From Birch Gold Group
Cryptocurrencies are all the rage at the moment with investors seeing their stakes in the virtual coins rise more than 1,000% this year. Some even more than 3,000%. And while Bitcoin is the most popular, others have made big gains this year, too, including Ethereum and Litecoin.
Some analysts argue cryptocurrencies are sucking up money that would otherwise be invested in gold, and claim gold has had its day.
However, other investment experts predict the tide may soon turn. And as cryptocurrencies reach the mainstream, investors may take their profits and invest them in the most well known safe-haven: gold.
The Switch to Gold
As the hype in cryptocurrencies dies down and the big “early adopter” gains disappear, it’s likely that many will take their profits and invest them in other undervalued assets that are more stable than cryptos, yet still have the potential for big gains. The prime beneficiary could very well be gold.
These sentiments were shared by Jeff Berwick in a recent interview he did with Collin Kettell of Palisade Global (emphasis ours):
And we touched upon the fact that because mining stocks and hard assets have been relatively flat or languishing to some degree since crypto has risen in popularity over the last year or so meaning that this could be a great buying opportunity to add to your positions or establish new ones.
Collin believes that for the next year or so it’s likely that cryptocurrencies will continue to take the limelight, but as the hype subsides, it’s quite likely that people will begin moving a lot of their earnings back into the most well-known safe havens; gold.
Why Cryptocurrencies Are Not the “New Gold”
While the crypto frenzy appears to be the Internet equivalent of the gold rush days, cryptocurrencies and gold are two completely different things. This was pointed out by Goldman Sachs in a recent note to investors where they said bitcoin isn’t the “new gold”, and also added:
The use of precious metals is not a historical accident – they are still the best long-term store of value out of the known elements.
Unlike cryptocurrencies, gold has a proven track record of stability, and has shown over time that it can protect against inflation and economic catastrophe.
And at only eight years old, it’s still too early to say whether or not cryptocurrencies will stand the test of time. So while things appear to be smooth sailing right now, rocky times could potentially be ahead for cryptocurrencies, including the always-present risk of a dramatic sell-off.
Once crypto investors realize this, they’ll look somewhere else to keep their gravy train going. This is why experts predict crypto investors will soon start recycling some of their profits into gold.
What This Means for Gold
Despite everyone rushing to invest in cryptocurrencies, it’s only a matter of time before some of those crypto investors turn to gold.
Not only has gold stood the test of time, but at $7 trillion its market dwarfs the crypto market, which is estimated to be around $300 billion.
Can you imagine what would happen to the price of gold if tens of millions in crypto profits were suddenly invested in gold? The price of gold could quickly rise.
So if you own gold, you are in a great position.
As any wise investor will tell you, you shouldn’t invest when everyone else has the same idea. The best time to get into gold to protect your wealth and see it grow is before the crowd does.