In the wake of escalating anticipation surrounding a possible bitcoin exchange-traded fund (ETF), not everyone is cheering. There are concerns that a spot bitcoin ETF could potentially expose BTC to vulnerabilities, akin to those experienced in the gold and silver markets. The approval of such an ETF might pave the way for manipulative practices that echo allegations made in the precious metals sector.
Concerns Over Potential Manipulation in Physically-Settled Bitcoin ETF
A tangible bitcoin ETF can be seen as a positive step for the growth and valuation of cryptocurrency. But, the fear is that it could mirror gold and silver ETFs, employing phantom BTC supplies as a means for futures leverage. Sudden price escalations could be mitigated by unleashing this fabricated supply. Instead of obtaining actual bitcoin, investing in a bitcoin ETF would not diminish the real supply. ETF operators could potentially manipulate positions that far exceed their verifiable assets, thus influencing prices.
Expert Opinions on Bitcoin ETF
Josef Tětek, a BTC analyst at Trezor, on October 16, 2023, expressed his concern that an "ETF is the fiatization of bitcoin." Tětek argues that in the long-term, an ETF may not be beneficial for BTC. He stated that a bitcoin ETF could be detrimental to bitcoin adoption and is an attack on self-custody, replacing actual usage for mere price speculation.
The History of Gold ETF and its Relation to Bitcoin ETF
The first gold exchange-traded product debuted in 1961, opening its doors to a broader investor base by 1983. After two decades on the Toronto Stock Exchange, it found its home on the U.S. Stock Exchange. However, since these introductions, accusations have been made against ETFs and financial giants for allegedly manipulating precious metal prices. This suspicion extends to a bitcoin ETF, where unchecked paper could overshadow an ETF's 100,000 BTC.
Apprehension Over Decentralized Crypto World
Concern is mounting that the decentralized crypto world could potentially fall victim to the same fate as gold and silver. Critics argue that a spot bitcoin ETF could enable significant financial corporations, like Blackrock, to purchase and control bitcoin, using other people's dollars.
Bitcoin ETF: A Blessing or a Curse?
While bitcoin ETFs may democratize access, critics argue that they could potentially hide leverage and speculative practices from oversight bodies and investors. Similar to precious metals ETFs, price discovery could be distorted. There's a growing sentiment among some bitcoin enthusiasts that an ETF could be detrimental to the decentralized crypto.
Future Speculations on Bitcoin ETF
Some argue that the approval of a spot ETF will benefit short-term traders as prices will soar. But the downside is that it may negatively affect small retail bitcoin investors, as the real price level may never be seen again. However, there are those who disagree with this viewpoint, maintaining that the resilient decentralized nature of bitcoin will always triumph.
The dialogue surrounding the critics of a spot bitcoin ETF continues. The question remains: do they have valid fears? The future of bitcoin ETFs is a subject filled with diverse thoughts and opinions, highlighting the complexities of the ever-evolving crypto world.
Frequently Asked Questions
Can I have physical gold in my IRA
Gold is money and not just paper currency. People have been using gold for thousands of years to store their wealth and protect it from economic instability and inflation. Today, investors invest in gold as part a diversified portfolio. This is because gold tends do better in financial turmoil.
Today, many Americans invest in precious metals such as gold and silver rather than stocks and bonds. It is possible to make money by investing in gold. However, it doesn't guarantee that you'll make a lot of money.
Another reason is the fact that gold historically has performed better than other assets in times of financial panic. The S&P 500 declined 21 percent during the same period. Gold prices increased nearly 100 per cent between August 2011 – early 2013. During those turbulent market conditions, gold was among the few assets that outperformed stocks.
Gold is one of the few assets that has virtually no counterparty risks. Your stock portfolio can fall, but you will still own your shares. But if you own gold, its value will increase even if the company you invested in defaults on its debt.
Finally, gold provides liquidity. This allows you to sell your gold whenever you want, unlike many other investments. You can buy gold in small amounts because it is so liquid. This allows you to take advantage of short-term fluctuations in the gold market.
Can I have a gold ETF in a Roth IRA
You may not have this option with a 401(k), however, you might want to consider other options, like an Individual retirement account (IRA).
