Fidelity's director of global macro, Jurrien Timmer, believes that bitcoin is the "exponential gold" of the digital age. In a series of posts on social media platform X, Timmer outlined his views on bitcoin's potential as a store of value and hedge against monetary debasement.
Bitcoin's Role as a Commodity Currency
Timmer describes bitcoin as a commodity currency that aims to serve as a store of value and a hedge against inflation. He compares it to gold, which historically has performed well during periods of high inflation, negative real interest rates, and excessive money supply growth.
While acknowledging that gold is a form of money, Timmer argues that it is too deflationary and cumbersome to be used as a medium of exchange. Instead, investors primarily hold gold as a store of value, which is one of the reasons why bitcoin is often compared to gold.
Bitcoin's Correlation with Other Assets
Timmer also discusses bitcoin's correlation with other assets. He notes that based on September's monthly data, bitcoin still has a positive correlation with equities, although less so than many other assets. He suggests that bitcoin should be considered as part of an alternative assets (alts) allocation in a 60/40 portfolio.
Furthermore, Timmer points out that bitcoin is negatively correlated with the U.S. dollar and Treasury bills. However, he highlights that it is uncorrelated with gold, which raises questions about the common belief that bitcoin and gold are on the same team. Nevertheless, Timmer sees this as a positive attribute, as it adds to the diversification of the altcoins market.
Fidelity's Perspective on Bitcoin and Gold
Fidelity's director of global macro presents an interesting perspective on the relationship between bitcoin and gold. While acknowledging the similarities between the two as stores of value, Timmer suggests that they play different games. He concludes that if bitcoin and gold are on the same team but in different games, it is not necessarily a bad thing.
It is clear that Fidelity's director of global macro sees the potential value of bitcoin as a digital store of value and a hedge against inflation. While gold has long been considered a safe haven asset, Timmer believes that bitcoin offers similar advantages in the digital age. As the world of finance continues to evolve, it will be interesting to see how bitcoin and gold coexist and whether bitcoin can truly become the "exponential gold" it aspires to be.
What are your thoughts on Fidelity's director of global macro's statements about bitcoin and gold? Share your opinions in the comments section below.
Frequently Asked Questions
What is a gold IRA account?
You can purchase physical gold bullion coins anytime. To start investing in gold, it doesn't matter if you are retired.
Owning gold as an IRA has the advantage of allowing you to keep it forever. You won't have to pay taxes on your gold investments when you die.
Your heirs inherit your gold without paying capital gains taxes. And because your gold remains outside of the estate, you aren't required to include it in your final estate report.
To open a IRA for gold, you must first create an individual retirement plan (IRA). Once you've done that, you'll receive an IRA custody. This company acts like a middleman between the IRS and you.
Your gold IRA custodian can handle all paperwork and submit necessary forms to IRS. This includes filing annual reports.
Taxes will be charged on gold you have withdrawn from an IRA. If you're withdrawing the entire balance, you'll owe income taxes plus a 10 percent penalty.
If you only take out a very small percentage of your income, you may not need to pay tax. However, there are exceptions. However, there are exceptions. If you take 30% or more of your total IRA asset, you'll owe federal Income Taxes plus a 20% penalty.
It's best not to take out more 50% of your total IRA investments each year. Otherwise, you'll face steep financial consequences.
How much do gold IRA fees cost?
$6 per month is the Individual Retirement Account Fee (IRA). This includes account maintenance and any investment costs.
If you wish to diversify your portfolio, you may need to pay additional fees. These fees vary depending on what type of IRA you choose. Some companies offer free check accounts, but charge monthly fee for IRA accounts.
A majority of providers also charge annual administration fees. These fees can range from 0% up to 1%. The average rate is.25% per year. These rates can often be waived if a broker, such as TD Ameritrade, is involved.
Can I have physical gold in my IRA
Gold is money. Not just paper currency. It is an asset that people have used over thousands of years as money, and a way to protect wealth from inflation and economic uncertainties. Today, investors use gold as part of a diversified portfolio because gold tends to do better during financial turmoil.
Many Americans are now more inclined to invest in precious metals like gold and silver than stocks or bonds. It is possible to make money by investing in gold. However, it doesn't guarantee that you'll make a lot of money.
One reason is that gold has historically performed better than other assets during periods of financial panic. Between August 2011 to early 2013, gold prices rose close to 100 percent while the S&P 500 fell 21 per cent. During those turbulent market conditions, gold was among the few assets that outperformed stocks.
Another benefit to investing in gold? It has virtually zero counterparty exposure. Your stock portfolio can fall, but you will still own your shares. But if you own gold, its value will increase even if the company you invested in defaults on its debt.
Finally, gold is liquid. This means you can easily sell your gold any time, unlike other investments. Because gold is so liquid compared to other investments, buying it in small amounts makes sense. This allows for you to benefit from the short-term fluctuations of the gold market.
- If you take distributions before hitting 59.5, you'll owe a 10% penalty on the amount withdrawn. (lendedu.com)
- You can only purchase gold bars at least 99.5% purity. (forbes.com)
- If you accidentally make an improper transaction, the IRS will disallow it and count it as a withdrawal, so you would owe income tax on the item's value and, if you are younger than 59 ½, an additional 10% early withdrawal penalty. (forbes.com)
- Contribution limits$6,000 (49 and under) $7,000 (50 and up)$6,000 (49 and under) $7,000 (50 and up)$58,000 or 25% of your annual compensation (whichever is smaller) (lendedu.com)
- This is a 15% margin that has shown no stable direction of growth but fluctuates seemingly at random. (smartasset.com)
- Saddam Hussein's InvasionHelped Uncage a Bear in 1990 – WSJ
- Do you want to keep your IRA gold at home? It's Not Exactly Lawful – WSJ
- Yahoo Finance provides information about Barrick Gold Corporation's (GOLD) stock price, news, quote, and history.
Three ways to invest in gold for retirement
It is crucial to understand how you can incorporate gold into your retirement plans. There are several options to invest in precious metals if your employer has a 401k. You might also be interested to invest in gold outside the workplace. A custodial account can be opened by a brokerage firm like Fidelity Investments if you already have an IRA. Or, if you don't already own any precious metals, you may want to consider buying them directly from a reputable dealer.
If you do invest in gold, follow these three simple rules:
- Buy Gold with Your Cash – Don't use credit cards or borrow money to fund your investments. Instead, deposit cash into your accounts. This will protect your against inflation and increase your purchasing power.
- Physical Gold Coins – Physical gold coins are better than a paper certificate. The reason for this is that physical gold coins are much more easily sold than certificates. There are no storage fees for physical gold coins.
- Diversify Your Portfolio. – Do not put all your eggs into one basket. This means that you should diversify your wealth by investing in different assets. This helps to reduce risk and provides more flexibility when markets are volatile.
By: Kevin Helms
Title: Fidelity Director Calls Bitcoin “Exponential Gold” and Compares it to Traditional Gold
Sourced From: news.bitcoin.com/financial-giant-fidelitys-director-sees-bitcoin-as-exponential-gold/
Published Date: Sun, 05 Nov 2023 04:30:17 +0000