Nathan Birch on Bitcoin, Gold & Silver: Which one should you buy?
There’s been some talk around gold, silver and Bitcoin recently, so let’s take a look at where each one is at and whether it’s a worthwhile buying option.
Silver is currently, at the time of writing, worth about AUD$35, or USD$27 via the paper price.
Of course, you can’t buy it at the paper price without a premium on it, so you’re paying about $45. It is pretty cheap, it could be seen to be undervalued and to have significant room to grow.
However, there are a few things holding it back. First, it appears to be manipulated.
Elon Musk comes out and says he’s buying Bitcoin. He’s pumping it up. But why is he not buying silver? Silver is a needed entity, it’s an industrial precious metal for all of his vehicles, his electronics and so on. Surely, with it being undervalued, he should be buying up all the silver he can for his technology.
But do you know anyone that’s made a lot of money out of silver? In 1980, silver was $50 an ounce, today it’s worth $35. The value has gone down over 40 years. Meanwhile, house prices have gone up 10 times 20 times, food prices 20 times, car prices 20 times, wage prices 10 times.
If silver, which should have gone up in value, was to go up by a lot, it would mean the iPhone or whatever other device you’re using would also go up in value. Each phone has maybe a half ounce of silver inside it, all your electronic devices have it. Even a solar panel would have almost an ounce of silver in a panel.
So if the price of silver went up by $500, it means the price of an iPhone or solar panel would also have to go up by $500. We live in a world where we don’t want that to happen so they artificially keep the price down.
Even though a lot of experts think the price of silver will go through the roof, it hasn’t happened.
Gold is another asset that has the experts excited. It’s always been seen as a traditional safe haven in times of economic uncertainty. It retains physical value, unlike stocks, or paper money.
However, it is unlike silver, in that it doesn’t have many uses. You can use it to make jewellery, but that’s not the same as having it in all your devices. Gold does have the potential for upside, but, like so many other things, it is being manipulated and it’s currently being suppressed.
Bitcoin is currently at about $60,000 Aussie and $50,000 US. From here, Bitcoin could comfortably go all the way up to a million dollars. It has significant upside but this doesn’t mean we’ll be going into any kind of Bitcoin backed economy. It works against the Central Bank system so governments won’t want to use it, except potentially as a hedge against hyperinflation.
All the other markets are in a bubble. The stock market has insolvent zombie companies going for all-time highs. Property prices are going through the roof, which is great, but ultimately our currency is crashing.
Could cryptocurrency stave off hyperinflation for another 10 years? Who knows, they might be artificially keeping silver low, and pumping up Bitcoin, so the whole economy doesn’t implode.
Remember the basics
A lot of smart investors like to hedge their bets, to be diversified, to have a sustainable portfolio and, most importantly, to keep cashflow coming in. They want more cash coming in so they can keep expanding their base. Look at what we’re talking about in this article. Gold and silver don’t give you cashflow. Cryptocurrency has some potential for that but it is still very volatile.