Gold vs. Bitcoin

Bitcoin broke $57,000 a coin, a record high, shortly after Tesla CEO Elon Musk tweeted his support for the cryptocurrency. Bitcoin and other cryptocurrencies have gained popularity as many lose faith in fiat currencies and turn to other forms of assets. Historically, precious metals have been a safe-haven asset for inflation due to their real-world value and use. Seasoned investors, major bitcoin bulls, gold lovers, and analysts are now discussing which alternative asset they would rather hold long-term.

For those who voted to hold gold, one of the main arguments for this was its historical value and consistent performance over the years. With one-fifth of the volatility of bitcoin, David Rosenberg of Rosenberg Research says, “The day that Queen Elizabeth trades in the five pounds of gold in her crown for crypto is the day I’ll shift course.” Gold has stood the test of time—over 5000 years—while Bitcoin had only recently entered the market 10 years ago. Another con of Bitcoin over precious metals is something everyone, even Bitcoin bulls, can all agree on—taxes. Individuals are required to report earnings on cryptocurrency earnings while self-directed IRAs with IRS-approved precious metals are exempt from taxes.

Kevin O’Leary, a judge on Shark Tank has shared this comment –

“Gold has traditionally been a hedge against inflation. If you ever wanted to hedge against inflation, you’d want it now. Some people have suggested that bitcoin could be a replacement for that. I am not in that camp for a whole host of reasons. I haven’t found the inverse correlation yet that people tell me bitcoin has to the markets, if you go look at the March corrections, bitcoin corrected as much, if not more than the market did, so I’m not convinced yet that it’s a replacement for gold.”

Bitcoin bulls on the other hand see the cryptocurrency as a long-term play, expecting it’s value to surpass the gold market by 2030. However, Bitcoin has already surpassed a point where retail investors can readily buy and benefit from its growth. At $57,000 a coin, it is more appealing to large companies, such as Tesla that can invest several million into Bitcoin. Holding a large number of coins is likely the only way the profits from the coin’s growth over the next few years will be significant enough to be worth the investment. And although Bitcoin is becoming a popular alternative to the ever-declining dollar, like the fiat currency, it has no real-world value. Referring to David Rosenberg’s quote, gold and other precious metals have industrial and environmental uses, which we will be seeing a boost in as President Biden pushes for clean energy, while Bitcoin’s main appeal is that it is digital and secure.

Both gold bugs and Bitcoin bulls both agree on one thing—why not invest in both? Diversification is the number one rule in investing. Though precious metals are the ultimate hedge against inflation, cryptocurrencies can be another form of insurance as well since it too is not reliant on stock market performance or national debt. With the COVID-19 pandemic far from being over, there will be more government spending, stimulus, unemployment, and a looming debt bubble close to popping, the value of the U.S. dollar will only continue to decline. Investing in precious metals ensures you are protected if both the U.S. dollar and the stock market come crashing down.

As the most trusted Gold IRA firm in the nation, Allegiance Gold combines over 50 years of experience to help thousands of Americans take back control of their financial future and secure their wealth. You can directly buy physical precious metals with Allegiance Gold. Customers can roll over an existing account, or open a new precious metal IRA with us as well. To speak to an experienced Allegiance Gold representative to discuss how precious metals can be incorporated into your investment portfolio call 844-790-9191 today.