Investors Favor Bitcoin over Gold, Says Cathie Wood
ARK Invest's CEO, Cathie Wood, has observed a notable shift in investment preferences, with a growing number of investors favoring bitcoin over traditional gold investments. This trend has become more prominent with the introduction of spot bitcoin ETFs, which have made it easier for investors to access the cryptocurrency.
Cathie Wood Highlights the Move from Gold to Bitcoin
In a recent video on ARK Invest's Youtube channel, Cathie Wood discussed the significant shift from gold to bitcoin among investors. Wood noted that this transition has become increasingly evident since the launch of spot bitcoin exchange-traded funds (ETFs), which offer a more streamlined approach to investing in bitcoin.
Bitcoin's Resilience in Times of Financial Uncertainty
During a conversation with Brett Winton, ARK's chief futurist, Wood emphasized bitcoin's remarkable resilience and growth, particularly during periods of financial instability. She pointed out that in March 2023, when the US faced a regional bank crisis and the regional bank index plummeted, bitcoin's value surged by 40%. Wood highlighted that a similar pattern is emerging now, with bitcoin gaining traction as a "flight to safety" asset amid the regional bank index's volatility.
Bitcoin's Rising Value in Comparison to Gold
Wood presented a compelling chart showcasing bitcoin's price in relation to gold, demonstrating a strong long-term upward trend. She explained that this trend indicates bitcoin's increasing popularity as an investment choice, partially replacing gold. Wood expressed her belief that this substitution will continue in the future.
Addressing Volatility and Remaining Optimistic
Wood acknowledged the volatility that followed the launch of spot bitcoin ETFs, including ARK 21shares Bitcoin ETF on January 11. She anticipated the subsequent price correction and remains optimistic despite the 20% drop in bitcoin's price post-launch. Wood highlighted that a significant number of bitcoins, approximately 15 million out of the 19.5 million in circulation, have not moved in over 155 days, indicating strong investor confidence and a holding pattern.
ARK Invest's Position in the Crypto Sector
ARK Invest's investments in the cryptocurrency space extend beyond bitcoin. The firm has made significant investments in Coinbase stock (COIN), although it has reduced its holdings since June 2023. Currently, ARK holds 7.187 million shares in Coinbase, valued at $843 million, demonstrating its continued bullish stance on the crypto sector despite market fluctuations.
In conclusion, the shift from traditional gold investments to bitcoin is gaining momentum, according to Cathie Wood. The introduction of spot bitcoin ETFs has facilitated easier access to the cryptocurrency, leading to increased investor interest. Wood's optimism about bitcoin's future and its potential to partially replace gold as a preferred investment choice reflects her confidence in the cryptocurrency's long-term prospects.
Frequently Asked Questions
How is gold taxed in Roth IRA?
An investment account's tax rate is determined based upon its current value, rather than what you originally paid. If you invest $1,000 in mutual funds or stocks and then later sell them, all gains are subjected to taxes.
However, if the money is deposited into a traditional IRA/401(k), the tax on the withdrawal of the money is not applicable. Capital gains and dividends earn you no tax. This applies only to investments made for longer than one-year.
Each state has its own rules regarding these accounts. For example, in Maryland, you must take withdrawals within 60 days after reaching age 59 1/2 . Massachusetts allows you to wait until April 1. New York offers a waiting period of up to 70 1/2 years. To avoid penalties, you should plan ahead and take distributions as soon as possible.
Can the government steal your gold?
Because you have it, the government can't take it. You worked hard to earn it. It belongs to your. However, there may be some exceptions to this rule. Your gold could be taken away if your crime was fraud against federal government. Additionally, your precious metals may be forfeited if you owe the IRS taxes. However, even if you don't pay your taxes, your gold can be kept as property of the United States Government.
Should You Purchase Gold?
In times past, gold was considered a safe haven for investors in times of economic trouble. Many people are shifting away from traditional investments like bonds or stocks to instead look toward precious metals such gold.
While gold prices have been rising in recent years they are still low relative to other commodities, such as silver and oil.
Some experts think that this could change in the near future. Experts believe that gold prices could skyrocket in the face of another global financial crisis.
They also mention that gold is becoming more popular due to its perceived worth and potential return.
Here are some things to consider if you're considering investing in gold.
- The first thing to do is assess whether you actually need the money you're putting aside for retirement. You can save for retirement and not invest your savings in gold. However, when you retire at age 65, gold can provide additional protection.
- Second, you need to be clear about what you are buying before you decide to buy gold. Each type offers varying levels and levels of security.
- Remember that gold is not as safe as a bank account. It is possible to lose your gold coins.
Do your research before you buy gold. And if you already own gold, ensure you're doing everything possible to protect it.
How to open a Precious Metal IRA
First, you must decide if your Individual Retirement Account (IRA) is what you want. You must complete Form 8606 to open an account. To determine which type of IRA you qualify for, you will need to fill out Form 5204. This form must be submitted within 60 days of the account opening. Once this has been completed, you can begin investing. You might also be able to contribute directly from the paycheck through payroll deduction.
Complete Form 8903 if your Roth IRA option is chosen. Otherwise, the process will look identical to an existing IRA.
To be eligible for a precious metals IRA, you will need to meet certain requirements. The IRS says you must be 18 years old and have earned income. You can't earn more than $110,000 per annum ($220,000 in married filing jointly) for any given tax year. And, you have to make contributions regularly. These rules apply whether you're contributing through an employer or directly from your paychecks.
You can use a precious-metals IRA to purchase gold, silver and palladium. You can only purchase bullion in physical form. This means you can't trade shares of stock and bonds.
