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October 31, 2017Key Gold Headlines

It’s a Phony Debate: Jim Rickards Weighs in on Bitcoin Vs. Gold

Financial guru Jim Rickards weighed in on the Bitcoin vs. gold debate and came down firmly on the side of the yellow metal. In fact, he’s said there really shouldn’t be a debate. Bitcoin and gold are two totally different things.

Rickards responded to a recent note published by Goldman Sachs declaring that Bitcoin is not the new gold in a column published at the Daily Reckoning. He said he doesn’t really like talking about Bitcoin and doesn’t think there is any real comparison between the cryptocurrency and gold.

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 said gold wins out over cryptocurrencies in a majority of the key characteristics of money, noting that precious metals  are “neither a historic accident or a relic.”

Bitcoin has seen phenomenal growth this year. The price of the cryptocurrency broke through the $6,000 level this month. A lot of people have made a lot of money on Bitcoin. But Goldman pointed to several fundamental weaknesses it sees in cryptos that make gold a better long-term store of value, including their vulnerability to hacking, the potential for government regulation, and its dependence on the internet and the electric grid for their existence.

Rickards noted that Goldman Sachs hasn’t exactly been a friend of gold.

 The fact that they favor gold over bitcoin is highly revealing in more ways than one.”

Rickards acknowledged that Bitcoin has made some people multimillionaires, but said he doesn’t own any Bitcoin.

I don’t recommend it. My reasons have to do with bubble dynamics, potential for fraud, and the prospect of government intrusion.”

Many cryptocurrency apologists blow people like Rickards off as old fuddy-duddies who don’t understand the technology and who are unwilling to step into the future. Rickards addressed this argument head-on, saying he’s studied many Bitcoin and blockchain technology papers.

I will say, however, that I believe in the power of the technology platforms on which the cryptocurrencies are based … So although I am a bitcoin skeptic, I believe there is a great future for the blockchain technology behind them.”

Rickards closes out his piece with some pretty solid advice.

I’m not telling anyone not to own cryptocurrencies, but you need to do your homework before you do.”

At SchiffGold, we recommend a diversified approach to investing in Bitcoin. Buying gold and silver is a great way to diversify your cryptocurrency portfolio. You can even buy gold and silver with Bitcoin. In the world of investing, it’s never wise to put all of your eggs in one proverbial basket. Diversifying your cryptocurrency portfolio with precious metals can help mitigate some of the potential downsides and put you in an overall stronger financial position.

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