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As Bitcoin Soars, Is It The New Safe-Haven Play?

Kitco News

Editor's Note: This story was updated to include comments from economist Mark Skousen.

The digital currency bitcoin jumped to a fresh all-time high Friday as global investors looked for safe-haven trades.

Bitcoin rose more than 3.5 percent to hit a record of $1,941.99. Gold prices rather were near steady in early U.S. trading with June Comex gold last up $0.809 an ounce at $1,252.

Amid the drama in Washington, the S&P 500 fell Wednesday to its worst day since September. So, are investors now turning to the cryptocurrency as a hedge during times of uncertainty over gold?

“If you were asking someone in Asia, then yes, bitcoin is definitely a safe-haven currency that gives them the ability to move funds out of the country. However, in the U.S. or Canada this isn’t the case. It is more of a speculative play than anything else,” said Phil Streible, chief market strategist for Chicago-based RJO Futures.

Japan and Korea are part of the bitcoin surge. Trading volumes in Japanese yen and Korean won account for around 48.6 percent of trading.

But Vince Lanci, founder of Echobay Partners and a columnist for marketslant.com, is weary of the digital money, noting that it is simply a front-end of a technology and “not real.”

“Bitcoin is not a safe haven in the long run,” the veteran trader said, adding that it is electronic and governments will crack down on its use under the pretense of "crime stopping.”

As far as replacing gold, “never,” said Lanci. “But the technology behind bitcoin is blockchain. And blockchain is a growing acceptance, which will be a boost for gold. Not a replacement.”

Mark Skousen founder of the popular Freedom Fest conference which draws Bitcoin devotees, is not stunned by the run up.

“I'm not surprised that Bitcoin has taken off, since by its nature, the supply is extremely limited while the central banks every where continue to inflate -- it's like gold or the Swiss franc in the inflationary 1970s, but more limited,” he told Kitco News.

“As other countries like Japan start allowing it for purchases without tax consequences, it could move even higher,” he added.

Follow bitcoin’s price action on Kitco’s dedicated page

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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