A traditional IRA allows contributions from both employee and employer. An Employee Stock Ownership Plan (ESOP) is another way to invest in publicly traded companies.
An ESOP gives employees tax advantages as they share the stock of the company and the profits it makes. The money invested in ESOPs is taxed at a lower rate that if it were owned directly by an employee.
Also available is an Individual Retirement Annuity. An IRA lets you make regular, income-generating payments to yourself over your life. Contributions made to IRAs are not taxable.
Who is the owner of the gold in a gold IRA
An individual who has gold is considered to be a “form of money” by the IRS and subject to taxation.
You must have gold at least $10,000 and it must be stored for at the least five years in order to take advantage of this tax-free status.
Although gold can help to prevent inflation and price volatility, it's not sensible to have it if it's not going to be used.
If you are planning to sell your gold someday, it is necessary that you report its value. This can affect the capital gains taxes that you owe when cashing in on investments.
Consult a financial advisor or accountant to determine your options.
What are the fees for an IRA that holds gold?
A monthly fee of $6 for an Individual Retirement Account is charged. This includes account maintenance fees and investment costs for your chosen investments.
If you wish to diversify your portfolio, you may need to pay additional fees. The fees you pay will vary depending on the type of IRA that you choose. Some companies offer free checking, but charge monthly fees for IRAs.
Many providers also charge annual management fees. These fees range from 0% to 1%. The average rate is.25% per year. These rates can be waived if the broker is TD Ameritrade.
What Precious Metals Can You Invest in for Retirement?
Silver and gold are two of the most valuable precious metals. They are both easy to trade and have been around for years. Consider adding them to the list if you're looking to diversify and expand your portfolio.
Gold: Gold is one of man's oldest forms of currency. It's also very safe and stable. Because of this, it's considered a good way to preserve wealth during times of uncertainty.
Silver: Silver has always been popular among investors. This is a great choice for people who want to avoid volatility. Silver tends to move up, not down, unlike gold.
Platinium: Platinum is another form of precious metal that's becoming increasingly popular. It's like silver or gold in that it is durable and resistant to corrosion. It's also more expensive than the other two.
Rhodium: Rhodium is used in catalytic converters. It is also used to make jewelry. It's also relatively inexpensive compared to other precious metals.
Palladium – Palladium is an alternative to platinum that's more common but less scarce. It's also more accessible. This is why it has become a favourite among investors looking for precious metals.
How can you withdraw from an IRA of Precious Metals?
First decide if your IRA account allows you to withdraw funds. Then make sure you have enough cash to cover any fees or penalties that may come with withdrawing funds from your retirement plan.
A taxable brokerage account is a better option than an IRA if you are prepared to pay a penalty for early withdrawals. You will also have to account for taxes due on any amount you withdraw if you choose this option.
Next, figure out how much money will be taken out of your IRA. This calculation will depend on many factors including your age at the time of withdrawal, how long the account has been in your possession, and whether you plan to continue contributing towards your retirement plan.
Once you have an idea of the amount of your total savings you wish to convert into cash you will need to decide what type of IRA you want. Traditional IRAs let you withdraw money tax-free after you turn 59 1/2, while Roth IRAs require you to pay income taxes upfront but allow you access the earnings later without paying any additional taxes.
Once these calculations have been completed you will need to open an account with a brokerage. To encourage customers to open accounts, brokers often offer signup bonuses and promotions. To avoid unnecessary fees, however, try opening an account using a debit card rather than a credit card.
When you do finally decide to withdraw from your precious metallic IRA, you will need a safe space where you can safely store your coins. Some storage facilities can accept bullion bar, while others require you buy individual coins. You will need to weigh each one before making a decision.
Because you don't have to store individual coins, bullion bars take up less space than other items. However, you'll need to count every coin individually. You can track their value by keeping individual coins.
Some prefer to keep their money in a vault. Others prefer to place them in safe deposit boxes. Regardless of the method you prefer, ensure that your bullion is safe so that you can continue to enjoy its benefits for many years.
What are the pros and cons of a gold IRA?
