Should you own bitcoin or gold? That’s easy

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Gold bugs are rarely, if ever, bearish on gold. To them, it’s the only real currency in a world of money-printing central banks endlessly devaluing their fiat (that is, paper) currencies. There are few people who believe so fervently as gold bugs.

But bitcoin fanatics come pretty close. These folks believe that this decentralised digital currency is the ultimate means of easily transferring value without the need for centralised entity, intermediary, or central bank. Bitcoin is a libertarian dream.

Now, given that gold bugs and bitcoin fanatics share a common desire – a completely independent store of value – and a common enemy (central banks), you’d think they might be the best of friends. But they’re not.

In fact, they’re more like dogs and cats – or chalk and cheese. They don’t mix well, at all.

I know this because I’m privy to a private mailing list that’s run by an old family friend who’s a consigliere of one of Hong Kong’s wealthiest families. He, along with a couple dozen business and financial gurus and veterans, some with names you recognise, share their investment ideas and opinions on all things related to global finance and investing.

And recently the topic of cryptocurrencies and bitcoin came up. After watching carefully thought-out emails travel back and forwards within the group, I drew a few conclusions.

Gold bugs don’t like bitcoin

Most of the guys (and they’re almost all men) on this email list are grizzled investors, and they like their gold. To be precise, their physical gold. They dismiss bitcoin as a fad, a craze, all hype and no substance.

As I said, bitcoin is frequently compared to gold. They’re the only two widely distributed, decentralised methods of exchanging value as currency. There is no central authority issuance like there is with U.S. dollars or any other fiat currency.

Neither bitcoin nor gold can just be “printed” at the push of a button by an anxious central banker. You have to either earn your gold by mining it – which is what you do to mine bitcoin, but with computers instead of picks and shovels – or you can pay cash for it.

But for the gold bugs, there’s no substitute for being able to see, feel and carry their gold.

Bitcoin? That just exists somewhere on the internet as far as they are concerned.

3 COMMENTS

  1. Well I’m the exception to this "rule", perhaps it’s a generational thing or perhaps it’s just that I have an IT background and understand the way Bitcoin works reasonably well.

    To be clear I hold the vast majority of my savings in physical metal (primarily Silver) I plan to accumulate Bitcoin over metal going forward for one main reason. That is that the crypto’s can do what the metals can’t i.e. appreciate in terms of currency because they can’t be manipulated by the established financial industry. To be clear I’m NOT reducing my metal position, I will probably add to it in time, but for right now I think I will see greater appreciation in the crypto space which can be converted to metal later than in metal directly. It is also FAR easier to trade quickly and represents another layer of insurance against capital controls.

    There is no reason to be afraid of Bitcoin. Like the author said we’re on the same side, we have the same enemy and the more people who are exposed to these ideas the quicker the existing system dies.

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