Stores Of Value? Gold, Bitcoin, Real Estate

Gold is a precious scarce metal on earth that we, nowadays, use for electricity conduction, to fill teeth cavities and to build jewelry.


gold
gold

Money has been around for millennia, thousands of years of commerce with money flowing from hand to hand, money is such an awesome thing… well, it used to be, back when money was real money and not this paper bullsh** we have nowadays. You see, for thousands of years we used real money, hard money, scarce money, deflationary money… gold!

Gold is a precious scarce metal on earth that we, nowadays, use for electricity conduction, to fill teeth cavities and to build jewelry. For many years we used it as a currency, we traded products for gold and that gold for other products, everyone lived like this. But this system had its problems, theft!

gold

Carrying around your gold or even saving it up and hiding it in your home was more prone to it being stolen, the Italian seeing this happening decided to build a place, a place to store your gold, a place that would keep that gold safe! Yup, that place is what we nowadays call a bank!

In 1157 in Venice, the first state-backed bank rose, which would fall down only centuries later. With the banking system came something that initiated humanity’s downfall, bills! People would store their gold in banks in order to keep it safe and in return they would get a certificate that said “This certificate corresponds to X amount of gold in the Medici Bank”, people realized that they didn’t need to withdraw their gold to actually use it, they could just hand over that certificate for a product and it was “as good as gold.” Well, it was… back then.

war

Centuries passed with this system in place, bills were all backed up by gold stored in banks, all of this changed in 1971 when a guy called Nixon decided to take the US out of the gold standard.

World War 2 obliterated Europe with America having almost no losses during this war, they lost between 2000 and 3000 people in Pearl Harbor which is nothing compared to the 27 million the Soviet Union threw at the Nazis, Pearl Harbor angered them to the point of finally taking up action against a badly injured opponent. Since America lost almost no infrastructures nor people in the war they had most of the power after it, they were the most powerful country in the world, and that had huge advantages, they were able to invest in rebuilding Europe, making huge amounts of profit along the way.

money

When Europe started picking up the pace and the industry started to expand, most companies decided to stockpile the world’s strongest economy bill, the dollar. Huge amounts of dollars stockpiled all over Europe’s banks… so much was stockpiled during that era that the US ran out of gold to back their currency. Instead of waiting it out, Nixon decided to take the dollar out of the gold standard, removing power from everyone!

With a non-gold-backed currency, the US is able to print as much as it wants and inflate the market, every time a single dollar bill is printed all the rest of the dollar bills lose value, everyone that saves dollar bills in the bank loses value, it’s almost like the US steals value out of every dollar and puts it on a new bill. Because of this and because the whole world uses the dollar as a reserve currency instead of gold, the whole world’s economy is dependant on the US… they can suck value out of the dollar and thus suck value out of the rest of the world! This inflationary and debt-based system has huge disadvantages, especially long-term, and when the bubble pops (and it will pop) nobody is going to like it. Imagine Venezuelas all over the world.

gold

More and more we see countries increasing their gold stockpiles, getting ready for the day when this system finally blows, for the days we go back to the gold standard. With a recession looming in the air, with the stock market not doing so well, with student loans near default date, everyone is starting to run for stores of value.

Gold is scarce, gold is deflationary, gold is divisable, the true qualities of a store of value, the qualities of a currency. It isn’t the fact that someone said “gold is a store of value” that made gold a store of value, it’s the qualities of gold that make it a good store of value!

city

But is gold the only good store of value in the world? Hell no…

Real Estate is also a really good store of value. Real estate and land are limited, especially land that is closer to the city center, cities grow outwards so we can expect that land closest to the city center is going to increase in value, storing value in real estate is always a good idea in my book!

There is something that screams STORE OF VALUE nowadays… Bitcoin! Bitcoin is the king when it comes to storing value because everything is imposed by code, I would put it at the same level as gold.

bitcoin cryptocurrency

Bitcoin is scarce by code, deflationary by code, uncensorable, unstoppable, unfreezable, highly divisible, easy to transact, easy to store and being digital makes it so if shit hits the fan, leaving a country with all of your Bitcoins is quite easy, a few words is all it’s needed to restore a bitcoin wallet, this is a huge benefit, even supposed “good countries” stole gold from their populations in the past, cof cof US in 1931 when they outlawed gold hodling.

When compared to gold in terms of storing value, Bitcoin exceeds in terms of characteristics, it is more divisible, easier and faster to transact, easier to store, more censorship-resistant, scarcer, more deflationary (gold has actually been inflationary the last couple of years because of tech improvements). With all of this said, gold has the liquidity and track record, that’s why I put Bitcoin and gold at the same level, Bitcoin still needs more time to grow and mature to become a reliable store of value, but in the future, I’m almost certain that it will be the standard…

Reference post: https://steemit.com/investing/@teutonium/stores-of-value-gold-bitcoin-real-estate


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