As Bitcoin (BTC) continues to meander along, inside a sideways and downwards channel, both gold and silver are at, or close to, all-time and local highs. It appears that the precious metals are leading the way, but Bitcoin is sure to follow soon.
Gold and silver - the havens of safety throughout history
Long before Bitcoin came into existence, gold and silver were the precious metal havens of safety. In times of recession, investors would make sure that a good part of their wealth was firmly parked in God’s money. This would make sure that if the stock market and other traditional assets went into meltdown, at least that part of their wealth in gold and silver would be protected.
How banks suppressed precious metals
Nevertheless, central banks, the big commercial banks, and Wall Street, put their heads together and came up with a way of suppressing the price of gold and silver through the use of derivatives. In fact, this was so incredibly successful over a period of quite a few decades, that investors began to believe the government line that gold was now a thing of the past, and that U.S. treasuries were much more reliable as a store of value.
However, the greed of governments and banks entered a level never before seen in history. The ability to just print as much paper currency as was needed, in order to fund wars etc., has led to the simply enormous pile of unpayable debt that is the case today.
People pay the debt interest and don’t even realise it
Many people still don’t realise that the only way to be able to even pay the interest on the debt is to socialise it, by printing whatever is necessary. As the government prints more currency, it enters into the ever-increasing lake of currency that is already in circulation. This dilutes the currency in everyone’s pockets, or in their bank accounts, and vastly decreases their purchasing power, and it is by this process that the people are forced to pay the interest on their government’s debt.
As already mentioned, the vast majority of people have still not woken up to this extremely unpalatable truth. That said, some have, and they are now buying the previously unwanted gold and silver of the past. In fact, they are being joined by the same institutions that warned them against it in past decades - the central banks themselves.
Central banks are buying gold again
An investigation into the gold buying of central banks might surprise everyone. Since warning that gold had little value compared with good old U.S. treasuries, central banks have bought more gold in the last two to three years than they have in the past several decades. You might well wonder at this.
Gold continues to make all-time highs
Source: TradingView
Looking at the chart for gold against the U.S. dollar, it can be seen that the gold price is continually making all-time highs. In fact, the price has now even climbed above the upward trend. As more liquidity (currency printing) comes into the system, the price of gold is only likely to keep going up.
Silver - a cheaper alternative
Source: TradingView
Although the silver price has tended to lag that of gold, it also appears to be headed much higher. Once a monetary metal, silver is no longer so. However, it is an extremely valuable commodity, and highly sought after in the fields of computing, solar power, the defence industry, and many others. Nevertheless, for those unable to afford gold, silver is a great cheaper alternative, and the price can move much faster than gold.
A cautionary note for precious metals buyers
When buying gold or silver, it must be borne in mind that even though they are probably going higher over time, the commercial banks still have a huge short position on both metals. Therefore, the ability to suppress the price, bringing it down sharply in the face of heavy buying, is still very much there.
Bitcoin is gold and silver on steroids
While both gold and silver are having their time in the sun, and will probably continue to do so, at least while recession is a constant threat, it’s arguably Bitcoin that has the biggest upside in this environment of terrible economic uncertainty.
Bitcoin has the smallest market capitalization, and by far the scarcest supply. It’s true that manipulation can potentially be achieved through the recent accessibility of futures and options derivatives for the number one cryptocurrency. However, given the sheer amount of indefatigable long term holders of $BTC, constant price manipulation will be extremely difficult for financial institutions to achieve.
Gold and silver are leading the way at this particular time in the most destructive period of monetary debasement in history. However, Bitcoin should surpass both. That said, holding all three might be a decent strategy.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
