ABC Bullion chief economist Jordan Eliseo discusses the relative benefits of gold and bitcoin.
Step aside Ali and Foreman, there’s a new tussle vying for the attention of the bloodthirsty investing public.
Our champ — and the former monetary system of the world — gold.
Our challenger — and the current king of cryptocurrency — Bitcoin.
Our ring official for this match is Jordan Eliseo, chief economist with ABC Bullion.
What is gold’s strength as an investment currency?
“Longevity, recognition, liquidity, infinite duration and a complete lack of credit risk. There is no ‘one strength’ of gold that makes it unique per se, but anyone interested in money and in investing should want to learn about gold, given its multi-millennia track record as a monetary instrument.
“Despite the fact that the developed world effectively abandoned the gold standard in 1971, gold remains an important part of central bank monetary reserves today. It has also proved to be a terrific investment over this period, rising by approximately eight per cent per annum, and has proved to be the most effective single asset class portfolio hedge in “risk off” market environments.
“It is also beautiful. One can be a gold bear, a gold bull, or entirely apathetic about the potential price movements of the yellow metal, but make no mistake, gold is and will forever remain humanity’s enduring image of wealth, achievement and prosperity.”
Where do you see Bitcoin heading over the next five years? How will it impact the global financial landscape?
“Our view on Bitcoin is much the same as it was about five years ago when we first started following the cryptocurrency. We think it offers fabulous speculative return potential, but it could also crash to zero, so from an investment perspective, people should only invest what they can afford to lose.
“Despite its marketing as ‘digital gold’, Bitcoin shares none of the characteristics that make gold unique. To be clear, we are not anti-Bitcoin, but we think investors, particularly in the second half of 2017, were hoodwinked into believing they were buying into a safe haven asset, which it (for now) clearly is not.”
How can investors find a healthy balance between investing in precious metals, fiat currency, and cryptocurrencies?
“If it’s a stable store of value on a day-to-day basis, then stick with fiat currency. If it’s a secure and trusted store of value over time, then stick with gold, and if you are willing to gamble in the hope of striking it rich, then go for crypto.
“The reality is that none of these assets, or forms of money, need be an either-or equation, as it can make perfect sense to own all three.
“For me personally, while I don’t speculate in cryptocurrency markets, I can totally understand why people do, and would only caution them to invest with money they can afford to lose, much like any other form of gambling.”
Jordan Eliseo will be discussing gold vs. bitcoin during his presentation within the Current Market Trends and Commodity stream of the International Mining and Resources Conference (IMARC) at the Melbourne Convention & Exhibition Centre from October 29 to November 1 2018.
IMARC is Australia’s largest mining convention bringing together over 6000 decision makers from over 90 countries for four days of learning, deal-making and unparalleled networking.
The article originally appeared in the October issue of Australian Mining.