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Cryptos Can Tumble Down To Zero At Any Time For Any Reason - Sprott

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Cryptos Can Tumble Down To Zero At Any Time For Any Reason— Sprott

(Kitco News) - Last year’s argument that “gold is dead” seems outrageous in 2018, especially after bitcoin dropped nearly 70% during the past four months, said Sprott Asset Management, adding that gold is the asset that deserves the status of “immutability.”

“One prominent 2017 storyline was, ‘Gold is dead — long live cryptocurrencies!’ Gold and cryptocurrencies were cast as opponents in a ‘monetary’ boxing ring,” CEO of Sprott Asset Management John Ciampaglia said in a report published on Tuesday. “But does anyone still think Bitcoin is a proven ‘store of value’?”

Crypto traders are still feeling the shock of bitcoin dropping from its high of nearly $20,000 reached in December to below $7,000 within a period of just four months. Late Tuesday bitcoin was last seen trading at $6,934.80, up 1.43% on the day, according to Kitco’s aggregated charts.

But, the price plunge was not that surprising to analysts who view bitcoin as a new asset that is extremely sensitive to a number of triggers, Ciampaglia pointed out.

“Any public blockchain could crumble due to lack of funds, lack of users, weak governance, a security breach, or multiple other common risks that face new businesses. Any of these could send the price of the crypto down to $0, leaving investors with nothing,” he wrote.

Ciampaglia also referred to investing in bitcoin as “speculation”: “When placing wagers on cryptocurrencies, it’s not a safety or diversification play, but speculation,” he said. You’re betting on startups, whether there’s a company behind it or, like Bitcoin, a decentralized blockchain that you believe will become more mainstream.

Gold Always Wins

The big debate of bitcoin versus gold is not even a debate, the report stated, highlighting that the yellow precious metal wins every time.

“Gold isn’t a startup, and it is certainly no ‘flash in the pan.’ Gold investors do not have to worry about a ‘company’ dissolving, and no matter what happens there is always value in gold bullion — hence its deserved immutability. And that’s been proven over millennia,” Ciampaglia said.

Gold has always been a stable investment with an impressive track record, the CEO added.

“Gold has a near infinite track record of performance and function … When investing in gold, extreme volatility has not been the historical norm,” Ciampaglia noted. “Gold investors also know that there is a baseline to their investment since no matter what goes wrong in the financial markets, gold still has inherent value.”

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 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.