Bitcoin Goes to the Moon, While Gold Drops: Insights from Daniel Fisher, a Certified Financial Analyst & Physical Gold Dealer
LONDON, Aug. 12, 2021 /PRNewswire/ -- Daniel Fisher is the Managing Director of Physical Gold Limited and his experience in the financial sector stretches back nearly 25 years. Since founding Physical, Fisher has qualified as CeFA registered to further understand regulatory frameworks and provide insight into the real world of investment covering the risks and rewards of the various asset classes.
- In a world gone mad for cryptocurrency, it certainly seems like Bitcoin, Ethereum, Cardano and many of the smaller altcoins are "going to the moon"
- With younger investors speculating on crypto – and solely on crypto – maybe it's time to pause and re-think how crypto is viewed as part of an overall investment strategy to balance risk and reward
LONDON, Aug. 12, 2021 /PRNewswire/ -- Daniel Fisher is the Managing Director of Physical Gold Limited and his experience in the financial sector stretches back nearly 25 years. Since founding Physical, Fisher has qualified as CeFA registered to further understand regulatory frameworks and provide insight into the real world of investment covering the risks and rewards of the various asset classes.
In addition, Fisher personally invests in the cryptocurrency markets so is expertly placed to discuss achieving a balanced overall investment portfolio.
"We all want to change our fortunes and achieve life-changing wealth. With the gold rush back on, this time in the form of digital gold rather than physical gold, it certainly feels like this may be possible. Indeed, it has become possible for many who spotted the merits of Bitcoin early on."
"That said, it's still early days in terms of adoption. While the price of Bitcoin may seem extraordinary, with a price per coin exceeding $45,000 and approaching $65,000 earlier this year, we still have a long way to go," says Fisher.
Looking at 2021 in isolation would lead to a conclusion that investing in Bitcoin makes the best sense. Gold prices have indeed dropped to their lowest point since March this year, gold prices are down 5% over 6 months and down 10% over the last year. Conversely, Bitcoin has risen nearly 30% in one month, but prices are down 2% over the last 6 months but up 280% over the last year.
The comparison here is stark and highlights the difference in volatility between each. Even when taking a 5-year view, Bitcoin has risen a staggering 7612%. The gold price has risen nearly 30%. Both have provided excellent returns over this period when you consider the risk versus reward factor.
Commenting about the 2021 stats, Fisher comments, "Gold and Bitcoin investments need to be viewed over the long-term. This is where the highest returns will be achieved, as part of a balanced portfolio. Bitcoin seems like the overall winner, but it's a far more speculative and risky strategy and is subject to numerous expected changes soon, such as regulation and taxation changes. Who knows what impact these will have?"
"Gold and silver prices though are expected to rise significantly over the next 3-5 years as safe havens. Most economic analysts agree that the global economy will have the biggest squeeze in history as governments attempt to recoup Covid-related debts with increased taxes. High unemployment levels and corporate bankruptcies are expected. Precious metals have a history of thriving in this environment."
The non-economic principle of FOMO (Fear of Missing Out) has driven more people to crypto, but physical gold and silver shouldn't be overlooked. FOMO means "a feeling of anxiety or insecurity over the possibility of missing out on something, as an event or an opportunity".
Fisher said about FOMO "Here at Physical Gold, we have noticed that when crypto hits the headlines with positive news (and massive rises), then FOMO leads many investors to focus on crypto currencies, meaning precious metals are neglected (usually in the short-term).
This demonstrates the natural human instinct of greed. Why buy an asset returning 10% per annum, when you could possibly make 500%? However, FOMO is not based on economics. Crypto prices are far more exposed to regulatory updates, which could send prices plummeting overnight at any time. Buy Gold and other precious metals like silver in the knowledge, they can never fall to zero due to their intrinsic value, but crypto could!"
The positive news for crypto currencies is that adoption is increasing. For example, bitcoin is a legally accepted currency in El Salvador. Similarly, large wealth funds are now adding crypto currencies to their portfolios. Germany's Fund Location Act allows German funds to buy up to 20% of their portfolio in crypto currencies. The mighty e-retailer Amazon is also rumoured to be lining up Bitcoin as an accepted form of payment by the end of 2021.
The majority of investors see precious metals and crypto currencies as polar opposites (e.g., tangible vs intangible assets), but there are more synergies than you would immediately think and it's a case where opposites most definitely attract!
For example, both rely on mining and have a limited supply, both also act as good inflation hedges. They share the basic economic dynamic of limited supply and increasing demand. "We see many of our gold and silver investors also buying crypto. There is a shared mentality that both asset classes appeal to those seeking to take control of their finances and destiny and demonstrate a desire to move away from the banking system." Says Fisher.
Using the HODL ("Hold on for dear life") principle, gold is considered a more proven, safer and lower risk strategy, while crypto is seen as more volatile but having the potential to yield much higher returns. This all goes back to the basics of risk versus reward. Each investor has a different risk appetite. Gold may be steadier, then silver is for those seeking higher risk/return, and finally crypto at the raciest end of the scale. Owning all three assets spreads risk and reward.
Physical Gold Ltd is often asked about what proportion of a portfolio should be invested in gold and silver. Fisher advises, "A sensible mix would be 10% of a portfolio in gold, 5% in silver and whilst I am not an expert on crypto, many analysts think that up to 5% of an investment portfolio should be invested in crypto currencies. Having an investment level of around 20% in precious metals and crypto currencies is a perfect combination for protection from volatility. Most importantly though, when considering any asset, never invest more than you can afford to lose."
About Physical Gold Limited
Physical Gold Limited was established in 2008 by Daniel Fisher, an experienced city of London trader. Dan launched https://www.physicalgold.com as a platform to sell gold and silver bars and coins online. A BNTA registered company, Physical Gold enjoys a solid reputation as a leading UK gold and silver trader.
Company website: https://www.physicalgold.com
Registered Office: 25 Old Broad St, London EC2N 1HN
Telephone: UK +44 (0)020 7060 9992
Contact: Daniel Fisher, Managing Director
Organisation: Physical Gold Limited
