There’s been a lot of chatter about alternative investments with the recent downturn in the Stock Market. The US-China Trade War has lead to lots of fear about a possible recession. Two assets are very popular right now. But, should you invest in Bitcoin or gold? You may think that’s an obvious choice. Gold has been around forever and Bitcoin is the new kid on the block. However, just because it’s new, doesn’t mean it should be overlooked. In the following, we’ll discuss the pros and cons of each and why you should use a self-directed retirement account to invest.
The Case for Gold
Since the Gold Rush of 1849, people have clamored to get their hands on the precious metal. People often rush to gold, and other metals, in times of economic downturns. It’s always been considered a “safe” investment. Apart from a few hiccups, gold has gone up since the turn of the century. Does that make it a better investment than Bitcoin?
Let’s see what gold has going for it.
Price – The price of gold per ounce sits at $1,377 per ounce as of 8/16/2019. On the other hand, Bitcoin sits at $10,443. Gold is about eight times cheaper to purchase.
Stability – When tracking the price of gold vs. Bitcoin, it’s clear which asset is more stable. Yes, gold has had it’s down years, but the overall picture is quite clear that gold is better at retaining it’s value.
Security – Since gold is a physical and valuable asset, precautions must be made to keep it secure. If you choose to store it yourself, you’ll need the best safe money can buy. If stored elsewhere, such as a bank vault, let’s hope their security is capable of thwarting would-be bank robbers.
Liquidity – Gold, just like cash, is about as liquid as an asset can get. You can easily convert your gold stash into cash when you need it. The same can’t be said for other investments.
The Case for Bitcoin
If you don’t know exactly what Bitcoin is, here’s a brief summary. Although a part of its name, Bitcoin is not a physical coin. It’s a type of digital currency, usually referred to as cryptocurrency. It is created by “miners” who use computers to break cryptographic codes to unlock the coin. It’s not backed or regulated by any government. Instead, a blockchain is used as a ledger to keep track of all transactions. Users can verify the authenticity of every use of a “coin.”
What are the benefits and drawbacks of investing in Bitcoin?
Rarity – While gold is still being mined, there’s a finite amount of Bitcoin available. In about a decade, all of the Bitcoin available will be unlocked. There will never be another Bitcoin made after it has all been mined.
Growth – The potential for Bitcoin to grow far outweighs that of gold. As we said, gold will generally maintain it’s value and will rise a bit. However, Bitcoin has the potential to far out-gain gold in the long run.
Security – Unlike gold, you don’t need to worry about how and where to store your Bitcoin. A Hard Wallet is used to secure your assets. It can be set up with a reputable company, saved on a protected personal computer, or kept offline completely.
Volatility – Obviously, Bitcoin is the more volatile choice. It reached a high of over $19,000 before losing over 80% of its value. However, it’s made a strong comeback in 2019.
Uncertainty – While many feel Bitcoin and other digital currencies are here to stay, no one really knows for sure. The blockchain technology certainly has broader aspects, but it remains to be seen if cryptos will make it to the mainstream.
Invest in Bitcoin or Gold with a Self-Directed Retirement Account
Did you know you can invest in gold AND Bitcoin with your retirement funds? By self-directing you IRA or 401(k) plan, you can invest in just about anything you like. The only caveat is that it must be IRS-approved. Most precious metals and cryptocurrencies are allowable investments.
If you are self-employed, a Solo 401(k) is your best option for alternative investing. Everyone else can utilize a Self-Directed IRA. Both types of plans work just like their regular counterparts. However, you are no longer limited in the types of investments traditional financial institutions offer, such as stocks, bonds and mutual funds.
The best part about investing in gold or Bitcoin with retirement funds, is that all gains are tax-free. Traditional accounts offer tax-deferral, while Roth options allow for tax-free distributions.
Should You Invest in Bitcoin or Gold?
The answer comes down to personal preference and financial goals. Gold and other metals will always retain their value. While they can make gains, especially during economic volatility, they certainly won’t triple and quadruple in value. However, gold is definitely considered the safer investment. Bitcoin, on the other hand, has the potential for huge returns. But, the risk is just as great for it to lose much of it’s value. Who knows where cryptos will go three, five, ten years down the line.
Please keep in mind that IRA Financial is not in the business of offering investment advice. We’re simple here to talk about possible investments you can make with a retirement account. It’s up to you, along with a financial advisor, to decide which investment is better for you.
Get in Touch
If you have any questions about how to invest in Bitcoin or gold with a self-directed retirement plan, please give us a call @ 800.472.0646. Alternatively, you can fill out a contact from and we’ll get in touch with you.