Investors Get Asked: Is Bitcoin A Better Speculative Asset Than Silver For 2019?
Precious Metals have been used by humankind as a medium of exchange for millennia—literally since their discovery. Precious metals also have uses beyond currency. They have been appreciated for their nobility and beauty in the form of personal adornments, weapons and armor, and art. Physical Precious Metals are generally thought of as a good long-term investment to hedge against market volatility.
Bitcoin, in contrast, is a digital-only crowdsourced currency that was first used in 2009. It is a cryptocurrency in its infancy. Being new, the market and people don’t know how to react to it which has led to it being highly volatile. Easily the most noticeable difference between Precious Metals and Bitcoin is a simple fact that Precious Metals are tangible and Bitcoin is not.
Silver At 50 Year Low
The current silver price, when adjusted for inflation using the 1980 formula, is now selling below any level it has in the past 50 years. And priced in July 2108 dollars, silver hit the equivalent of $683.22 per ounce at its 1980 high. This potential is enormous; Silver would have to climb roughly 4,711% from current prices to match its peak level during the 1970s mania.
Even if Silver doesn’t reach all-time highs of $700, is clearly undervalued right now and carries tremendous upside potential if it comes anywhere close to matching its 1970s performance.
Silver is the tiniest markets when compared to Stock, Gold, and Crypto. Value of All Above ground silver Stocks (1 B oz) is 17B @ $17/oz. Crypto market at $740 Billion (42 times bigger than Silver). Gold 7.7 Trillion — 11 times bigger than Crypto. The 73 Trillion stock market is 10 times bigger than Gold. You can buy 1333 ounces of Silver for the price of 1 Bitcoin. This is a Humongous bargain at the bottom of the mountain.
Should You Buy Bitcoin Or Silver
Lou Kerner, a partner at CryptoOracle – a cryptocurrency investment and advisory firm, states that this is where a store of value steps in, with gold being a safe haven for those who don’t want to hold their value in the Dollar. He argues that BTC is fast becoming a popular store of value, comparing the market cap of silver versus BTC:
“Silver is the second biggest store of value at $50 billion and Bitcoin today is $60 billion so Its really taken over second place from silver as a store of value.”
Speculation surrounding the future price of BTC often finds a way of directing discussion back to previous price crashes, Kerner is no exception, blaming the early 2018 crash on investors: “We got ahead of ourselves.”
He likens the crash to Amara's law, which states that speculators tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run, something which Kerner believes added to the overinflated price of BTC.
To conclude, both Silver and Bitcoin seem to be undervalued right now with a promising 2019. It is probably best to look at both the assets diversifying your portfolio.