by Jim Rickards, Daily Reckoning:
I write and speak a lot on gold. In contrast — and this surprises some people — bitcoin is my least favorite topic. I’m made my views known many times.
Still, interviewers love to get into the “gold versus bitcoin” debate. I continually get dragged into discussing bitcoin in interviews on TV, radio and the internet. So I discuss it whether I want to or not.
From my perspective, you might as well discuss gold versus watermelons or bicycles versus bitcoin. In other words, it’s a phony debate. I agree that gold and bitcoin are both forms of money, but they go their own ways.
There’s no natural relationship between the two (what traders call a “basis”). The gold/bitcoin basis trade does not exist. But people love to discuss it, and I guess Goldman Sachs is no different.
Goldman Sachs has released a new research report that comes down squarely on the side of gold as a reliable store of wealth rather than bitcoin, which is untested in market turndowns.
Precious metals like gold are “neither a historic accident or a relic,” said the report.
It affirmed that gold is more durable than cryptocurrencies because cryptocurrencies are vulnerable to hacking, government regulation and infrastructure failure during a crisis.
Goldman also reminds us that gold holds its purchasing better than cryptocurrencies and has much less volatility. In dollar terms, bitcoin has had seven times the volatility of gold this year.
Since Goldman’s research department has not been notable as a friend to gold, the fact that they favor gold over bitcoin is highly revealing in more ways than one.
I don’t deny that bitcoin has made some people multimillionaires, but I also believe it’s a massive bubble right now.
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