By Tama Churchouse, editor, Stansberry Churchouse Research

Monday, October 16, 2017

Bitcoin is frequently compared to gold. But it's not an either/or proposition... And I'll tell you why.

Gold and bitcoin are the only two widely distributed, decentralized methods of exchanging value as currency. They have no central authority issuance, unlike U.S. dollars or any other fiat currency.

Likewise, neither bitcoin nor gold can just be "printed" at the push of a button by an anxious central banker. You have to either earn your gold by mining it, or you can pay cash for it. The same is true of bitcoin (although bitcoin miners use computers instead of picks and shovels).

But there's one big difference between the two...

Gold is the very opposite of new technology.

Gold is a physical, tangible, and real asset. You can pick it up and feel its satisfying weight in your hand. It can't be altered. Gold is gold. Once I own it, that's it. I don't need to rely on a functioning Internet. I don't need a computer. It has pure, tangible value.

And gold has unquestionably been money for thousands of years. A gold coin can still sit in my pocket, even while I might be fending off mobs, zombies, hordes of cockroaches, or a nuclear winter.

On the other hand, bitcoin is nothing more than a code that exists somewhere on the Internet. You can't pick it up and put it in your pocket. If you lose that code... you lose your bitcoin.

Not only that, but unlike gold, bitcoin isn't easy to explain to the average guy on the street. The fundamentals of blockchain, and the distributed ledger systems upon which bitcoin is built, are not straightforward. It usually takes time and effort for people to understand just how much of an innovation bitcoin really is as a "trustless" mechanism for exchanging value.

(By "trustless," I mean we don't need to trust an intermediary to settle our transaction – we can exchange value directly and securely with one another, thanks to blockchain technology.)

Despite its benefits, most people simply can't comprehend bitcoin and blockchain.

Gold, however, is easy to understand. Its value has stood the test of time. As a friend of mine once put it: "I prefer a currency that has survived 5,000-plus years of wars, empires, the rise and fall of countries, cold spells, hot spells, and has been universally accepted in every country of the world."

I can't argue with that.

No matter how big bitcoin gets, it will never be gold.

If you were to ask me which I think is more likely to be around a hundred years from now, my answer is gold... every time. Nothing has usurped it for millennia as a globally accepted medium of exchange or store of value, and I don't think bitcoin will do so either.

But... you should still own bitcoin. Let me tell you why...

Bitcoin is the ultimate in freedom of asset ownership. The government can't confiscate it, as the U.S. government did with gold under Executive Order 6102 in 1933.

You can cross national borders with bitcoin in your possession on a USB thumb drive... or, if you can memorize your private key, with no physical object in your possession of any kind.

Whether your bitcoin is worth $100 or $100 million, it makes no difference to how you move and store it (which is clearly not the same with gold). You don't need a trusted middleman to send it. And you can move it around the world, securely, in a matter of minutes.

And if you're looking for gains... bitcoin is a lot likelier than gold to be up 1,000% three years from now. Even though its price has soared over the past few years, it's still nowhere near mainstream yet.

So gold and bitcoin both deserve a place in your portfolio.

Gold has stood the test of time and is a medium of storing value. Bitcoin's time, on the other hand, is just beginning. Blockchain technology is the future, and when you have an opportunity to buy the future and tuck it away, you should take it.

Good investing,

Tama Churchouse

Further Reading:

The skepticism and debate rages on – is bitcoin really money? It may be purely digital. But if Tama is right, bitcoin will soon be accepted as currency all over the world... Read his recent essay right here: Bitcoin Will Change How You Think About Money... Here's Why.

In a recent essay, Tama takes on some of the most common biases against bitcoin. If you've heard negative press about bitcoin in the past, check it out right here: Don't Let These Three Reasons Stop You From Buying Bitcoin.

Market Notes

NEW HIGHS OF NOTE LAST WEEK

Lockheed Martin (LMT)... "offense" contractor

Northrop Grumman (NOC)... "offense" contractor

Boeing (BA)... "offense" contractor

Raytheon (RTN)... "offense" contractor

Brink's (BCO)... "cash transportation"

American Express (AXP)... credit cards

Bank of Montreal (BMO)... Canadian bank

Royal Bank of Canada (RY)... Canadian bank

Bank of Nova Scotia (BNS)... Canadian bank

Kemper (KMPR)... insurance

Markel (MKL)... insurance

Entergy (ETR)... utilities

El Paso Electric (EE)... utilities

American States Water (AWR)... utilities

KB Home (KBH)... homebuilder

D.R. Horton (DHI)... homebuilder

Toll Brothers (TOL)... homebuilder

Meritage Homes (MTH)... homebuilder

Hilton Worldwide (HLT)... hotels

La Quinta (LQ)... hotels

Wyndham Worldwide (WYN)... hotels

Xenia Hotels & Resorts (XHR)... hotels

CBRE Group (CBG)... real estate "picks and shovels"

Square (SQ)... mobile payments "picks and shovels"

Alibaba (BABA)... China's Amazon

NEW LOWS OF NOTE LAST WEEK

Kellogg (K)... food giant

General Mills (GIS)... food giant

General Electric (GE)... appliance giant

Dick's Sporting Goods (DKS)... sporting goods

Avon Products (AVP)... beauty products

Triple-digit upside is possible in this mining company...

While bitcoin's rally remains in the spotlight, the uptrend in platinum and other precious metals is being overlooked. And Flavious Smith believes this mining company could soar as the uptrend continues...

Click here to get immediate access.

Bitcoin Won't Replace Gold... Here's Why You Should Still Own It

Market Notes

Recent Articles