Introduction
Bloomberg commodity market expert, Mike McGlone, has recently highlighted the disappointing performance of Bitcoin compared to gold since its peak in 2021. The Bitcoin-to-gold ratio has seen a significant decline of about 40% from its 2021 high, signaling a potential downturn for the cryptocurrency.
Bitcoin's Underperformance Against Gold
According to Mike McGlone, a Bloomberg commodity analyst, Bitcoin has failed to match the performance of gold since its peak in 2021. In his recent evaluation of commodities, including Bitcoin, McGlone noted that the S&P 500 E-mini futures had left a gap on the weekly charts in December, which could have implications for risk assets. He further explained that the Bitcoin-to-gold ratio, which has historically been a leading indicator, has been trailing since its peak in 2021. Currently, the ratio is about 40% below its 2021 apex.
Potential Recession Indicated
McGlone previously discussed the Bitcoin-to-gold ratio on January 23, 2024, suggesting that Bitcoin's underperformance compared to gold, despite a strong U.S. stock market, could indicate a possible recession. He believes that if the Bitcoin/gold ratio continues to decline, it could be a cause for concern. This shift in performance is attributed to the end of zero-interest-rate policies (ZIRP) and the liquidity surge in 2021. As the Federal Reserve's federal fund rate is currently at 5.58, assets like gold and Bitcoin, which do not generate earnings or interest, become less attractive in portfolios. McGlone even went as far as stating that the frenzy around crypto exchange-traded funds could be seen as a bell ringing at the top.
Conclusion
As the Bitcoin-to-gold ratio continues to decline, experts like Mike McGlone warn of a potential downturn for Bitcoin. The disappointing performance of Bitcoin against gold since its peak in 2021 raises concerns and indicates a possible recession. The end of zero-interest-rate policies and the changing market scenario have impacted assets like gold and Bitcoin, making them less attractive in portfolios. It remains to be seen how the crypto market will respond to these developments.
Frequently Asked Questions
Should You Invest in gold for Retirement?
The answer will depend on how many dollars you have saved so far and whether you had gold as an investment option at the time. If you're unsure about which option to choose then consider investing in both.
Gold offers potential returns and is therefore a safe investment. It's a great investment for retirees.
While most investments offer fixed rates of return, gold tends to fluctuate. Because of this, gold's value can fluctuate over time.
But this doesn't mean you shouldn't invest in gold. This just means you need to account for fluctuations in your overall portfolio.
Another advantage to gold is that it can be used as a tangible asset. Gold can be stored more easily than stocks and bonds. It can be easily transported.
You can always access your gold as long as it is kept safe. Physical gold is not subject to storage fees.
Investing in gold can help protect against inflation. As gold prices rise in tandem with other commodities it can be a good hedge against rising cost.
You'll also benefit from having a portion of your savings invested in something that isn't going down in value. Gold rises in the face of a falling stock market.
Another advantage to investing in gold is the ability to sell it whenever you wish. You can also liquidate your gold position at any time you need cash, just like stocks. You don't even have to wait until you retire.
If you do decide to invest in gold, make sure to diversify your holdings. Don't put all of your eggs in one basket.
You shouldn't buy too little at once. Start small, buying only a few ounces. You can add more as you need.
It's not about getting rich fast. It is to create enough wealth that you no longer have to depend on Social Security.
While gold may not be the best investment, it can be a great addition to any retirement plan.
What Precious Metals Can You Invest in for Retirement?
It is gold and silver that are the best precious metal investment. They are both simple to purchase and sell, and they have been around for a long time. You should add them to your portfolio if you are looking to diversify.
Gold: One of the oldest forms of currency, gold, is one of mankind's most valuable. It's stable and safe. Because of this, it's considered a good way to preserve wealth during times of uncertainty.
Silver: The popularity of silver has always been a concern for investors. It's a good choice for those who want to avoid volatility. Silver, unlike gold, tends not to go down but up.
Platinium is another precious metal that is becoming increasingly popular. It's like silver or gold in that it is durable and resistant to corrosion. It's also more expensive than the other two.
Rhodium: Rhodium can be used in catalytic convertors. It is also used to make jewelry. It is also quite affordable compared with other types of precious metals.
Palladium: Palladium has a similarity to platinum but is more rare. It's also more accessible. For these reasons, it's become a favorite among investors looking to add precious metals to their portfolios.
Is gold a good choice for an investment IRA?
If you are looking for a way to save money, gold is a great investment. It can be used to diversify your portfolio. But gold is not all that it seems.
It's been used as a form of payment throughout history. It's sometimes called “the world's oldest money”.
Gold, unlike other paper currencies created by governments is mined directly from the earth. Because it is rare and difficult to make, it is extremely valuable.
The price of gold fluctuates based on supply and demand. People tend to spend more when the economy is healthy, which means that fewer people are able to mine gold. The result is that gold's value increases.
On the flip side, when the economy slows down, people hoard cash instead of spending it. This leads to more gold being produced which decreases its value.
This is why investing in gold makes sense for individuals and businesses. If you make an investment in gold, you can reap the economic benefits whenever the economy is growing.
Your investments will also generate interest, which can help you increase your wealth. In addition, you won’t lose any money if gold falls in value.
What are the pros and cons of a gold IRA?
An Individual Retirement account (IRA) is a better option than regular savings accounts in that interest earned is exempted from tax. An IRA is a good choice for those who want a way to save some money but don’t want the tax. However, there are also disadvantages to this type of investment.
