Bitcoin, bucks and gold

What a difference a year makes.

After peaking at $1,145.46 last November, a bitcoin now sells, as we go to press, for about $350.

After gold peaked at $1,921.50 a troy ounce in September 2011, it’s trading in the low- to mid-$1,200 range.

As for the dollar, after falling to 1.45 against the euro when gold was hitting new highs, the Euro/U.S. Dollar FX Spot Rate fix is now at about 1.26.

So, with bitcoins and gold down, and the dollar up and gaining strength, many currency-market players are placing bets on the buck.

And while the International Monetary Fund yet again downgraded its global economic growth projection “largely due to weaker-than-expected global activity in the first half of 2014,” the prevailing wisdom on Wall Street is that the U.S. economy is growing — and with it, the dollar’s strength.

For me, be it bitcoins or bucks, both are virtual currencies. They’re printed out of thin air with downside potential far greater than gold, which I forecast can still fall some $100-$150, but with an upside potential well above its 2011 level.*

While there will be a place for digital currencies such as bitcoins, backed by nothing and susceptible to cyber attacks and manipulation, I see it more as a transfer/exchange currency. Yes, companies, including ours, will accept digital currencies as payment, but as soon as they’re received, they’re exchanged for cash.

As for U.S. digital dollars printed on demand by the privately supported Federal Reserve Bank (with $4.48 trillion on its balance sheet since it began its bond-buying spree six years ago), and backed by a government mired in nearly $18 trillion in debt (while squandering its dwindling resources to fight its never-ending, always-growing global War on Terror as its middle class shrinks and class divisions widen), we forecast the dollar again will tank when the next financial crisis hits, and gold prices rise.

Financial crisis? According the recently released Geneva Report, despite record levels of public and private debt, and little growth to show for it, the stage has been set for another economic crisis — a forecast that supports the one we have been making for years. There is no recovery; it was a cover-up.

Throughout history, gold has proven its unique value as the precious metal of choice during times of heightened geopolitical uncertainty. And now with regional and civil wars raging throughout Africa, the Middle East and Ukraine, spreading to Eastern Europe, the high levels of turmoil that can quickly rattle world equity markets and crash currencies make gold’s safe-haven allure brighter.

*Publisher’s Note: I do not provide financial advice, nor do I represent any gold interests. However, for me, gold is still golden. I continue to hold what I have for my golden years and buy what I can, when I can. My first buy was a hundred ounces at $187.50 an ounce in 1978. I don’t play the stock markets nor bet my money on paper currencies. Look at how much the dollar has been devalued since then and how much gold has gone up. Not being market savvy, I was glad I invested heavily in gold and I didn’t listen to my broker and invest in Sears, Kmart, PanAm or Eastern Airlines when their stocks were flying high and the latters’ planes were still flying.