Gold prices experienced a pretty rough 2013, with the yellow
metal plunging more than 25% on the year. This marked the first
time in more than a decade that gold produced a calendar year loss,
and it has led some to think that the glory days of the precious
metal are over.
Yet, while gold struggled, a newcomer to the 'safe haven' market
stole the show in 2013, bitcoins. This new type of currency-which
is 'mined' by supercomputers-has attracted a huge following.
The currency is out-of-reach from inflating-prone central banks,
and since there are only a finite number of bitcoins available,
worries over devaluations are non-existent. Thanks to these
features, bitcoins became extremely popular last year, while the
performance of bitcoins didn't hurt its popularity either.
After all, bitcoins started the year trading
for each bitcoin, and soon spiked to over $238 by the start of the
second quarter. And following a big drop in April and May, bitcoins
took off, finishing the year around the $800 mark, representing a
huge gain for investors.
So far in 2014, gold, as represented by ETFs like
, has been pretty much flat. Meanwhile, gold miners, represented by
, have faced some turbulence too, losing about 2% to start the
Bitcoins on the other hand, have already added more than 10% in the
year, soaring past the $1,000 level before falling back a bit
lately. So already this year bitcoins are off to a good start once
And with some concerns over production amounts for gold, we might
see further losses in the precious metal market, especially if the
economy continues to chug along and investors remain in stock
However, after such a horrendous year in 2013, I think the metal is
due for a bit of a bounce back, especially if gold bugs look to get
in a better price for the long haul, or for miners that can hold on
in this difficult time.
Barrick Gold (
is actually at a 9.5 forward PE, while the gold mining industry,
although still depressed, has moved out of the bottom bracket from
Zacks Industry Rank perspective
, suggesting it is may be due for a rebound soon.
Meanwhile, after bitcoin's incredible run and huge amount of press
last year, it is bound to attract some attention from governments
around the world. Legal issues seem likely to creep up this year,
and that could drag down bitcoin's value, or at least increase
We have already seen a preview of this thanks to a crackdown in
what is thought to be a key market for bitcoins, China. In fact,
just this week, China's biggest e-commerce company, Alibaba,
banned the sale of bitcoins on its Taobao
If others follow suit or if more legal worries hit bitcoins in key
markets, it might prompt some to cash in their huge winnings, and
stay on the sidelines for the near term.
Given this, I think that the much-hyped crypto-currency takes a
step back this year, and that gold finds a way to rebound. But what
Are you betting on gold or bitcoins in 2014?
Let us know in the comments section below!
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