Investors Head Straight for GOLD When Cryptocurrencies Crash
Posted By | January 26, 2018
“In the land of alternative assets, will the REAL store of value please stand up?”
With apologies to the legendary television game show “To Tell the Truth,” the line above refers to discerning investor behavior in the wake of the recent crash of cryptocurrencies. Investors appear to have indeed revealed just where people ultimately feel safest when markets demonstrate frightening volatility.
According to an article over at Bloomberg.com, it is none other than gold that seems to be the most direct asset beneficiary in the wake of a recent, sharp downswing in the crypto market, one that saw Bitcoin’s price fall by more than 40 percent in just a month’s time. There are a variety of reasons for the current upheaval in the cryptocurrency market, including the dual threat posed by growing fears of scams and the move toward heavier regulation of cryptos that will surely result. However, the bigger issue to focus on is where investors are going when they lose faith in the reliability of their digital assets.
As noted by the Bloomberg piece, online gold coin dealer CoinInvest of Frankfurt, Germany has seen sales jump by 500 percent since bitcoin started on its recent and pronounced descent. Director Daniel Marburger noted that during a recent day when bitcoin sank by 23 percent, CoinInvest sold roughly 30 kilograms of gold, worth about $1.2 million.
Remarking on the stunning level of activity, Marburger said, “Emails and phones did not stand still, with customers asking how they could turn their crypto into gold.”
Ireland’s GoldCore Ltd. has experienced similar activity, and director Mark O’Byrne, in a note emailed to Bloomberg, commented that his firm’s clients “told us they were concerned that the massive price appreciation was unsustainable and they got nervous about it.” O’Byrne added, “We think increasingly people are realizing that these digital assets have much higher risk levels than the traditional safe haven asset.”
While that may be true, there is little question many investors find both precious metals and cryptocurrencies similarly appealing as alternative assets that exist outside of traditional financial markets. CoinInvest’s Marburger, citing the advantages common to both cryptos and gold, told Bloomberg each is “limited in quantity, easy to trade and you can store them decentralized.” As Marburger also said, there are “no passwords you can lose” with gold, and “the volatility is much lower, sustainable growth and in the end you can hold your investment in your hands.”
“To what extent can a virtual asset be a store of value?” This is the compelling question asked by Bloomberg in its piece, and they suggest “by swapping out of digital gold and into the real thing, some investors may be providing an answer.”
When the rubber finally meets the road and popular financial markets – including a nascent cryptocurrency market – begin to suffer the volatility that inevitably ensues after long stretches of upward price movement, precious metals may well remain the one asset to which investors instinctively turn when looking to keep safe from portfolio instability. As London-based gold dealer Ross James told Bloomberg, “Gold…offers investors 4,000 years of history as a store of value, and that’s looking quite appealing right now.”
In the face of both bitcoin’s wild swings and the mounting concerns about an overheated stock market, it’s a good time to make sure you have enough gold and silver in your portfolio mix. If you need assistance to that end, I encourage you to reevaluate your holdings with one of the many knowledgeable team members at Augusta Precious Metals. Reach out to us directly at 855-242-4121 to discuss your situation, and find out if owning your metals in a tax-deferred gold IRA account is a good fit for you. Let Augusta help you make a significant difference in your portfolio as the new year begins!
In addition to consistently serving portfolios as highly stable, inflation-fighting assets, precious metals are expected by many analysts to enjoy a particularly robust 2018. Investors are heading straight for GOLD as cryptocurrencies crash. So why don’t you?
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