Are Bitcoins Ruining the Price of Gold?

You have probably heard at least something about Bitcoins.

Bitcoins are a finite, world-wide currency that that were initially used mainly for underground transactions. Their value is simply based on what people are willing to pay for, or trade for them. In their relatively short lifespan they have seen some volatile swings in prices. As of this writing, for the first time ever, Bitcoins have reached over $100 each.

What do Bitcoins have to do with the price of gold? Well, perhaps nothing. However, historically when there has been chaos in the world…war, political upheaval or other signs of major instability, gold has served as a safe haven for investors. One could almost count on the price of gold increasing when there were tensions. Stocks could fall, and there would be an increase in the price of precious metals. If there was a threat of, or impending military action around the world, you would see the price of gold edge upward.

In spite of significant problems in the Middle East and now with North Korea, the price of gold has remained relatively low. There are some who believe that Bitcoins may be at least partially responsible for holding prices down. They have certainly got people thinking about alternative forms of investments. Are Bitcoins beginning to gain wider acceptance as a hedge against inflation and other investments? Certainly SOMETHING is pushing their price above $100.

Bitcoins however, could have some considerably problems if governments determine that they are currency and make them illegal. The anonymous creators of Bitcoins could also decide to produce more. It is possible the Bitcoins servers get hacked. In the meantime, gold continues to plod along, and Bitcoins continue to soar.

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