Gold AND Bitcoin

Before we get into today’s article we’ve had a number of disgruntled customers voicing their concern over a misleading headline late yesterday (after the AFR article) saying “SHOCK! Aussie bullion dealer dumps gold for Bitcoin”.  Whilst the text under the heading didn’t suggest we were ‘dumping gold’, loyal customers still took umbrage with the heading. Thanks for your many emails.  We are on record as being fans of the publishing house from where this came.  It was just a bit of sensationalist, loose wording, nothing more.  We also don’t believe there was any malice in it.

So if you are a newcomer to Ainslie off that heading, please let us clarify our position.  We are in no way moving our core business away from gold and silver.  We are however adding another monetary asset in the form of bitcoin to our customer offer.  We are even expanding that offer to Ether and Litecoin.  Why?  Because that is what our customers want and no one else was offering the ease and security to purchase in person that we do.  We also are the first to acknowledge, as stated in the above article, that some crypto currencies exhibit the same fundamental monetary properties as gold and silver.  We are simply offering another monetary asset, not moving from another.  We actually think they are quite complimentary.

The analogy provided to the AFR but not printed was that gold and silver are most certainly the pre-eminent monetary asset with over 5,000 years of proven history.  The periodic table we all learned at school tells us you simply can’t create gold 2.0 or silver 2.0 or platinum 2.0 out of the blue either.  Bitcoin has been around now for just over 7 years.  HOWEVER, we acknowledge that 5,000 years ago when money was shells etc, people may have queried these new shiny kids on the block, gold and silver.  Maybe the same will be the case for bitcoin and the like?

As we said in our article yesterday, some very smart people are saying the advent and use of the blockchain today is what the internet was to society 25 years ago.  That is big.  That is a generational game changer.

Now let’s move on and look at some market analysis.  The chart below (courtesy of SomaBull) shows a critical breakout in the gold price has recently occurred:

Perhaps more importantly the second chart shows the monthly MACD in the positive again after those awful (for sellers) / wonderful (for buyers) years post the 2011 / 2013 price corrections.  That essentially means momentum is to the upside and we are absolutely nowhere near any perceived ‘over bought’ situation.  For newcomers to technical analysis Investopedia defines MACD as:

“Moving average convergence divergence (MACD) is a trend-following momentum indicator that shows the relationship between two moving averages of prices.”

Coincidentally, going back to our earlier gold v crypto discussion, that same analyst had this to say:

“As worldwide government debt explodes, the search for other new or alternative forms of currencies is taking place. I'm not here to debate the merits of these cryptocurrencies, but to rather point out that I believe they signal the eventual rise of gold back to the top of the global currency game.

While some postulate that cryptos are used mainly for nefarious activities, and that is the only reason for their existence, I believe their recent rise in popularity is because of the sorry state of government balance sheets.

The level of distrust in government "paper" is starting to increase, as consumers (and investors) are slowly coming to the realization that these national debts CANNOT be repaid under normal conditions. As a result, new "forms of currency" are sniffing out this weakness and attempting to take the place of the old guard. While this is still occurring on an extraordinarily small scale level (considering the amount of government issued paper there is in existence), these currencies are clearly taking root and beginning to threaten the established order. Needless to say, while these new forms of "money" might have been ignored before - written off as a fad that will eventually die - they are now starting to raise some eyebrows given their continued surge in popularity.”

In other words both gold/silver and crypto are currently on the rise on people all around the world seeking uncorrelated, monetary assets to protect their wealth.  Sound familiar?  It’s the heart of our trademark:

“Balance your wealth in an unbalanced world”