A few years ago at a Mines & Money conference in London, I was privileged to listen to a presentation from one of my favorite analysts, Grant Williams of newsletter "Things that make you go hmm" fame, with the title "Nobody Cares."
The performance of the markets recently, particularly for bitcoin and gold, brings that title particularly to mind, although back then Grant was primarily concentrating on gold as bitcoin had not yet really taken off, making some of its adherents rich beyond their wildest dreams – at least on paper.
The title is even more relevant today, particularly when dealing with bitcoin. In this writer’s opinion, bitcoin has to be one of the biggest scams in the financial marketplace. Some of bitcoin’s capabilities as an anonymous electronic payment system seem to have attracted some of the get-rich-quick crowd among its leading lights, as well as others who see bitcoin as a tool for use in criminal activities, such as money laundering.
This is more than obvious to anyone who researches this market in any kind of depth, yet nobody seems to care!
For those interested in the bitcoin phenomenon, take a look at Substack.com and a particular contributor who styles himself Doomberg.
Many of his articles focus on bitcoin, and its proponents. The writer appears to have conducted a considerable amount of research into bitcoin, and the people behind some of its leading beneficiaries therefrom, and the conclusions are, to say the least, alarming.
Many analysts see the whole bitcoin scenario ending in tears as governments intervene to clamp down on aspects of the cryptocurrency that make it so attractive for money laundering by the criminal fraternity. But don’t bank on it happening! There are too many vested interests now involved in this market.
So why should I, who primarily offers commentary on the precious metals sector, write about bitcoin?
The possible growth in bitcoin’s value, could divert some of the funds that might normally find its way into the precious metals sector, and into gold and silver in particular.
Gold has stood the test of time – thousands of years in fact – as an excellent wealth protector. Bitcoin, on the other hand, is a recent investment phenomenon, and can be hugely volatile as we’ve seen in recent months - and if sentiment and governments move against it, as they well may, it could fall enormously again, decimating putative investment gains.
While the gold price seems to move up and down on positive or negative US data releases and statements from Fed officials hinting at the possible moving forward of its tapering and interest rate raising timetable, I feel the overall prognosis for the yellow metal remains distinctly positive.
A good part of this optimism for gold is based on inflation levels, a topic attracting considerable media attention at present. They are running higher than current interest rate levels, which means real interest rates are currently distinctly negative, and look like remaining so.
Negative real rates are usually seen as positive for the gold price given that gold itself is a non-interest generating asset. So in a financial scenario that could see investors’ assets diminishing in value, relative price stability can be seen as a benefit.
Since the 6th Century BC in Lydia, when it’s believed that gold coins were first used as a form of currency, gold has stood the test of time. Over thousands of years, gold has helped to be a wealth preserver, not a get-rich-quick asset.
A claim bitcoin simply cannot make.
by Lawrence Williams
Lawrence (Lawrie) Williams is a highly regarded London-based writer and commentator on financial and political subjects, specializing in precious metals news and commentary. He graduated in mining engineering from The Royal School of Mines, a constituent college of Imperial College, London. He has contributed articles on precious metals to the Financial Times, Sharps Pixley, US Gold Bureau and Seeking Alpha among others.
The opinions expressed in this article are the author's own, do not necessarily reflect the opinions or views of Rosland Capital LLC or its employees, and do not constitute financial or investment advice or recommendations from the author or Rosland Capital or its employees. The author is compensated by Rosland Capital for his articles.