Bitcoin's Disappointing Performance Against Gold
Commodity market expert Mike McGlone, from Bloomberg, has raised concerns about the potential downturn for bitcoin compared to gold. He highlights the underwhelming performance of bitcoin against gold since its peak in 2021. According to McGlone, the bitcoin-to-gold ratio has dropped by approximately 40% from its 2021 high of 37 times.
McGlone Emphasizes Bitcoin-to-Gold Ratio and Warns of a Potential Downturn
In his most recent evaluation of commodities, including bitcoin (BTC), McGlone discusses the pattern recognition, gaps, and the gold versus bitcoin scenario. He notes that the S&P 500 E-mini futures, which started trading in 1997, had never left a gap on the weekly charts until December, implying potential implications for risk assets.
McGlone further explains that the bitcoin-to-gold ratio, which has historically been a leading indicator, has been lagging since the significant rally in 2021. He points out that the highly speculative digital asset is currently equivalent to about 21 ounces of gold, representing a 40% decline from its peak.
Bitcoin's Underperformance and Potential Recession
This is not the first time that McGlone has discussed the bitcoin-to-gold ratio. On January 23, 2024, he highlighted bitcoin's underperformance compared to gold and suggested that it could signal an opportunity for bitcoin to catch up or indicate a possible recession. He leans towards the latter, expressing concerns if the Bitcoin/gold ratio continues to decline.
The shift in performance can be attributed to the end of zero-interest-rate policies (ZIRP) and the liquidity surge in 2021. With the current federal fund rate at 5.58, assets like gold and bitcoin, which do not generate earnings or interest, are becoming less attractive in portfolios. McGlone even suggests that the recent frenzy around crypto exchange-traded funds (ETFs) could be seen as a warning sign.
Share Your Thoughts
What are your thoughts on McGlone's analysis of the bitcoin-to-gold ratio? Do you believe that gold will continue to outshine bitcoin? Share your opinions in the comments section below.
Frequently Asked Questions
Can the government take your gold?
You own your gold and therefore the government cannot seize it. You earned it through hard work. It belongs exclusively to you. This rule may not apply to all cases. You could lose your gold if convicted of fraud against a federal government agency. Additionally, your precious metals may be forfeited if you owe the IRS taxes. However, even if taxes are not paid, gold is still your property.
How much of your IRA should include precious metals?
It's important to understand that precious metals aren't only for wealthy people. You don't have to be rich to invest in them. There are many ways that you can make money with gold and silver investments, even if you don't have much money.
You might consider purchasing physical coins, such as bullion bars and rounds. Stocks in companies that produce precious materials could be purchased. Another option is to make use of the IRA rollover programs offered by your retirement plan provider.
Regardless of your choice, you'll still benefit from owning precious metals. They are not stocks but offer long-term growth.
And, unlike traditional investments, their prices tend to rise over time. If you decide to make a sale of your investment in the future, you will likely realize more profit than with traditional investments.
How much do gold IRA fees cost?
An Individual Retirement Account (IRA) fee is $6 per month. This fee covers account maintenance fees, as well any investment costs that may be associated with your investments.
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. For example, some companies offer free checking accounts but charge monthly fees for IRA accounts.
Most providers also charge annual management costs. These fees range between 0% and 1 percent. The average rate is.25% annually. However, these rates are typically waived if you use a broker like TD Ameritrade.
Can I keep physical gold in an IRA?
Gold is money, not just paper currency or coinage. 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. Investors use gold today as part of their diversified portfolio, because it tends to perform better in times of 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.
Gold has historically performed better during financial panics than other assets. 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 provides liquidity. 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 you to profit from short-term fluctuations on the gold market.
Can I buy or sell gold from my self-directed IRA
Although you can buy gold using your self-directed IRA account, you will need to open an account at a brokerage like TD Ameritrade. You can also transfer funds from an existing retirement fund.
The IRS allows individuals up to $5.500 annually ($6,500 if you are married and filing jointly). This can be contributed to a traditional IRA. Individuals may contribute up to $1,000 ($2,000 if married, filing jointly) directly into a Roth IRA.
If you do decide you want to invest your money in gold, you should look into purchasing physical bullion instead of futures contracts. Futures contracts can be described as financial instruments that are determined by the gold price. You can speculate on future prices, but not own the metal. But, physical bullion is real bars of gold or silver that you can hold in one's hand.
Who is the owner of the gold in a gold IRA
The IRS considers any individual who holds gold “a form of income” that is subject to taxation.
You must have at least $10,000 in gold and keep it for at most five years to qualify for this tax-free status.
The purchase of gold can protect you from inflation and price volatility. But it's not smart to hold it if your only intention is to use it.
If you plan to eventually sell the gold, you'll need a report on its value. This could impact the amount of capital gains taxes your owe if you cash in your investments.
You should consult a financial planner or accountant to see what options are available to you.
Statistics
- (Basically, if your GDP grows by 2%, you need miners to dig 2% more gold out of the ground every year to keep prices steady.) (smartasset.com)
- Instead, the economy improved, stocks rebounded, and gold plunged, losing 28 percent of its value in 2013. (aarp.org)
- 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)
- The price of gold jumped 131 percent from late 2007 to September 2011, when it hit a high of $1,921 an ounce, according to the World Gold Council. (aarp.org)
- Gold is considered a collectible, and profits from a sale are taxed at a maximum rate of 28 percent. (aarp.org)
External Links
forbes.com
- Gold IRA, Add Sparkle to Your Retirement Nest egg
- Understanding China's Evergrande Crisis – Forbes Advisor
cftc.gov
irs.gov
bbb.org
How To
Tips for Investing with Gold
Investing in Gold is a popular investment strategy. Because investing in gold has many benefits. There are several ways to invest in gold. Some people buy physical gold coins, while others prefer investing in gold ETFs (Exchange Traded Funds).
Before you purchase any type or gold, here are some things to think about.
- First, find out if your country allows gold ownership. If so, then you can proceed. You can also look at buying gold abroad.
- Secondly, you should know what kind of gold coin you want. You can choose between yellow gold and white gold as well as rose gold.
- The third factor to consider is the price for gold. Start small and move up. Diversifying your portfolio is a key thing to remember when purchasing gold. Diversifying your portfolio should be a priority, including stocks, bonds and real estate.
- Don't forget to keep in mind that gold prices often change. You need to keep up with current trends.
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By: Jamie Redman
Title: Gold Outshines Bitcoin as Crypto-to-Metal Ratio Plunges, Says Commodity Analyst Mike McGlone
Sourced From: news.bitcoin.com/commodity-analyst-mike-mcglone-says-gold-glitters-over-bitcoin-as-crypto-to-metal-ratio-plunges-post-2021/
Published Date: Sun, 04 Feb 2024 22:30:21 +0000
