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Tags: gold | safe haven | cryptocurrency | inflation | recession | retirement savings

Trevor Gerszt: Gold vs. Crypto: Who Will Win the Battle of the Safe Havens?

Trevor Gerszt: Gold vs. Crypto: Who Will Win the Battle of the Safe Havens?
(bwylezich / 123RF Stock Photo)

Trevor Gerszt By Friday, 07 July 2023 12:17 PM EDT Current | Bio | Archive

With recent financial developments making more and more Americans nervous about their money, the search for safe havens is on. No one wants to leave their money at the mercy of markets in the event of a financial downturn, but what to do with it?

Many people still remember the losses of the 2008 financial crisis, when markets lost over 50% of their value. For years afterward markets struggled to regain their footing, and investors hesitated to put their money back into markets lest they get burned again.

One bright spot during the crisis was gold, which gained 25% during the same period markets lost over 50%. And indeed many people today are buying gold in the hope that gold will protect their assets today in the same way it did from 2008-2011.

But since 2008 there are new entrants to the market, and new challengers to gold’s status as a safe haven asset, namely cryptocurrencies like Bitcoin. Will these upstarts challenge gold and make a name for themselves as safe havens? Or when all is said and done, will gold once again reassert its status as the safe haven asset against which all others are judged?

The Advantages of Cryptocurrency

Bitcoin was the first cryptocurrency to gain mainstream appeal, getting its start in the aftermath of the financial crisis. It was developed specifically to try to counteract some of the problems with fiat currencies that became apparent after the Federal Reserve’s quantitative easing.

Bitcoin was intended to act as a peer-to-peer digital currency, allowing people to become their own bank. It was intended to allow for greater ease of making payments, especially across borders, and its quantity was fixed, thus ensuring that no single actor could inflate the supply of Bitcoin and make existing units of the currency worth less.

Since that time, numerous cryptocurrencies have been developed, some sharing Bitcoin’s approach and others differing markedly. But they have helped spur the adoption of cryptocurrencies and have brought crypto into the mainstream. Bitcoin is now even traded on mainstream futures exchanges.

Cryptocurrency can be traded relatively easily, most often today through exchanges that offer trading in multiple different cryptocurrencies. And cryptocurrencies, aside from being speculative assets, can also be used to purchase goods and services online.

The value of cryptocurrencies has increased significantly too, with Bitcoin going from fractions of a penny to over $30,000 today. That rapid price growth drew many people into the crypto world, and had many people talking about how cryptocurrencies now can rival gold as a safe haven asset. But can they really?

The Disadvantages of Cryptocurrency

The major disadvantage of cryptocurrency today isn’t the cryptocurrencies themselves, it’s the government reaction to their adoption. While the U.S. government has had a largely laissez faire attitude toward crypto for the past several years, that’s changing.

The Securities and Exchange Commission (SEC) recently charged Binance, the world’s largest crypto exchange, with 13 violations, including operating an unregistered exchange. And it charged Coinbase, the second-largest exchange, with operating as an unregistered exchange.

While some cryptocurrencies such as Bitcoin are considered commodities, others might be considered securities. But SEC hasn’t provided firm guidance on which cryptocurrencies are securities and which aren’t, so these exchanges are caught up in what is a regulatory struggle between SEC and the Commodity Futures Trading Commission (CFTC), which regulates commodities trading.

This action by SEC leaves the future of cryptocurrency exchanges in doubt, which could impact the future adoption and use of cryptocurrencies by making it far more difficult for people to purchase and trade cryptocurrencies. It also comes on the heels of the collapse of FTX after its fraudulent activities were discovered.

Needless to say, regulators are taking a much stronger approach toward cryptocurrencies and crypto companies today than they have in the past, and that doesn’t bode well for cryptocurrency holders. While you can hold Bitcoin and other cryptocurrencies in your crypto wallet, how much will they be worth to you if you can’t find an easy way to sell them to other people?

Will the SEC crackdown be the beginning of the end for crypto in the US? Or will a central bank digital currency eventually put Bitcoin and other cryptocurrencies out of business? It’s hard to say. But even with Bitcoin’s great performance so far this year, it’s hard to ignore the dark clouds on the horizon.

Gold as a Safe Haven

By comparison, gold markets seem to have remained as staid as they normally are. One of the reasons for gold’s continued popularity is its reputation for stability. It just keeps plugging along, no matter what is happening in the world around it.

Gold is also highly liquid, able to be bought and sold 24/7 around the world. Thousands of vendors exist to buy and sell gold coins and bars around the world, making it relatively easy to find the gold products you want.

Of course, you still need to do your due diligence and work with reputable and experienced gold sellers. The last thing you want to do is to buy counterfeit coins or invest money into a scheme that takes your money and gives you nothing in return. That’s why Goldco is so proud of the many 5-star reviews we have received from our customers, as it demonstrates our commitment to customer service, transparency, and customer satisfaction.

While the cryptocurrency world is seeing unease and instability right now due to government enforcement actions, it’s hard to imagine a similar scenario in gold markets. Gold has been an established safe haven asset for thousands of years, and to many people is almost synonymous with wealth. You can buy gold coins from numerous reputable sellers, and whether you decide to buy gold with a gold IRA or buy gold to store at home, you should always have an option at some point to take physical possession of the gold you buy.

That tangible aspect of gold is something that Bitcoin and cryptocurrencies can’t offer. Holding a gold coin in your hand, you realize why people have sought after gold for millennia. The luster, the heft, and the feeling of actually holding wealth in your hands are something that only gold can offer.

If you’re interested in adding gold to your portfolio, call Goldco today. With thousands of satisfied customers and over $2 billion in precious metals placements, we have gold products available that can satisfy your needs for a safe haven asset. Talk to a Goldco representative today to learn more about how gold can start working for you.


Trevor Gerszt is the founder and CEO of Goldco, a precious metals dealer in Los Angeles. For more than 20 years, Trevor has sought out ways to help people build long-term wealth through the security and stability of precious metals and other alternative assets. Goldco is A+ Rated by the Better Business Bureau, a 5-Time INC 500 Winner and has countless 5-Star Reviews for its quality customer service, dependability and strong reputation.

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With recent financial developments making more and more Americans nervous about their money, the search for safe havens is on. No one wants to leave their money at the mercy of markets in the event of a financial downturn, but what to do with it?
gold, safe haven, cryptocurrency, inflation, recession, retirement savings
Friday, 07 July 2023 12:17 PM
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