After the craze for Bitcoin and other crypto-currencies, it would appear that the trend is currently in favour of Gold.
Indeed, the collapse of crypto-currencies (loss of 70% of the total value of virtual currencies) in recent months and especially Bitcoin which fell below 7 000 USD, encourages investors anxious to preserve their capital to move towards precious metals.
But first of all, what is Bitcoin and what is its origin?
Bitcoin would have been invented by a Japanese named Satoshi NAKAMOTO in 2009. However, this remains a rumour as many people have proclaimed themselves as the inventors of the famous digital currency.
The Bitcoin principle is quite simple. It is a new currency outside the banking system based on what is called the “Block-chain”. The block-chain being metaphorically a chain of bicycle of which each link is a book of account which lists a great number of transactions.
In a classic banking scheme, transactions are collected in the bank’s computer and validated by the bank. In the case of Bitcoin, transactions are validated by the block-chain which is distributed on a multitude of computers around the world that download and validate transactions from the block-chain. Namely that these computers generally belong to private individuals and are paid in Bitcoin for their work. These are called “miners”. Therefore, the advantage of the block-chain lies in these computers whose system is very secure thanks to the many mathematical algorithms used. A transaction cannot be usurped.
On the other hand, the reliability of crypto-currencies has been called into question several times following computer bugs. Moreover, like any currency, Bitcoin is subject to speculation and is as likely to appreciate in value as to lose. Indeed, the Bitcoin having plummeted by more than 60% of its rate since the beginning of this year, worried investors are forsaking digital currencies to transform them into a more real and ancestral value such as Gold.
For example, Bunker Gold&Silver, a leading precious metals dealer based in Singapore, whose customers have turned away from crypto-currency in favour of physical gold. Investors fear and worry that the massive price appreciation is not sustainable. More and more people are realising that these digital assets have much higher levels of risk than traditional assets.
The advantage of gold is the fact that there is no password or digital wallet to lose, volatility is much lower, growth is historically sustainable and most importantly, you can hold your investment in your hands.
Indeed, gold is considered as the safe investment because it has existed for 4 000 years against other currencies such as the US dollar which is the current world reference currency. For example, after a long period of stability between 1792 and 1971 (-100.00 USD on average), its price has soared to over 1,000.00 USD and is steadily increasing. Today, the gold price is approaching 1,400 USD/OZ.
One of the good reason to invest in Gold is for insurance against a financial meltdown, disintegration of fiat currency and or crypto-currency collapse. This is why many investors buy physical gold with their Bitcoin in the end.