Gold vs Bitcoin – Precious Metals Investing Vs BTC Fund Investing?
Precious Metals Investment Fund Exploring Bitcoin Investment
The Old Mutual Gold & Silver Fund, an investment company managing $220 million of precious metals and equities wants a piece of the Bitcoin action.
Beginning its operations in April with a mandate to allocate 5 percent to cryptocurrencies, its manager, Ned Naylor-Leyland, says that the company hopes to leverage profits from cryptocurrency investments, Bitcoin in particular, to reinvest in precious metals.
“Bitcoin was explicitly designed to be digital gold, so if you’re going to have a small proportion of a fund in bitcoin, it should be in a gold fund, because that’s exactly the point. It’s about bringing the ownership of disciplined money into the modern world. Bitcoin is paving the way for the reintroduction of gold as global money,” said Naylor-Leyland.
Bitcoin's proof of concept as a novel payment system, decentralized and trustless, has attracted plenty of attention spanning across investment and financial sectors. While some of most seasoned investors have advised exercising caution in a marketspace rife with manipulation and lacking regulation to guard against it, some investors remain unshakeably convinced about Bitcoin’s potential.
Hedge fund manager Mike Novogratz, who is starting a $500 million fund to invest in cryptocurrencies, opines that Bitcoin's rally is inexhaustible, “Gold has value solely because people say it has value; bitcoin is built on an amazing technology, there’s a limited supply of it. This whole revolution came out of a breakdown in trust in the 2008 crisis.”
However, Bitcoin is not without detractors. Gold wins out over cryptocurrencies when assessed on the majority of the key characteristics of money, according to Goldman Sachs Group Inc., ““Precious metals remain a relevant asset class in modern portfolios, despite their lack of yield. They are neither a historic accident or a relic and possess an intrinsic established value.”
Adrian Ash, research director at London-based BullionVault, says Gold is caught in the headwind of Bitcoin's noise, “With the U.S. stock market setting fresh all-time highs day after day, it’s no surprise gold prices have retreated. Some investors are also being distracted by the noise around Bitcoin and other cryptocurrencies. Altogether, that’s made interest from new gold investors the weakest since the metal’s half-decade price lows of end-2015.”
Shares in Riot Blockchain (Nasdaq:RIOT) – a biotech company since 2000 until switching to distributed record-keeping technology this October – meantime rose 42% on Wednesday, nearly doubling the stock's price from this time last week.
Trading as Bioptix, the company made multi-million dollar losses every year since at least 2012, according to data from MarketWatch. Its stock-price doubled in the week prior to 4 October, when it announced the change.
Recent research has revealed that ‘buy bitcoin' is more frequently searched on Google than ‘buy gold'. It sure indicates that Bitcoin is popular but being popular and being a blue-chip asset are two very different qualities. There can be no argument that novelty effect is not a contributor to Bitcoin and blockchain’s present value.