‘Just buy gold!’
‘The place to put your money is silver!’
How many times have you heard it over the last five years? It is like a mantra in any modern financial circle, from Bloomberg LP, to MSNBC, to Fox Business. I used to work at a major financial firm in New York, and it was all about gold and silver futures, trusts, funds. If you want to sound economically intelligent, just use those two sentences at the top, rinse, and repeat. Was it all just bad information? If you look at the hard numbers, not only has the advice not panned out, but Bitcoin has been the winner no one saw coming, and no one will admit they missed it.
Read the full story below.
Bitcoin as a commodity has an unprecedented track record of growth
If you listen to the mainstream media, you’d think Bitcoin was only a solid investment when it spikes $200 USD in a month, and that you should avoid it like the plague the rest of the time. Let’s look at the numbers for the old standbys, like gold and silver since 2011 and see how they’re really do during this latter day “Gold Rush”.
As you can plainly see, the “Golden Goose” has been laying an egg that doesn’t glitter, and has been kind of rotten since this time in 2010. Since its peak about four years ago, gold has been on a correction ever since, losing over 40% of its USD value. When Bitcoin has a Mt. Gox exchange go down, it is reason to fear Bitcoin for all times, but notice anything similar about gold in late 2011? Bitcoin had one year of correction, but gold is on Year Four. Take out this bubble from 2011, and Gold has still lost almost 20% over the five years.
Has silver done any better? The answer is... No it has not. In fact, it is even worse off. The Silver bubble, which occurred a few months before Gold’s bubble, has seen an even more marked drop of over 70%. Remove the bubble in 2011 again, and silver is still down almost 50%. Recently, Silver dropped for almost two weeks straight, which hasn’t happened since 1980. This is a sure sign of deflation in the commodity markets, and an indicator of the overall market, if The Federal Reserve and the government weren't actively manipulating it. Now let’s look at Bitcoin, in comparison
Bitcoin’s value was just $0.26 on November 16th, 2010. It was over $6 by the end of 2011, and had doubled again by the start of 2013. A larger part of the mainstream market seemed to discover Bitcoin midway through 2013, and it was trading at $125-130 midway through 2013. Everyone knows the bubble that was Mt. Gox, so take that out. You were still ahead over 35% after the smoke had cleared early in January of this year, and the market corrected itself. And its value has almost doubled ever since. This most recent bubble two weeks ago still left a gain of almost 40% after correction. I’d say Bitcoin is upwardly volatile, and the others are downwardly volatile. Which would you prefer? I have one more graph to include, just for kicks and giggles…….
Is anyone saying gold and silver are poor long -term investments? No, but how many people bought gold and silver five years ago thinking they were going to make 10-20% a year from then on? What financial advisor was saying you’ll need to hold these commodities for a decade to make a return? And how many had the acumen to see Bitcoin making an almost infinite return instead?
Please, do your own due diligence and check with your financial advisor……but then again, maybe not! If he is not running his own business, and works at a centralized bank institution, are you really going to get advice that doesn’t serve the bank first, and you second? I’ve been there. That’s all I can say about that.
If you have the means, buying precious metals like gold and silver is a sound strategy, but its probably going to be another 3-5 years before you get a Bitcoin-like ROI. Long-term, it is a good idea, but whether you’re a short or long-term player, why not buy a good position in Bitcoin, and microwave that timeframe into 3-5 months? Whether you’re in gold, silver, or a 5-year CD @ 5%, after taxes and inflation, you’ve done a lot worse than Bitcoin, right? Why double down when you can own some “Digital Gold”, and get ahead of the next curve? Just take this as food for thought.
Make 2016 your year to get ahead, just choose your investments wisely. Like gold and silver, Bitcoin is not going anywhere. The U.S. Dollar, eh…….