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Author Topic: [2017-08-31] Gold Losing Safe Haven Status Due to Cryptocurrencies, Monetary Pol  (Read 2112 times)
gokayc
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August 31, 2017, 03:46:47 AM
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Gold prices jumped 1% on Tuesday morning, fueled by geopolitical and market concerns, with the latest North Korean missile launch being the immediate catalyst.



However, according to Bloomberg, the jump in gold prices is a ‘too little too late’ response to the general state of geopolitics and market uncertainties. The precious metal appears to be losing its ‘safe haven’ status. Traditional models should have gold prices well above what they are now, and there are two things to blame for gold’s relatively poor performance.

Eroding Gold

Part of the reason gold hasn’t performed as well as expected is because investors are shifting their funds to digital currencies. Currencies such as Bitcoin have held their value quite well during recent crises, such as Venezuela’s hyperinflation.

Unconventional monetary policies by central banks has also eroded a bit of gold’s value. The unwinding of central bank balance sheets which must eventually happen is leaving investors nervous. Some of them are seeking a safe haven in Bitcoin.

Investors have fled the precious metals and stock markets in favor of the greater returns and general stability of Bitcoin and other cryptocurrencies. Over $30 billion has flowed out of the stock market in the past 10 weeks, moving into other investment options.

https://cointelegraph.com/news/gold-losing-safe-haven-status-due-to-cryptocurrencies-monetary-policy

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August 31, 2017, 03:53:26 AM
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Part of the reason gold hasn’t performed as well as expected is because investors are shifting their funds to digital currencies. Currencies such as Bitcoin have held their value quite well during recent crises, such as Venezuela’s hyperinflation.

Now, it can be told that Bitcoin is now the new gold in digital form. Recent developments put some limelight into Bitcoin as a safe haven the role usually played by physical gold. Whenever there are disturbing news anywhere in the globe that has some possible ramifications to other countries and that can shake the globe's current stability, there should been a noticeable spike in the value of gold but this time it is not happening due to lack of demand as many are now shifting to digital currencies as replacement for gold.  

Bitcoin is leading the way as the number one choice for people who shifted from gold...here they are afforded the same safe heaven they want PLUS a much, much bigger potential for earnings or ROI...two unbeatable combination that the current outlook of gold could not offer to potential "investors" looking for an alternative.

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August 31, 2017, 05:36:37 AM
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I think that no doubt that bitcoin is now the safe haven for a lot of investors and I'm speculating that those new faces than are entering the bitcoin ecosystem came from the precious metal group. It was really evident that in the last couple of months bitcoin price has been skyrocketing only experiencing some minor blips along the way.

Personally, I think gold is still the best hedge against a global economic crisis. And just like fiat, bitcoin will be useless, lets say if ever a war broke today. Precious metals have been and will remain the best hedge as proven in the WW2. Those countries that got involved in war bought raw materials from other nation using golds. I don't know if this will be the case if ever another war broke. Nevertheless, we already found bitcoin to be a safe haven specially this year and probably those precious metal guys are not doubting anymore that bitcoin is also a nice portfolio to be added on their instrument.

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August 31, 2017, 07:13:46 AM
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Gold is hard to trade in today's 24/7 'digital' world. So for hedging risks besides a total meltdown of society, paper (or better said: electronic) derivatives of PMs and/or cryptocurrencies that can be traded all over the world for pennies, may seem a better temporary vehicle to hedge risks. Gold is becoming increasingly a fixed asset only used to store wealth for ages. Most investors are not looking for such a store of value. So cryptocurrencies may continue to take a part of that field as temporary hedges against perceived risks.

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August 31, 2017, 08:39:36 AM
 #5

I think that no doubt that bitcoin is now the safe haven for a lot of investors and I'm speculating that those new faces than are entering the bitcoin ecosystem came from the precious metal group. It was really evident that in the last couple of months bitcoin price has been skyrocketing only experiencing some minor blips along the way.

Personally, I think gold is still the best hedge against a global economic crisis. And just like fiat, bitcoin will be useless, lets say if ever a war broke today. Precious metals have been and will remain the best hedge as proven in the WW2. Those countries that got involved in war bought raw materials from other nation using golds. I don't know if this will be the case if ever another war broke. Nevertheless, we already found bitcoin to be a safe haven specially this year and probably those precious metal guys are not doubting anymore that bitcoin is also a nice portfolio to be added on their instrument.

Bitcoin's value in some doomsday scenario will depend on whether there is electricity and Internet or no, and it may actually be very different for different regions, since arbitraging during the war might be very hard. So, it's possible that it will be "digital gold" during hard times, especially if there will be more Bitcoin satellites and if they will be able to accept transactions too. And Bitcoin might be even more convenient than gold for transactions in case the whole economic system goes down, since it would be hard to quantify and transport gold safely.

