Is Bitcoin Safer Than Gold?
With President Trump dominating the news cycle, several major stories have been pushed out of the spotlight. A global cyberattack that covered 150 countries has received little coverage. Meanwhile, Bitcoin has reached all-time highs. Gold gets honorable mention as a safe haven, but not much more. Williams discusses where the real risk, as well as the real value, lies.
With an 8-year track record, Bitcoin has demonstrated that it has value, but how much, and value measured by what? Will it perform as a store of value?
One Bitcoin is valued today at roughly $1,850, a lot for a currency backed only by an algorithmic data mining process married to the good faith and trust of its users. Will they be able to reach into cybersphere and grab those Bitcoins in times of financial stress, or will that wealth vanish in a haze of government intervention, cybertheft or Internet malfunction?
Where does gold fit into this modern world of finance? Gold is clearly a unit of account, measured and valued against all other major currencies daily. It is a medium of exchange in global trade, especially in times of stress. It is a staple of all major central bank reserve assets.
The most important use of gold, however, could be its property as a store of value. For more than 5,000 years, gold has been synonymous with wealth. Its inherent physical properties have been universally valued. Gold is not tied to any country, financial system or counterparty. It is no one’s liability.
In fact, it is the only tangible, liquid, non-financial asset that is practical to own outside the financial system while remaining marketable at transparent prices across the world’s financial centers.
This is where the real value of gold lies. It is a store of wealth outside the digital, crypto and cyber worlds of finance. Physical gold greatly reduces (eliminates) this new, unknown cyber risk. Gold will never just vanish into the ether or be stolen by a phantom hacker on the other side of the planet. As we watch the news and assess where the risks to wealth lie, physical gold is a good place to be. And it’s cheap relative to most other asset classes.