It’s not either or.
That’s how I feel about owning gold versus owning cryptocurrencies. There is usually no love lost between these two alternative assets. The gold critters despise the crypto financiers because gold has always been around and from about 700 BC.
But the crypto financiers view gold as a clumsy investment, something that can’t get away on its own, while Bitcoin and Ethereum, the two I’m most focused on, have made your fortunes. Gold, they say, was supposed to be a defense against inflation and governments printing too much money. But in this what you’ve done for me lately, it’s been a disappointment.
At the same time, we’ve had spectacular performances from all kinds of cryptos, making them better in their own right.
Plus the golden people tend to be understated. Mark Bristow, the CEO of Barrick (GOLD), arguably the largest gold company of our time, is using $1,700 for gold this year, but bases his five-year forecast on much lower levels.
Meanwhile, Cathie Wood (ARK Innovation (ARKK)), never one modest in her price targeting, thinks the $48,000 Bitcoin could be at $500,000 in five years. I don’t want to slander, but Wood is a great convert and evangelist for what she believes, judging by her very big call to buy Tesla (TSLA) not too long ago, that made you fortunes. That allows her to make an otherwise insanely bullish call without being laughed at. I didn’t think Bristow could say that gold will be at $17,000 five years from now without sacrificing hard-won credibility.
Now I view crypto as something that is just a highly speculative asset that is not backed by anything, not by history or the government.
Gold, on the other hand, has a huge scarcity and a history of being hard to find. The stock of gold found is rising at about 1% per year, meaning there isn’t enough around to keep it low for too long. And it’s proven its worth in, well, gold, if you need to escape a dangerous location for a more halcyon.
So what’s right? I believe in both gold and crypto. I think of gold as an insurance company against long-term inflation. I consider Ethereum a speculative trade, I cannot consider it more than that because it has no history and moves in a way that should be considered prudent. It’s a store of value when it goes up. It’s a colossal mistake when it goes down. That’s not what I’m looking for in an insurance policy, but it has its advantages in terms of limited supply and demand and a kind of currency that has boosters like I’ve ever seen for security and keeps them afloat in any weakness.
Far too often in this market I see people attacking people they think are weak. To me, that’s the bush league logic. I think you can own both gold and crypto as hedges, but you have to be realistic: the value of gold is its timelessness. Cryptograms? It’s current affairs, and, I’m afraid, not much more.
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