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August 31, 2017, 08:46:30 AM
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The gold market is estimated to be worth between six and seven trillion dollars.

The crypto market, in total, is worth 168 billion dollars.  If we divide an estimate of 6.3 trillion by 168 billion, you can see that the crypto market is about 37 times smaller than gold.  It's also worth mentioning that most cryptocurrencies are not regarded as safe havens (the closest thing to a safe haven is BTC and even BTC isn't particularly safe).

When you consider the fact that the Bitcoin price has multiplied by about 4.5 since the start of the year, it starts looking quite a bit more dangerous and it doesn't seem like it's causing weak performance in the gold market at all.

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August 31, 2017, 09:14:08 AM
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Put simply:

  • Fiat currency will not be a good long term investment
  • Bitcoin will probably be a good long term investment
  • Cryptocurrencies will very likely be a good long term investment
  • Gold will definitely be a good long term investment

What makes gold a good store of value hasn't changed, and it will outlast everything. It will drop in price as a result of the (likely) coming cryptocurrency revolution, and will drop significantly on a long term basis. None of this will change the fundamental value proposition of gold, whereas Satoshi's design for cryptocurrencies depends on how smart and/or wilful it's wealthiest users are.

We will have to see how that works out in the long term, up to now, the wealthiest Bitcoiners have made pretty good decisions in rejecting the hard forks of obvious control freaks. But will they continue to do so? Or will Bitcoin get attacked by those seeking to dominate it from within the group of Bitcoin developers, instead of by an external dev team? Gold, of course, will never have this problem (in spite of all the problems gold does have)

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August 31, 2017, 09:43:34 AM
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Put simply:

  • Fiat currency will not be a good long term investment
  • Bitcoin will probably be a good long term investment
  • Cryptocurrencies will very likely be a good long term investment
  • Gold will definitely be a good long term investment

What makes gold a good store of value hasn't changed, and it will outlast everything. It will drop in price as a result of the (likely) coming cryptocurrency revolution, and will drop significantly on a long term basis. None of this will change the fundamental value proposition of gold, whereas Satoshi's design for cryptocurrencies depends on how smart and/or wilful it's wealthiest users are.

We will have to see how that works out in the long term, up to now, the wealthiest Bitcoiners have made pretty good decisions in rejecting the hard forks of obvious control freaks. But will they continue to do so? Or will Bitcoin get attacked by those seeking to dominate it from within the group of Bitcoin developers, instead of by an external dev team? Gold, of course, will never have this problem (in spite of all the problems gold does have)



I don't think you can say both Bitcoin and Gold will both be a good long term investment. If Gold will be a good long term investment,then Bitcoin will be a VERY good long term investment, because the potential upside for Bitcoin is way bigger than it is for Gold which already got a multi trilion dollar marketcap. With a $100,000 BTC investment right now, you will most likely change your life and retire in 5 to 10 years.

Now, if you are holding $100,000 worth of gold... you aren't most likely going to do much when it comes to changing your life.

This is simple risk and reward. Gold may be the safer investment, but you can't say the rewards will be the same.

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August 31, 2017, 12:13:12 PM
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Well, it depends on your timeframe and also how you define "good investment".

Gold is unlikely a good buy in the medium term, there are good reasons to believe that gold will experience a short term rally and a medium term decline.

But if you buy gold during that medium term decline, it may well prove to be a good investment in the long term.



Bitcoin looks, based on the information we have right now, to be a great short, medium & long term investment. But who knows what events and innovations could affect Bitcoin's value proposition detrimentally over those timeframes. With gold, one can at least say that events and innovations that could significantly affect it's value must be far more radical than those that could affect Bitcoin's.

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August 31, 2017, 12:35:58 PM
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I don't think you can say both Bitcoin and Gold will both be a good long term investment. If Gold will be a good long term investment,then Bitcoin will be a VERY good long term investment, because the potential upside for Bitcoin is way bigger than it is for Gold which already got a multi trilion dollar marketcap. With a $100,000 BTC investment right now, you will most likely change your life and retire in 5 to 10 years.

Now, if you are holding $100,000 worth of gold... you aren't most likely going to do much when it comes to changing your life.

This is simple risk and reward. Gold may be the safer investment, but you can't say the rewards will be the same.

But gold isn't a good long-term investment simply for its potential upside, but because it is a safe haven - recognised everywhere and by everyone to be a sure bet. Sure, it's under pressure now and for the next few years from crypto, but even a decade can be considered short-term when talking about it in this frame. You can confidently lock in gold for the next 5, 10, 25 years. As much as I'm gung-ho on crypto, I can't find the same confidence for where it'll be a year from now.

Of course > risk, > reward... but generally you want long-term investments to be low risk.

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