In The Age of Cryptocurrency, Are You Still a Gold or Silver Bug?

In The Age of Cryptocurrency, Are You Still a Gold or Silver Bug?

Over the past few years, many of us have become familiar with words like cryptocurrency and Bitcoin. They’ve been in plenty of headlines as cryptocurrencies hit new record prices and make incredible gains. However, like any other market, bubbles exist in cryptocurrency and then we see the headlines about a crash.

More and more people are turning their attention to Bitcoin, Etherium and other cryptocurrencies. Some of them are even long-time investors in stocks and precious metals. So, with cryptocurrency getting so much attention, are you still purchasing gold or silver with the same fervor you have in the past? Let’s take a look at both sides of this story.

The Cryptocurrency Craze

Bitcoin was introduced in early 2009. It was the first majorly successful cryptocurrency, but what is a cryptocurrency exactly? First of all, cryptocurrency does not physically exist. When you buy 1 Bitcoin (BTC) you don’t receive an object in the mail. It exists electronically.

In addition to lacking a physical form, cryptocurrencies like Bitcoin are not tied to a specific currency or government for their value. They are decentralized. You can trade them for goods, services, U.S. dollars, euros, yen or other currencies if you so desire. Cryptocurrencies have a set trading price at any given time. This also makes them a viable solution for sending a sum of money to another individual.

When Bitcoin was introduced, it was initially available for just cents per BTC. The value per BTC stayed well below $1 until 2011. At this point, the first Bitcoin price spike occurred and prices rose to $32 per BTC before falling back to $2. This type of trend has generally continued for Bitcoin. Just a few days ago the price of Bitcoin rose to over $7,000 and set a new record high. With such staggering price increases on the books, it’s easy to see what’s been drawing new buyers to the market.

The success of Bitcoin, as well as its shortcomings, have produced a large number of cryptocurrencies. Some of them are meant to solve specific problems such as maintaining privacy, while others are simply brainchild projects that the creators believe to be superior to Bitcoin.

Gold and Silver in 2017

Gold and silver have held value for as long as they have been known. Today, many still purchase gold and silver in its physical form. There is no shortage of investors, especially when it comes to futures and ETFs. Historically speaking, it wasn’t so long ago that U.S. dollars were redeemable for silver. Both the gold standard and silver standard were used by the United States for significant periods of time. However, if you look around the market it seems as though less bullion is being purchased than in previous years.

Some experts seem to think that buyers are moving away from physical bullion. Many of these opinions appear to be based on sales figures from 2016 compared to those from 2017. While that could be true, sales figures from 2016 and 2017 don’t tell the whole story.

Secrets of the Silver Eagle

Let’s take a look at American Silver Eagle production instead. Why the American Silver Eagle? Well, first of all it’s one of the most popular silver bullion coins. It’s safe to say that everyone with an interest in bullion is at least familiar with these coins if not the owner of some. Additionally, the standard American Silver Eagle is minted to demand. No limits are set and production won’t stop until either orders stop coming in or the end of the year arrives and production begins for the next year.

In 2016 there were 37,701,500 bullion Silver Eagles struck. This figure is lower than the 2015 mintage which was a new record, 47,000,000. However, the last time that fewer than 30,000,000 bullion Silver Eagles were minted was in 2008, nearly a decade ago.

Prior to 2008, which was a significant production record at the time, mintage of these coins was quite consistent from 1999 to 2007. During this period production ranged between 7,408,640 and 10,676,522 bullion Silver Eagles annually.

So what does this really tell us? In my opinion, the number of bullion buyers is still following an uptrend. Some of them may not be so active in 2017, but this year has lacked the large price drops that make so many of us take out our wallets.

In 2016 there were multiple months where the spot price of silver remained below $16 per oz. In fact, 2016 began with the spot price of silver at just over $14 per oz. Many silver bugs noticed these opportunities and took advantage of the situation.

2017 has been a different story. For a large portion of the year thus far, silver has been at least $17 per oz. There were even some periods when silver was in the $18+ range.

The Big Picture

While according to volume, bullion purchases may be lower in 2017, this year has not presented the kind of buying opportunities that we saw in 2016 or 2015. The United States isn’t using the gold standard or silver standard, but that doesn’t mean that bullion has lost its appeal. It’s true that some buyers have taken notice of Bitcoin and other cryptocurrencies. It’s hard to ignore them given what has occurred in the past few years.

At the end of the day, gold and silver still offer advantages that cryptocurrency doesn’t. These advantages, such as being able to physically own it and store it wherever we choose, are what draw many of us to bullion in the first place. Gold and silver will never go out of style. If you’re looking to add to your stack, MCM always has a wide variety of bullion available. Check out silver bullion and gold bullion available now!