For example, if you withdraw too much from your IRA once, you could lose all your accumulated funds. The IRS may prohibit you from withdrawing funds from your IRA before you are 59 1/2 years of age. If you do withdraw funds from your IRA you will most likely be required to pay a penalty.
The downside is that managing your IRA requires fees. Many banks charge between 0.5% and 2.0% per year. Other providers charge monthly management costs ranging from $10-50.
Insurance is necessary if you wish to keep your money safe from the banks. Many insurers require that you own at least one ounce of gold before you can make a claim. Insurance that covers losses upto $500,000.
If you choose to go with a gold IRA, you'll need to determine how much gold you want to use. Some providers limit the number of ounces of gold that you can own. Some providers allow you to choose your weight.
It is also up to you to decide whether you want to purchase physical gold or futures. Futures contracts for gold are less expensive than physical gold. Futures contracts provide flexibility for purchasing gold. Futures contracts allow you to create a contract with a specified expiration date.
You'll also need to decide what kind of insurance coverage you want. The standard policy does not include theft protection or loss caused by fire, flood, earthquake. The policy does not cover natural disasters. If you live near a high-risk region, you might want to consider additional coverage.
In addition to insurance, you'll need to consider the cost of storing your gold. Insurance doesn't cover storage costs. Banks charge between $25 and $40 per month for safekeeping.
To open a IRA in gold, you will need to first speak with a qualified custodian. Custodians keep track of your investments and ensure compliance with federal regulations. Custodians aren't allowed to sell your assets. Instead, they must keep your assets for as long you request.
Once you have chosen the right type of IRA to suit your needs, it is time to fill out paperwork defining your goals. You must include information about what investments you would like to make (e.g. stocks, bonds and mutual funds). It is also important to specify how much money you will invest each month.
After completing the forms, send them along with a check or a small deposit to your chosen provider. After reviewing your application, the company will send you a confirmation mail.
When opening a gold IRA, you should consider using a financial planner. Financial planners are experts in investing and will help you decide which type of IRA works best for your situation. They can help you find cheaper insurance options to lower your costs.
How does gold perform as an investment?
Supply and demand determine the gold price. Interest rates are also a factor.
Due to their limited supply, gold prices fluctuate. In addition, there is a risk associated with owning physical gold because you have to store it somewhere.
Can the government seize your gold?
You own your gold and therefore the government cannot seize it. You worked hard to earn it. It belongs to you. However, there may be some exceptions to this rule. You could lose your gold if convicted of fraud against a federal government agency. You can also lose precious metals if you owe taxes. However, even though your taxes have not been paid, you can still keep your precious metals, even though they are considered the property of United States Government.
Statistics
- Contribution limits$6,000 (49 and under) $7,000 (50 and up)$6,000 (49 and under) $7,000 (50 and up)$58,000 or 25% of your annual compensation (whichever is smaller) (lendedu.com)
- Indeed, several financial advisers interviewed for this article suggest you invest 5 to 15 percent of your portfolio in gold, just in case. (aarp.org)
- Instead, the economy improved, stocks rebounded, and gold plunged, losing 28 percent of its value in 2013. (aarp.org)
- Gold is considered a collectible, and profits from a sale are taxed at a maximum rate of 28 percent. (aarp.org)
- The price of gold jumped 131 percent from late 2007 to September 2011, when it hit a high of $1,921 an ounce, according to the World Gold Council. (aarp.org)
External Links
bbb.org
cftc.gov
irs.gov
wsj.com
- Saddam Hussein's Invasion Helped Uncage a Bear In 1990 – WSJ
- Do you want to keep your IRA gold at home? It's Not Exactly Legal – WSJ
How To
Investing in gold vs. investing in stocks
Investing in gold as an investment vehicle might seem like a very risky proposition these days. This is because many people believe gold is no longer financially profitable. This belief is due to the fact that many people see gold prices dropping because of the global economy. They feel that gold investment would cause them to lose money. However, investing in gold can still provide significant benefits. Below are some of them.
One of the oldest forms known of currency is gold. It has been in use for thousands of year. It is a valuable store of value that has been used by many people throughout the world. Even today, countries such as South Africa continue to rely heavily on it as a form of payment for their citizens.
Consider the price per gram when you decide whether you should invest in or not. You must determine how much gold bullion you can afford per gram before you consider buying it. If you don't know your current market rate, you could always contact a local jeweler and ask them what they think the price is.
Noting that gold prices have fallen in recent years, it is worth noting that the cost to produce gold has gone up. So while the price of gold has declined, production costs haven't changed.
It is important to keep in mind the amount you plan to purchase of gold when you're weighing whether or not it is worth your time. It makes sense to save any gold you don't need to purchase if your goal is to use it for wedding rings. It is worth considering if you intend to use it for long-term investment. It is possible to make a profit by selling your gold at higher prices than when you purchased it.
We hope that this article has helped you gain a better understanding and appreciation for gold as an investment option. Before making any investment decisions, we strongly advise that you thoroughly research all options. Only then can you make informed decisions.
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By: Jamie Redman
Title: Gold Outshines Bitcoin as Crypto-to-Metal Ratio Drops Post-2021
Sourced From: news.bitcoin.com/commodity-analyst-mike-mcglone-says-gold-glitters-over-bitcoin-as-crypto-to-metal-ratio-plunges-post-2021/
Published Date: Sun, 04 Feb 2024 22:30:21 +0000
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