Bitcoin-to-Gold Ratio Plunges as Crypto Falls Short of Gold's Performance
Bloomberg's commodity market expert, Mike McGlone, has raised concerns about the potential downturn for bitcoin, emphasizing its underwhelming performance compared to gold since its peak in 2021. McGlone recently highlighted the significant drop in the bitcoin-to-gold ratio, which has fallen by approximately 40% from its highest point of 37 times in 2021.
McGlone's Evaluation of Bitcoin's Performance
McGlone, a commodity analyst at Bloomberg, has expressed his analysis of bitcoin's performance relative to gold. In a recent assessment, he discussed the relationship between bitcoin and gold, along with other commodities. He drew attention to the gap in the weekly charts of S&P 500 E-mini futures and its implications for risk assets. According to McGlone, this gap has potential implications for the performance of bitcoin and gold.
The Bitcoin-to-Gold Ratio as a Leading Indicator
McGlone's analysis includes a comparison of the bitcoin-to-gold ratio, which he believes can serve as a leading indicator. He notes that this ratio has been trailing since the significant surge in bitcoin's value in 2021. As of January 2, the ratio equated to about 21 ounces of gold. However, it is currently approximately 40% lower than its peak in 2021.
Bitcoin's Underperformance and the Possibility of a Recession
This is not the first time McGlone has discussed the bitcoin-to-gold ratio. In a previous analysis on January 23, 2024, he suggested that bitcoin's underperformance compared to gold, despite a strong U.S. stock market, could indicate either an opportunity for bitcoin to catch up or a potential recession. McGlone leans towards the latter, expressing concerns if the Bitcoin/gold ratio continues to decline.
The Impact of Changing Interest Rates and Liquidity Surge
The shift in bitcoin's performance relative to gold can be attributed to changes in interest rates and the liquidity surge in 2021. With the current federal fund rate at 5.58, the scenario has shifted, affecting assets like gold and bitcoin, which do not generate earnings or interest. As a result, these assets have become less attractive in investment portfolios. McGlone suggests that the recent frenzy around crypto exchange-traded funds may be seen as a warning sign of a market peak.
In conclusion, Mike McGlone's analysis highlights the disappointing performance of bitcoin compared to gold. The significant drop in the bitcoin-to-gold ratio raises concerns about the future trajectory of bitcoin. As the market continues to evolve, it will be interesting to see if bitcoin can regain its momentum or if a potential recession lies ahead.
Frequently Asked Questions
What are some of the benefits of a gold IRA
The best way to invest money for retirement is by putting it into an Individual Retirement Account (IRA). It's tax-deferred until you withdraw it. You control how much you take each year. And there are many different types of IRAs. Some are more suitable for students who wish to save money for college. Others are intended for investors seeking higher returns. Roth IRAs let individuals contribute after age 591/2 and pay tax on any earnings at retirement. These earnings don't get taxed if they withdraw funds. So if you're planning to retire early, this type of account may make sense.
Because you can invest money in many asset classes, a gold IRA works similarly to other IRAs. Unlike a regular IRA you don't need to worry about taxes while you wait for your gains to be available. For people who would rather invest than spend their money, gold IRA accounts are a good option.
You can also enjoy automatic withdrawals, which is another benefit of owning your gold through an IRA. It means that you don’t have to remember to make deposits every month. To ensure that you never miss a payment, you could set up direct debits.
Gold is one of today's most safest investments. Because it's not tied to any particular country, its value tends to remain steady. Even in economic turmoil, gold prices tends to remain relatively stable. As a result, it's often considered a good choice when protecting your savings from inflation.
Is gold a good investment IRA option?
Any person looking to save money is well-served by gold. It can be used to diversify your portfolio. But gold has more to it than meets the eyes.
It has been used throughout the history of currency and remains a popular payment method. It's often referred to as “the world's oldest currency.”
