It is precisely at a time when investors have a great need for security that supply shortages of physical gold occur. However, Bitcoin could benefit from this development.
• Monetary expansion unsettles investors
• Physical gold is running out
• Bitcoin could benefit
The corona virus continues to spread and paralyze numerous large economies. For fear of the economic consequences, which can not yet be estimated, many investors sell their shares and go to so-called “safe havens”.
Gold is in short supply
Gold in particular is valued as a safe investment in times of crisis. So now too. The level of uncertainty among investors is so great that many of them no longer trust financial institutions with regard to the securitization and storage of their gold holdings. Instead, they opt for the supposedly safest form of investment: their own physical storage. However, the interest in bars and coins is now so great that demand can hardly be met.
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However, this is only partly due to the high demand. In addition, the corona virus causes supply bottlenecks: gold mines in South Africa and many mines in South Africa and Canada have now been temporarily closed for fear of the spread of the corona virus. The Swiss canton of Ticino is also affected by such a shutdown. What many probably don’t know is that around a third of the world’s annual supply of gold is processed there. And since coin manufacturers and refineries are not considered to be essential companies, supplies are beginning to stall.
Stable coins also suffer
But what does this mean for digital currencies? Numerous crypto fans ultimately see them as a good, if not a better alternative to gold.
The shortage of gold according to the “BTC Echo” is becoming problematic for stable coins that securitize the gold price. As they provide gold coverage, the current bottlenecks mean that they will not be able to issue new coins until they get new gold to ensure coverage.
Chance for the Bitcoin
The experts at “BTC Echo”, on the other hand, are optimistic about Bitcoin, the world’s most popular cryptocurrency. You refer to the parallels between gold and Bitcoin: Both score thanks to their possibility of autonomous storage with a political independence. In addition, due to their scarcity, both offer protection against devaluation, such as that resulting from the ultra-loose Monetary policy of the central banks could threaten the traditional currencies. In the fight against the corona consequences, the money gates were opened wide. Gold and Bitcoin are therefore very attractive for investors who have lost their trust in the state financial system.
The fact that there are now bottlenecks in physical gold could prove positive for Bitcoin. Because numerous investors who were previously skeptical about the cyber currency could now turn to Bitcoin in their search for an alternative to gold.
However, “BTC Echo” emphasizes that gold and Bitcoin do not want to assume an immediate correlation. Rather, they recommend conservative investors in particular to include both assets in their portfolios, because both convinced with their long-term value storage function, especially given the current monetary expansion by the central banks.
Editorial office finanzen.ch
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