The Underestimated Potential
Gabor Gurbacs, Vaneck's director of digital assets strategy, believes that people often underestimate the long-term impact of spot bitcoin exchange-traded funds (ETFs). He explains that upon the approval of a U.S. spot bitcoin ETF by the Securities and Exchange Commission (SEC), bitcoin's price trajectory could follow a similar pattern to gold's growth from 2004, but at a much faster pace.
Vaneck's Perspective
Vaneck, an asset management firm, has applied to launch a spot bitcoin ETF with the SEC. Gurbacs shared his predictions on the social media platform X, stating that while the initial impact of U.S. bitcoin ETFs may be overestimated, the long-term effects are often overlooked.
Bitcoin's Market Potential
Gurbacs suggests that people focus too much on the current hype surrounding bitcoin, without considering the bigger picture. He believes that bitcoin is revolutionizing its own capital market systems and products, extending far beyond the scope of ETFs. He states that the real question is not which traditional financial institution adopts bitcoin, but rather, which bitcoin company will become the next major player in the industry.
A Parallel with Gold
Gurbacs draws a parallel between bitcoin and gold, highlighting the potential for a similar growth trajectory. He references the introduction of the SPDR Gold Shares ETF (GLD) in 2004, which resulted in gold's market cap quadrupling over the next eight years. He suggests that upon the approval of a U.S. spot bitcoin ETF, bitcoin's market cap could follow a similar path, but with much faster growth.
Predicted Impact
Gurbacs acknowledges that the adoption of bitcoin exchange-traded products (ETPs) may not happen all at once, but he believes that it will have a significant boost on the market. He points out that bitcoin's relatively low float, held by strong hands and long-term holders, combined with its systematic scarcity through halving schedules, will contribute to its price appreciation.
Legitimizing Bitcoin
Gurbacs emphasizes that the approval of a spot bitcoin ETF will legitimize and destigmatize bitcoin's place in investment portfolios. This will lead to further adoption of bitcoin outside of ETFs, with nation states and sovereign wealth funds holding bitcoin directly and exploring its potential for mining and their own bitcoin-based capital markets. He cites the example of gold, where the adoption of ETPs played a crucial role in getting comfortable with the asset.
Do you agree with Gurbacs' assessment of the impact of spot bitcoin ETFs on the price of bitcoin? Let us know your thoughts in the comments section below.
Frequently Asked Questions
What does gold do as an investment?
The price of gold fluctuates based on supply and demand. Interest rates also have an impact on the price of gold.
Due to limited supplies, gold prices are subject to volatility. Additionally, physical gold can be volatile because it must be stored somewhere.
Can I have physical gold in my IRA
Gold is money and not just paper currency. Gold is an asset people have used for thousands years as a place to store value and protect their wealth from economic uncertainty and inflation. Investors use gold today as part of their diversified portfolio, because it tends to perform better in times of financial turmoil.
Many Americans now invest in precious metals. 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 historically performs better than other assets during financial panics. Gold prices rose nearly 100 percent between August 2011 and early 2013, while the S&P 500 fell 21 percent over the same period. Gold was one asset that outperformed stocks in turbulent market conditions.
Another benefit to investing in gold? It has virtually zero counterparty exposure. Even if your stock portfolio is down, your shares are still yours. Gold can be worth more than its investment in a company that defaults on its obligations.
Finally, gold provides liquidity. This means that you can sell gold anytime, regardless of whether or not another buyer is available. Because gold is so liquid compared to other investments, buying it in small amounts makes sense. This allows you take advantage of the short-term fluctuations that occur in the gold markets.
How much tax is gold subject to in an IRA
The fair value of gold sold to determines the price at which tax is due. You don’t have tax to pay when you buy or sell gold. It is not considered income. If you decide to make a sale of it, you’ll be entitled to a taxable loss if the value goes up.
Loans can be secured with gold. When you borrow against your assets, lenders try to find the highest return possible. Selling gold is usually the best option. This is not always possible. They may just keep it. They might decide to sell it. Either way you will lose potential profit.
In order to avoid losing your money, only lend against your precious metal if you plan to use it to secure other collateral. If you don’t plan to use it as collateral, it is better to let it be.
How much should you have of gold in your portfolio
The amount of money you need to make depends on how much capital you are looking for. You can start small by investing $5k-10k. Then as you grow, you could move into an office space and rent out desks, etc. This way, you don’t have to worry about paying rent all at once. You just pay per month.
It’s also important to determine what type business you’ll run. In my case, I run a website-creation company. Our clients pay us between $1000-2000/month and depending on their order. This is why you should consider what you expect from each client if you’re doing this kind of thing.
Because freelance work pays freelancers, you won’t likely get a monthly income if you do freelance work. Therefore, you might only get paid one time every six months.
Decide what kind of income do you want before you calculate how much gold is needed.
I recommend starting with $1k-$2k of gold and growing from there.
What are the benefits to having a gold IRA
The best way to save money for retirement is to place it in an Individual Retirement Account. It’s tax-deferred until you withdraw it. You are in complete control of how much you take out each fiscal year. There are many types available. Some are better suited to college savings. Others are made for investors seeking higher returns. Roth IRAs let individuals contribute after age 591/2 and pay tax on any earnings at retirement. However, once they begin withdrawing funds, these earnings are not taxed again. This type of account might be a good choice if your goal is to retire early.
Because it allows you money to be invested in multiple asset classes, a ‘gold IRA’ is similar to any other IRAs. Unlike a regular IRA that requires you to pay taxes on the gains you make while you wait to access them, a gold IRA does not have to do this. People who want to invest their money rather than spend it make gold IRA accounts a great option.
Another advantage to owning gold via an IRA is the ease of automatic withdraws. It means that you don’t have to remember to make deposits every month. To avoid missing a payment, direct debits can be set up.
Gold is one of today’s most safest investments. It is not tied to any country so its value tends stay steady. Even in times of economic turmoil gold prices tend to remain stable. It is therefore a great choice for protecting your savings against inflation.
Statistics
- 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)
- Instead, the economy improved, stocks rebounded, and gold plunged, losing 28 percent of its value in 2013. (aarp.org)
- Gold is considered a collectible, and profits from a sale are taxed at a maximum rate of 28 percent. (aarp.org)
- Indeed, several financial advisers interviewed for this article suggest you invest 5 to 15 percent of your portfolio in gold, just in case. (aarp.org)
- If you take distributions before hitting 59.5, you’ll owe a 10% penalty on the amount withdrawn. (lendedu.com)
