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Safe Haven Assets in the Age of COVID-19

by icosuccess

Brent Jabbour 0:00
A new report from the world gold council claims that Gold’s latest Bull Run has come too fast but gold still has room for growth.

Now according to the W GC, the combination of high uncertainty easy monetary policy, very low interest rates positive price momentum, the depreciation of the US dollar and fears of higher inflation fueled record flows of 734 tons into gold backed ETF ETFs in the first half of this year now, meanwhile, the US dollar has started to rebound from a multi year support level simultaneously the prices of both Bitcoin and gold have dropped off.

So joining us now to discuss our boom bust coast and crypto analyst Ben Swan and CEO of Euro Pacific capital. Peter Schiff, thank you both for being here. Now. Peter, I want to start with you. What do you make of this w GC report and where is gold headed?

Peter Schiff 0:51
Well, first of all, Gold’s headed a lot higher. I agree with the report in that the price of gold is going to go up I think, the world gold council that’s actually under You’re estimating just how high the price is going to rise because I think they’re also under estimating how much inflation global central banks are going to create, in particular, the Federal Reserve, and how much value the US dollar is going to lose against other fiat currencies, but in particular, against Real Money, which is gold.

Brent Jabbour 1:20
And I got a quick I guess, I have to ask you this, Peter, you have often been here you touting the popularity of gold, why you should invest in it? Is there ever a time where you feel like it’s not the right investment?

Peter Schiff 1:34
Well, first of all, I don’t even look at gold bullion as an investment. I look at it as a store of value as an alternative to cash. So I think it’s always makes sense to have some cash right? I mean, especially if you think assets are expensive if you think stocks are overpriced. If you think real estate is overpriced, and you don’t want to buy now you want to buy later how you going to store that purchasing power.

I think storing it in gold Historically is much better than just relying on a piece of paper, even the best fiat currencies, I have a poor track record relative to gold. So if you understand what gold is, then you should always have some. But right now, I think it’s particularly important given how much money those central banks are printing, particularly the Fed.

I think gold is going to make a much normal a bigger rise against these fiat currencies, but as an investment, I think that investors should be in gold mining stocks. I think Warren Buffett had it right by buying Barrick Gold, which I own myself and I’ve owned for a long time, but there’s a lot of other gold stocks that I think are particularly good investments right now, given how much value I think gold is going to gain in the months and years ahead.

Brent Jabbour 2:43
Sometimes you have to go to square one I just had to cover that quick bend now since the dollar increase from its monthly opening on September 1, the price of bitcoin declined from 12,086 to 11,001 60. Now gold has seen a similar response declining by nearly 1.8% In the past few days, is strengthening dollar going to end bitcoins current search.

Ben Swann 3:05
And know. First of all, I think that when we especially when we’re looking at what Peter just said about inflation, what these numbers don’t take into account is remember the federal, the Fed reserve chairman Jerome Powell just came out a few weeks ago and talked about, you know, altering and changing the feds stance on inflation and letting them run moderately above 2%.

All of that lends itself into both Bitcoin and gold, which essentially, are acting in different ways, but both as a store of value assets. Now listen, we can disagree about what which one’s better and which one you should go into. But here’s what I know.

I know there are a lot of companies right now that are starting to move some of their money over into cryptocurrencies in Bitcoin, because they’re afraid of what the Fed is doing to the dollar. So listen, this is a long term game. And if we’re talking about long term games, the Fed is not winning a long term game they continue to print money devalue the currency and continue to essentially run the American currency into the ground.

Brent Jabbour 4:00
I think it’s fair to say that you both agree that fiat currency is not the way to go or I mean, as far as holding the store of value there. But Peter, what do you make of what Ben just said there?

Peter Schiff 4:11
Well, I mean, first of all, I agree with him that I don’t think it matters what the dollar does ultimately to Bitcoin, whether the dollar is strengthening or weakening against other fiat currencies. I think ultimately Bitcoin is going to collapse underneath its own weight. I just don’t think Bitcoin is a viable alternative to gold. I don’t think it’s a store of value.

I agree that there are some people who mistakenly believe that it is, and so they may buy it. I think Ben is overstating how much institutional money is actually moving in to Bitcoin. I think it’s a tiny amount. And I think that to the extent that institutions pension is a dominance are going to be correctly worried about inflation and a weak dollar, they are far more likely to go to gold than to Bitcoin.

And so I just was Stay out of it. I mean, you could trade it, but I think if you’re gonna trade, you know, trade, the mining stocks, I think you got a lot more upside potential there if you’re a gambler, and I think there’s less downside risk.

Brent Jabbour 5:12
Now, Ben, Bitcoin did fall on Wednesday by 4%. But it defended the long held support zone of 11,100 11,200 ish. Are we going to see an even larger pullback over the next few days?

Ben Swann 5:25
Well, we could see that, but I don’t think we’re going to drop well below that $11,000 Mark, but just kind of going back to what Peter’s saying there.

Look, I think there’s a lot of disagreement over whether or not Bitcoin truly as a store of value and institutional money, but there is so much technology being built around blockchain right now, and consequently attaching itself to Bitcoin and cryptocurrencies.

I think that you can’t ignore the fact that there is an enormous technological value and technological assets being built around Bitcoin right now. And it’s been that way for several years.

So when people do look at the way that Bitcoin fell off at the end of 20 17 going into 2018 and say, Oh, look, it’s gonna fall all the way back to $3,000. Again, I don’t think that that’s going to happen based upon the fact that the technological space around Bitcoin is very different today than it was a couple years ago.

Brent Jabbour 6:11
Peter, go ahead. Yeah.

Peter Schiff 6:14
Yeah, that will that may all turn out to be malinvestment, that was a consequence or byproduct of the bubble. And to the extent that that technology has value, it doesn’t necessarily mean that Bitcoin itself has that value. I think it’s just a speculative you know, digital token.

Brent Jabbour 6:29
Peter Schiff of Euro Pacific capital and Ben Swan, boom bust, Coase and crypto analysts. Thank you both for your time.

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