LAWRIE WILLIAMS: W(h)ither bitcoin. Gold looks to be a better bet.
It will not have escaped investor notice that bitcoin, often recently promoted as a rival safe haven investment to gold, has been performing weakly, to say the least. Over the past few weeks it has more than halved in value as some of the key promoters/players in the bitcoin market have been exposed to have some more than dubious antecedents. There also seem to have, at long last, been some almost inevitable moves by governments to start to ty and exert some control and regulation of what looks to be very much a ‘Wild West’ scenario.
Indeed one of my favourite commentators, Grant Williams, has in his Things that make you go hmm.. newsletter, and a recent podcast for his paid subscribers made a hugely strong case for distrusting totally a couple of the biggest beneficiaries of, and promoters in, the bitcoin community. Caveat emptor.
His newsletter article on the subject - Schrödinger’s Coin – released into the public domain as an accompaniment to the podcast, conducted with Bennet Tomlin and George Noble,. These both put forward what appears to be definitive proof of the fraudulent antecedents of those controlling at least two of the biggest players in the bitcoin sector and companies with which they may be associated. Details of how to access the article and subsequent podcast, appear on Grant’s website for those who may be interested.
In short the article and the podcast expose the seemingly dubious personalities behind two massive players in the bitcoin marketing and handling sector, and companies with which they may be associated. Also they look at some what appears to be exceedingly suspect financial activities conducted by these entities in pursuit of their advancing their earnings from the bitcoin phenomenon.
I would also point readers to a free blog (Doomberg) which covers much of the same ground including a very pointed allegorical post entitled A Crypto Field of Dreams. There are a number of other posts by the same author which delve into some of the other murkier aspects of the crypto sector as well as other, in my view, hugely perceptive coverage of the global financial sector.
Readers of my articles on sharpspixley.com will have been aware for some time that this writer is no fan of bitcoin – in fact quite the opposite. Our view is that the crypto has no substance behind it and the craze for bitcoin is a purely manufactured one with resemblance to a Ponzi scheme whereby the only reason for it to rise is through others pouring money into it. It is thus taken advantage of by unscrupulous promoters who drag some, in our view exceedingly naïve, fellow travellers along with them. True, those who have followed my advice and stayed away may have missed out on ridiculous gains, followed by equally ridiculous losses for those who may have invested at the wrong time. However, in this writer’s view the whole phenomenon is still likely to come crashing down, particularly as it becomes apparent that some of those making the most money out of the sector may not be as financially honest as they make out to be.
This brings us all back to gold as a safe-haven wealth protecting asset of choice. While its performance so far this year may have been somewhat lacklustre, it has at least held its value and its prospects for continuing to do so remain strong at this time of rising inflationary pressures as we exit from the COVID-19 pandemic restrictions. The gold investor may not make some of the huge gains, or losses, which have been experienced by the bitcoin player, but the latter is a gamble, whereas gold tends to remain a relatively safe investment and thus an overall protector of accumulated wealth. It may not make you huge gains but will still serve to protect whatever you may have already,
If you want to gamble on a relatively safe bet, we would recommend the major gold mining stocks. Most of them have a break-even cost level of a little over $1,000 an ounce gold. At current gold price levels they should be generating substantial profits and as well as potential stock price rises as profit-advancing financial statements are released, they virtually all pay dividends too, most of which yield more than any interest-bearing securities.