Stress analysis & comparison — Bitcoin Vs Gold

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Do you know why big investors are cautious and still about Bitcoin? At the moment, no more than only 4% of hedge funds have bitcoin in their portfolios. Many big A-list Forbes world billionaire entrepreneurs like Warren Buffet have said they won't own bitcoin. Of course, the lack of a comprehensive regulatory framework is a big problem for many, but an equally important reason lies in the extreme volatility of the world’s first and strongest cryptocurrency.

Only recently; Tesla owner Elon Musk, in his twitter response to renowned Harry Potter writer — JK Rowling, said he has only 0.25 BTC in his wallet. This sound rather sarcastic. But however true this is, one would expect Elon Musk to give a more cheering response to Rowling who wanted someone to explain what bitcoin is to her. Especially as Rowling with her influence could rally a huge non crypto community onboard the train of bitcoin and disrupt the market

An important point to note is that Bitcoin's volatility in 2019 was at a record low. Even its growth from $3000 at the beginning of the year to $13,800 in late spring is well within the realistic range for traditional stocks.

However, bitcoin is not just some random altcoin – it is an uncontested crypto leader that occupies almost two-thirds of the total market cap of the cryptos. Imagine that the price of stocks such as Hilton, Apple, or Amazon changed by a factor of four in a quarter characterized by low volatility. Not only conservative investors, but also many aggressive ones would consider it high-level madness to invest in such assets.

If you do this simple mental analysis, you would understand just why people who are not too familiar with the concepts and realities of the crypto market are so skeptical about Bitcoin – to say nothing of altcoins.

Bitcoin is volatile

The last drop from $13,800 to $7,900 and even lower was a cold bath for the overly optimistic supporters of bitcoin, while the pessimists declared – for the n-th time - “You see! Told you so!” Nobody knows how much lower Bitcoin can go - this causes much anxiety not only to those investors who have already bought BTC but also to the much larger number of people and businesses that have been considering the idea of purchasing it.

As the BTC price kept falling during the dip, investors rapidly switched to stablecoins. For instance, at the height of the panic, the exchange rate of USDT rose to $1.1. Some particularly nervous market players were prepared to lose as much as 10% just to get rid of their BTC quickly, regardless of the slippage. This, too, seems like sheer madness to traditional stock market professionals. Interestingly, the market is coming back up and bitcoin is marching close to $10k, but with a constant knowledge that it could come down anytime as fast as it is going up.

On the other hand, any fiat-pegged coin or token has a different issue — an almost zero profitability in conjunction with the higher risks, compared to a bank deposit at 0%. But of course, investors who store crypto as part of their portfolios won't exchange it into fiat. So what should they do?

Gold-backed Aureus Nummus Gold coin (ANG coin)

In the context of the turbulence associated with bitcoin and altcoin markets, as well as the zero-profitability of fiat-pegged stablecoins, the new solution from Aureus Nummus can kill both birds with one stone.

The price of the ANG stablecoin is pegged to that of 1 ounce of 99.99%-pure physical gold with a ration of 100,000 ANG to 1 ounce of real gold bullion. The total number of issued ANG tokens is 30 trillion which is fixed. When ANG is purchased, exactly 1 ounce of gold bullion or gold equivalent will be deposited automatically into a trust account, so that each ANG sold shall be backed by real physical value

The volatility of ANG coins in USD equivalent is equal to the volatility of gold prices in the global market. Considering that investors across the globe hold over $7 trillion worth of physical gold, one can say that volatility is definitely NOT an issue in the gold market.

Profitability of investment (ROI)

The problem of profitability is also taken care of. From history, gold has been growing steadily by 3-5% annually, following the rate of inflation. This means that the price of ANG coin relative to any fiat-pegged stablecoins will grow at the same rate. However, we shouldn’t only take the average historical profitability rate into account, but also the current circumstances. Central banks in leading countries across the world keep relaxing their monetary and credit policies. Similarly, the European Central Bank has recently started a new round of quantitative easing, while the US Federal Reserve is ready to lower the interest rate on dollar-denominated assets once again.

It's a known fact that gold prices grow much faster than average during the years when the monetary policy is relaxed. Indeed, everyone's favourite precious metal has already shown remarkable growth in 2019. Considering that the economic growth in developed countries is slowing down due to the ongoing trade wars, and global health pandemic caused by COVID-19; more experts predict that the price of gold will exceed $2,000 per troy ounce by the end of 2020 – which will result in a 30-40% increase for ANG coin.

Compare this ROI on gold to the zero profitability of fiat stablecoins, and draw your own conclusions.

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