Last year (August 2019) Reuters reported about a forgery crisis currently roiling the world’s gold industry.
According to the report at least (possibly much more) $50 million worth of fake gold bars are being “fraudulently stamped with the logos of major refineries are being inserted into the global market” with at least 1,000 of the bars, of a standard size known as a kilobar for their weight, have been found in the vaults of JPMorgan Chase & Co., one of the major banks at the heart of the market in bullion.
This is alarming to many who consider gold the most stable and trusted long-term investment and highlights just one of the risks involved with stacking gold, others include illegal displacement or transportation of the precious metal across borders and in some cases, confiscation and general bans on possession for personal use.
Sounds crazy, right?
In fact, this already happened in many countries, even in the so-called free world – USA and Australia being prime examples as seen in the excerpts below (source wikipedia).
As Goldsilver (broker) explains: “When a gold confiscation happens, there unfortunately aren’t a lot of viable solutions. If your government declares it illegal to own a meaningful amount of bullion, you’d have little choice but to comply. Either that or play the role of a fugitive—with the prospects of financial penalties, forcible confiscation of your metal, and even jail time waiting for you.”
They also point out that “Fake gold bars – blocks of cheaper metal plated with gold – are relatively common in the gold industry”.
All of this makes me wonder yet again, is Gold really the most stable and reliable asset for long-term investment?
For those who are following this blog, you probably already know where I’m going with this. For a few years now I have been talking about the advantages that Bitcoin has over Gold and the news about counterfeited gold came as yet another reminder that we live in times when everything gets forged, faked, especially physical items, which is where cryptocurrencies came into the picture and changed the game for good.
Bitcoin cannot be forged, it cannot be faked or counterfeited. It is digital data, permanently recorded, publicly traceable and simultaneously shared across millions of computers around the world. It’s not money as we know it nor it is an asset per se, but is has value.
But how, you might ask…
As Anthony Pompliano explained so eloquently, the limited supply of Bitcoin combined with decentralisation model are huge factors for its value: “Each time one is lost or destroyed, they are gone forever. This makes the macro design of Bitcoin deflationary. We can’t create more of them, but we can see a total supply reduction over time. And then we have the supply schedule. Rather than creating more and more money out of thin air, Bitcoin requires an incredible amount of investment and work to be done to produce bitcoin. Every four years its production is cut in half.
No group of humans having private meetings to determine what happens next. Just a fully transparent, decentralised system that can be verified by anyone at any time. Bitcoin relies on math. Cold, hard facts.”
To add to this, I can only point out the obvious fact that Bitcoin has outperformed gold (in RIO terms) every year since its conception (except 2014). That’s right, 10 out of 11 years performance ranking puts Bitcoin way ahead of Gold in terms of return of investment and here lies the answer to the question what is the better asset to invest in.
Will this be the case for decades to come? Perhaps not. But it sure is the case now and for the foreseeable future, so ride the wave while you can and keep an open mind.
To find out which retailers I use to buy Bitcoin (and other crypto) check out this post.
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