcoin Blew It
Part of Bitcoin’s trouble is that it proved too much of a risk to play a real defensive role in any investment strategy. Any asset that’s made headlines for losing 16 percent overnight and 60 percent in a matter of months is not going to play a major role in any investment strategy that’s geared toward minimizing risk. With no predictability, no stability, and very little history to base patterns on, Bitcoin is still too much of an unknown factor and a wild card to become a sensible defensive move. Unfortunately for Bitcoin, which has many advocates claiming it will replace gold, the alternative asset class where crypto-currencies are seeking their niche is inherently defensive.
The second factor against Bitcoin is that it never achieved the kind of widespread acceptance as a currency that would make it a real alternative currency to the USD. In fact, some companies stopped accepting Bitcoin because of the high fees and volatility, including digital video game distributor Steam and even a Bitcoin conference in Miami. High fees and long transaction times meant Bitcoin was not actually better for transactions than gold. Some of the biggest new adopters of Bitcoin turned out to be gold dealers like Silver Gold Bull. That’s because gold dealers can see the potential in any alternative commodity and how to play the two off each other for profit.
Why Gold Is Still King
What’s the number one reason gold investors prefer bullion to ETFs or gold mining stocks? There’s no counterparty risk and you can hold it in your hands, which is why so many people prefer buying physical gold from Silver Gold Bull. You can’t hack gold and it’s still worth something when the power goes out. It may sound paranoid to some, but that’s the kind of unshakable confidence people have in gold and its ability to get them through a crisis. That’s why the daily gold price continues to rise steadily while Bitcoin’s days look numbered.
Bitcoin isn’t going to fade off the face of the earth. Blockchain and cryptocurrencies have a role to play in the future economy, but it will never “replace” gold. As the world waits to see what happens to Bitcoin at the end of its bubble, in the meantime you can trade Bitcoin and gold with gold dealers Silver Gold Bull.
As Bitcoin struggles with out-of-control volatility and the gold markets shows renewed signs of strength, play your defensive hand with confidence and buy gold.