You can also use your precious metals IRA to invest directly in companies that deal in precious metals. This option is available from some IRA providers.
There are two major drawbacks to investing via an IRA in precious metals. First, they aren't as liquid than stocks and bonds. It is therefore harder to sell them when required. They also don't pay dividends, like stocks and bonds. Therefore, you will lose money over time and not gain it.
What are the pros & con's of a golden IRA?
The main advantage of an Individual Retirement Account (IRA) over a regular savings account is that you don't have to pay taxes on any interest earned. An IRA is a great option for those who want to save money, but don't want tax on any interest earned. However, there are disadvantages to this type investment.
For example, if you withdraw too much from your IRA once, you could lose all your accumulated funds. The IRS may prohibit you from withdrawing funds from your IRA before you are 59 1/2 years of age. You will likely have to pay a penalty fee if you withdraw funds from an IRA.
Another problem is the cost of managing your IRA. Most banks charge 0.5% to 2.0% per annum. Others charge management fees that range from $10 to $50 per month.
Insurance is necessary if you wish to keep your money safe from the banks. Many insurers require that you own at least one ounce of gold before you can make a claim. Insurance that covers losses upto $500,000.
You will need to decide how much gold you wish to use if you opt for a gold IRA. Some providers limit the amount of gold that you are allowed to own. Others let you choose your weight.
It is also up to you to decide whether you want to purchase physical gold or futures. The price of physical gold is higher than that of gold futures. However, futures contracts give you flexibility when buying gold. You can set up futures contracts with a fixed expiration date.
It is also important to choose the type of insurance coverage that you need. The standard policy doesn't include theft protection or loss due to fire, flood, or earthquake. However, it does cover damage caused by natural disasters. If you live near a high-risk region, you might want to consider additional coverage.
Additional to your insurance, you will need to consider how much it costs to store your gold. Storage costs are not covered by insurance. In addition, most banks charge around $25-$40 per month for safekeeping.
If you decide to open a gold IRA, you must first contact a qualified custodian. A custodian maintains track of all your investments and ensures you are in compliance with federal regulations. Custodians aren't allowed to sell your assets. Instead, they must keep your assets for as long you request.
Once you have chosen the right type of IRA to suit your needs, it is time to fill out paperwork defining your goals. You must include information about what investments you would like to make (e.g. stocks, bonds and mutual funds). The plan should also include information about how much you are willing to invest each month.
You will need to fill out the forms and send them to your chosen provider together with a check for small deposits. The company will review your application and send you a confirmation letter.
You should consult a financial planner before opening a Gold IRA. Financial planners have extensive knowledge in investing and can help determine the best type of IRA to suit your needs. They can help reduce your expenses by helping you find cheaper alternatives to buying insurance.
Are gold investments a good idea for an IRA?
Gold is an excellent investment for any person who wants to save money. You can also diversify your portfolio by investing in gold. There's more to gold that meets the eye.
It has been used throughout the history of currency and remains a popular payment method. It is sometimes called the “oldest currency in the world”.
But unlike paper currencies, which governments create, gold is mined out of the earth. That makes it very valuable because it's rare and hard to create.
The supply and demand for gold determine the price of gold. People tend to spend more when the economy is healthy, which means that fewer people are able to mine gold. Gold's value rises as a result.
On the flip side, when the economy slows down, people hoard cash instead of spending it. This increases the production of gold, which in turn drives down its value.
It is this reason that gold investing makes sense for businesses and individuals. If you have gold to invest, you will reap the rewards when the economy expands.
Additionally, you'll earn interest on your investments which will help you grow your wealth. In addition, you won’t lose any money if gold falls in value.
Statistics
- You can only purchase gold bars at least 99.5% purity. (forbes.com)
- This is a 15% margin that has shown no stable direction of growth but fluctuates seemingly at random. (smartasset.com)
- Contribution limits$6,000 (49 and under) $7,000 (50 and up)$6,000 (49 and under) $7,000 (50 and up)$58,000 or 25% of your annual compensation (whichever is smaller) (lendedu.com)
- If you take distributions before hitting 59.5, you'll owe a 10% penalty on the amount withdrawn. (lendedu.com)
- (Basically, if your GDP grows by 2%, you need miners to dig 2% more gold out of the ground every year to keep prices steady.) (smartasset.com)
External Links
investopedia.com
- Are You a Good Candidate for a Gold IRA
- What are the Options Types, Spreads, Example, and Risk Metrics
irs.gov
finance.yahoo.com
bbb.org
How To
Gold IRAs: A Growing Trend
As investors look for ways to diversify their portfolios and protect themselves against inflation, the gold IRA trend is on the rise.
Owners of the gold IRA can use it to invest in physical bars and bullion gold. It is tax-free and can be used by investors who aren't concerned about stocks and bond.
Investors can have confidence in their investments and avoid market volatility with a gold IRA. The gold IRA can be used to protect against inflation or other potential problems.
Investors also get the unique benefits of owning physical Gold, including its durability, portability, flexibility, and divisibility.
Additionally, the gold IRA has many benefits. It allows you to quickly transfer your gold ownership to your heirs. The IRS doesn't consider gold a commodity or currency.
All this means that the gold IRA is becoming increasingly popular among investors seeking a haven during financial uncertainty.
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By: David Sencil
Title: Bitcoin Emerges as Preferred Investment Over Gold, Asserts Cathie Wood
Sourced From: news.bitcoin.com/bitcoin-emerges-as-flight-to-safety-asset-outshining-gold-says-cathie-wood/
Published Date: Wed, 07 Feb 2024 08:30:46 +0000
