Physical Gold Value Vs Bitcoin Value

More and more respected businesses, including APMEX, have begun accepting Bitcoin as a payment method, providing cryptocurrency with greater legitimacy and buying power. However, cryptocurrency is not without its risks. The importance of understanding the instability associated with Bitcoin and other cryptocurrencies cannot be overstated. 

Bitcoin often appeals to those who worry about the collapse of fiat currency. Hedging against financial uncertainty is wise, but the choice of using Bitcoin as your hedge is still in question. Cryptocurrency has more in common with fiat currency than you might assume. Fiat currency is legal tender not backed by a physical commodity, something Bitcoin and fiat currency have in common. The United States abandoned the Gold Standard in 1971, meaning the U.S. dollar has not been backed by a tangible resource since. In fact, there is no major currency backed by a physical asset.

The dollar’s purchasing power has declined since being separated from Gold, while the price of an ounce of Gold still retains roughly the same relative buying power. In 1940, a fine men’s suit cost about the same as an ounce of Gold, just as it does today, while the number in dollars has skyrocketed. The finite Gold supply has a great deal to do with this.

Gold has intrinsic value and many applications besides currency. Bitcoin is only used as currency, meaning it is entirely lacking intrinsic value. This may seem insignificant if looking at the parallels between Bitcoin and fiat currency, but if we shift the discussion to investment products and practical uses, this difference becomes crucial. If you own Gold or any other Precious Metals assets, you have something with enduring value.

Gold is in demand by many industries. Its practical application extends from space travel to exquisite jewelry. Here are a few practical uses of the Precious Metal: 

  • NASA needs to build space vehicles with the most dependable parts possible. For this reason, Gold is used in many applications involving in space travel. The circuitry of the space vehicle is Gold because the Precious Metal is a highly dependable conductor of electricity.
  • Gold is the most malleable of all Precious Metals. This allows Gold to be hammered into sheets as thin as a few millionths of an inch. The hammered sheets are known as Gold Leaf and are used to add Gold to furniture, picture frames and other household items. Gold does not easily corrode, making Gold Leaf applicable to decorating external and internal surfaces of buildings.
  • If you use a cell phone, laptop, desktop or tablet -- you own Gold. Gold is able to transmit digital information better than any other Precious Metal. The mounting of microprocessors and memory chips uses a Gold plating as well as the connectors used to attach cables. Gold is even used in GPS systems and calculators.
  • More than 75% of the newly mined Gold is used in jewelry. Gold has been used in jewelry for centuries because of its gorgeous luster, color, malleability and resistance to tarnishing.

There will always be a market for Precious Metals. Gold can provide a protective hedge against the volatile market, while Bitcoin can be unstable. When you seek a safe-haven asset that will retain its value when all else fails, Gold is truly the Gold standard.

APMEX recommends discussing the pros and cons of investing with a financial adviser or professional.

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