An Individual Retirement Account is a more beneficial option than regular savings accounts. You don't pay taxes on any interest earned. An IRA is a great way to save money and not have to pay taxes on the interest you earn. There are some disadvantages to this 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. If you do withdraw funds, you'll need to pay a penalty.
A disadvantage to managing your IRA is the fact that fees must be paid. Many banks charge between 0.5%-2.0% per year. Other providers charge monthly management fees ranging from $10 to $50.
If you prefer to keep your money outside a bank, you'll need to purchase insurance. In order to make a claim, most insurers will require that you have a minimum amount in gold. It is possible that you will be required to purchase insurance that covers losses of up to $500,000.
If you are considering a Gold IRA, you need to first decide how much of it you would like to use. Some providers limit the amount of gold that you are allowed to own. Others let you pick your weight.
You'll also need to decide whether to buy physical gold or futures contracts. The price of physical gold is higher than that of gold futures. However, futures contracts give you flexibility when buying gold. They let you set up a contract that has a specific expiration.
Also, you will need to decide on the type of insurance coverage you would like. The standard policy does not include theft protection or loss caused by fire, flood, earthquake. The policy does not cover natural disasters. You might consider purchasing additional coverage if your area is at high risk.
In addition to insurance, you'll need to consider the cost of storing your gold. Storage costs are not covered by insurance. Safekeeping costs can be as high as $25-40 per month at most banks.
To open a IRA in gold, you will need to first speak with a qualified custodian. A custodian maintains track of all your investments and ensures you are in compliance with federal regulations. Custodians are not allowed to sell your assets. Instead, they must retain them for as long and as you require.
Once you have chosen the right type of IRA to suit your needs, it is time to fill out paperwork defining your goals. Your plan should include information about the investments you want to make, such as stocks, bonds, mutual funds, or real estate. It is also important to specify how much money you will invest each month.
Once you have completed the forms, you will need to mail them to your provider with a check and a small deposit. The company will then review your application and mail you a letter of confirmation.
Consider consulting a financial advisor when opening a golden IRA. A financial planner can help you decide the type of IRA that is right for your needs. They can also help you lower your expenses by finding cheaper alternatives to purchasing insurance.
- Indeed, several financial advisers interviewed for this article suggest you invest 5 to 15 percent of your portfolio in gold, just in case. (aarp.org)
- If you accidentally make an improper transaction, the IRS will disallow it and count it as a withdrawal, so you would owe income tax on the item's value and, if you are younger than 59 ½, an additional 10% early withdrawal penalty. (forbes.com)
- The price of gold jumped 131 percent from late 2007 to September 2011, when it hit a high of $1,921 an ounce, according to the World Gold Council. (aarp.org)
- You can only purchase gold bars at least 99.5% purity. (forbes.com)
- Instead, the economy improved, stocks rebounded, and gold plunged, losing 28 percent of its value in 2013. (aarp.org)
- 7 U.S. Code SS7 – Designation board of trade as contract marketplaces
- 26 U.S. Code SS 408 – Individual retirement accounts
- Saddam Hussein’s InvasionHelped Uncage a Bear In 1989 – WSJ
- Do you want to keep your IRA gold at home? It's not exactly legal – WSJ
Guidelines for Gold Roth IRA
It is best to start saving early for retirement. It is best to start saving for retirement as soon you can (typically at age 50). It is important to invest enough money each and every year to ensure you get adequate growth.
You also want to take advantage of tax-free opportunities such as a traditional 401(k), SEP IRA, or SIMPLE IRA. These savings vehicles permit you to make contributions, but not pay any tax until your earnings are withdrawn. These savings vehicles can be a great option for individuals who don't qualify for employer matching funds.
Save regularly and continue to save over time. If you don't contribute the maximum amount, you will miss any tax benefits.
By: Jamie Redman
Title: Bitcoin ETF Aspirations Surge Amidst Fears of Market Vulnerabilities and Potential Manipulation
Sourced From: news.bitcoin.com/amid-rising-bitcoin-etf-hopes-critics-warn-of-vulnerability-and-echoes-of-precious-metal-manipulation/
Published Date: Fri, 20 Oct 2023 18:00:50 +0000