Should I invest in more than one precious metal?
Bitoin is massive news right now.
The media cannot stop talking about it. Retail investors are now chasing a rising bitcoin price and venture money is flowing into bitcoin related start-ups.
Helped into its next leg up by stories of Baidu’s acceptance of the currency and China’s strategic targeting of bitcoin as another anti-dollar play in the currency war, this most famous of the digital money darlings continues to hold above $1,000.
So what does this all mean for investors?
Well, many things in fact. We list the five most important below and explain what they mean for the markets and for your money.
Silver’s small market cap of available silver of $25bn has made it an attractive target for investors trying to corner it and pump the silver price up. Remember the Hunt brothers. Even Warren Buffett had a play on silver in the early 2000s.
Bitcoin’s market cap had been ebbing and flowing between one and two billion dollars for much of this year, but the last few weeks has seen this swell many times over.
Some investors like to trade ratios with certain big numbers holding a lot of weight. With the gold-bitcoin ratio nearing 1:1 no doubt some of these technicians will be allocating their chips accordingly. Jan Skoyles wrote an interesting piece the other day investigating the ratios between gold, silver and bitcoin, where you can see a potential changing of the guard in the non-fiat monies.
Those are eye-popping numbers!
And, it’s not just Bitcoin surging. Other crypto-currencies have been on the run too, some appreciating by hundreds of percent in a day. This makes the US stock markets much herald 22% gain this year look trivial.
Whilst the media focus might be mainly on bitcoin, the limelight is slowly widening to cover other interesting new names like Litecoin, Feathercoin, Namecoin and many more.
Is this an opportunity? Or just a bubble?
The jury’s out and there is heated debate both sides of the fence. It’s certainly the case that crypto-currencies are red hot right now.
Throughout the years of Swiss banking, clients were often advised to keep the first 10% of their portfolio in gold bullion. The idea was to keep some of your money in the ultimate form of liquidity, before putting some in government issued currencies.
With the growth of crypto-currencies we may be seeing a whole new form of liquidity emerging for investors to consider as a savings vehicle.
Could it be that in 50 years time money managers are advising clients to keep 5-10% in cryptos? There is plenty of water to flow under the bridge before then, but it is possible.
One such phenomenon is government and regulatory attention, as nations around the world face a challenge to the money they issue and collect taxes in.
Whilst some fans of crypto-currencies might tell you that there’s nothing to fear here and that we’re finally seeing the internet allow Their’s Law to exert itself and disrupt fiat money, other experts are more cautious.
Money expert Jim Rickards is one such expert voicing a bit of caution. His point in these tweets is that bitcoin is of man, depends of technology networks operating and is vulnerable to government shut down.
Problematic government interference with crypto-currencies is a hot topic of debate. Even if some crypto-currency fans don’t think this is probable, it is possible. Investors in bitcoin et al should consider this risk and research it.
So there we are. Those are our five most important takeaways for investors at this juncture in the digital currency revolution.
It’s been quite a ride so far and the cryptos are quite simply the biggest story in the financial markets right now.
Hot money is pouring into these new, niche markets and it’s difficult to know how much leverage is being used along the way and thus further fueling the run up in crypto-currency prices.
Did we miss any angles? Any other key investor takeaways? Voice your opinion in the comments below.
Bitoin is massive news right now.
The media cannot stop talking about it. Retail investors are now chasing a rising bitcoin price and venture money is flowing into bitcoin related start-ups.
Helped into its next leg up by stories of Baidu’s acceptance of the currency and China’s strategic targeting of bitcoin as another anti-dollar play in the currency war, this most famous of the digital money darlings continues to hold above $1,000.
So what does this all mean for investors?
Well, many things in fact. We list the five most important below and explain what they mean for the markets and for your money.
Bitcoin’s market cap now $12.5bn, half of silver’s
Bitcoin’s market cap is sitting around the $12.5bn mark, meaning it is half as large as annual silver supply to the market.Silver’s small market cap of available silver of $25bn has made it an attractive target for investors trying to corner it and pump the silver price up. Remember the Hunt brothers. Even Warren Buffett had a play on silver in the early 2000s.
Bitcoin’s market cap had been ebbing and flowing between one and two billion dollars for much of this year, but the last few weeks has seen this swell many times over.
It’s worth nearly as much as gold
With one bitcoin being worth $1,045, the crypto-currency is now worth nearly as much as an ounce of gold. With the gold price falling from nearly $1,900 in September 2011, these two non-government issued forms of money hit price parity last week, before bitcoin dropped from the $1,200s to around $1,000 again.Some investors like to trade ratios with certain big numbers holding a lot of weight. With the gold-bitcoin ratio nearing 1:1 no doubt some of these technicians will be allocating their chips accordingly. Jan Skoyles wrote an interesting piece the other day investigating the ratios between gold, silver and bitcoin, where you can see a potential changing of the guard in the non-fiat monies.
2013’s best performing asset class
With the price of bitcoin rising from $14 at the beginning of 2013 to $1,045 today, holders of bitcoin have seen their holdings grow in value nearly 75 times this year.Those are eye-popping numbers!
And, it’s not just Bitcoin surging. Other crypto-currencies have been on the run too, some appreciating by hundreds of percent in a day. This makes the US stock markets much herald 22% gain this year look trivial.
Whilst the media focus might be mainly on bitcoin, the limelight is slowly widening to cover other interesting new names like Litecoin, Feathercoin, Namecoin and many more.
Is this an opportunity? Or just a bubble?
The jury’s out and there is heated debate both sides of the fence. It’s certainly the case that crypto-currencies are red hot right now.
New forms of liquidity?
When your money is not in investments, earning you a return in return for the risks you bare, you might hold it as liquidity in dollars, pounds, gold or some other currency.Throughout the years of Swiss banking, clients were often advised to keep the first 10% of their portfolio in gold bullion. The idea was to keep some of your money in the ultimate form of liquidity, before putting some in government issued currencies.
With the growth of crypto-currencies we may be seeing a whole new form of liquidity emerging for investors to consider as a savings vehicle.
Could it be that in 50 years time money managers are advising clients to keep 5-10% in cryptos? There is plenty of water to flow under the bridge before then, but it is possible.
Beware of unwanted attention from above
The crypto-mania raging at the moment has brought many phenomena with it, but some of these are less desired.One such phenomenon is government and regulatory attention, as nations around the world face a challenge to the money they issue and collect taxes in.
Whilst some fans of crypto-currencies might tell you that there’s nothing to fear here and that we’re finally seeing the internet allow Their’s Law to exert itself and disrupt fiat money, other experts are more cautious.
Money expert Jim Rickards is one such expert voicing a bit of caution. His point in these tweets is that bitcoin is of man, depends of technology networks operating and is vulnerable to government shut down.
Problematic government interference with crypto-currencies is a hot topic of debate. Even if some crypto-currency fans don’t think this is probable, it is possible. Investors in bitcoin et al should consider this risk and research it.
So there we are. Those are our five most important takeaways for investors at this juncture in the digital currency revolution.
It’s been quite a ride so far and the cryptos are quite simply the biggest story in the financial markets right now.
Hot money is pouring into these new, niche markets and it’s difficult to know how much leverage is being used along the way and thus further fueling the run up in crypto-currency prices.
Did we miss any angles? Any other key investor takeaways? Voice your opinion in the comments below.