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-demand relationship determines the gold price. The strength of the economy means people spend more, and so, there is less demand for gold. This results in gold prices rising.
On the other hand, people will save cash when the economy slows and not spend it. This increases the production of gold, which in turn drives down its value.
This is why investing in gold makes sense for individuals and businesses. If you invest in gold, you'll benefit whenever the economy grows.
Also, your investments will earn you interest which can help increase your wealth. If gold's value falls, you don't have to lose any of your investments.
What is a Precious Metal IRA, and how can you get one?
A precious metal IRA lets you diversify your retirement savings to include gold, silver, palladium, rhodium, iridium, osmium, osmium, rhodium, iridium and other rare metallics. These are “precious metals” because they are hard to find, and therefore very valuable. They make excellent investments for your money and help you protect your future from inflation and economic instability.
Precious metals are sometimes called “bullion.” Bullion refers to the actual physical metal itself.
Bullion can be bought via various channels, such as online retailers, large coin dealers and grocery stores.
You can invest directly in bullion with a precious metal IRA instead of buying shares of stock. This allows you to receive dividends every year.
Precious metal IRAs have no paperwork or annual fees. Instead, you pay a small percentage tax on the gains. You also have unlimited access to your funds whenever and wherever you wish.
What precious metal is best for investing?
This question depends on how risky you are willing to take, and what return you want. Although gold has traditionally been considered a safe investment choice, it may not be the most profitable. If you are looking for quick profits, gold might not be the right investment. Silver is a better investment if you have patience and the time to do it.
If you're not looking to make quick money, gold is probably your best choice. Silver may be a better option for investors who want long-term steady returns.
How much is gold taxed under a Roth IRA
An investment account's tax is calculated based on the current value of the account, and not on what you paid originally. So if you invest $1,000 in a mutual fund or stock and then sell it later, any gains are subject to taxes.
But if you put the money into a traditional IRA or 401(k), there's no tax when you withdraw the money. Only earnings from capital gains and dividends are subject to tax. These taxes do not apply to investments that have been held for more than one year.
Each state has its own rules regarding these accounts. Maryland requires that you withdraw funds within 60 business days after reaching the age of 59 1/2. Massachusetts allows you to delay withdrawals until April 1. New York has a maximum age limit of 70 1/2. You should plan and take distributions early enough to cover all retirement savings expenses to avoid penalties.
Who owns 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 at least $10,000 in gold and keep it for at most five years to qualify for this tax-free status.
The purchase of gold can protect you from inflation and price volatility. But it's not smart to hold it if your only intention is to use it.
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.
A financial planner or accountant should be consulted to discuss your options.
How do I open a Precious Metal IRA
The first step in opening an Individual Retirement Account, (IRA), is to decide if it's something you want. If you do, you must open the account by completing Form 8606. Then you must fill out Form 5204 to determine what type of IRA you are eligible for. This form should not be completed more than 60 days after the account is opened. You can then start investing once you have this completed. You could also opt to make a contribution directly from your paycheck by using payroll deduction.
Complete Form 8903 if your Roth IRA option is chosen. Otherwise, it will be the same process as an ordinary IRA.
To be eligible for a precious metals IRA, you will need to meet certain requirements. The IRS stipulates that you must have earned income and be at least 18-years old. Your earnings cannot exceed $110,000 per year ($220,000 if married and filing jointly) for any single tax year. Contributions must be made on a regular basis. These rules apply regardless of whether you are contributing directly to your paychecks or through your employer.
You can use a precious metals IRA to invest in gold, silver, palladium, platinum, rhodium, or even platinum. However, physical bullion will not be available for purchase. This means you won't be allowed to trade shares of stock or bonds.
There are two major drawbacks to investing via an IRA in precious metals. First, they are not as liquid or as easy to sell as stocks and bonds. This makes it harder to sell them when needed. Second, they are not able to generate dividends as stocks and bonds. Also, they don't generate dividends like stocks and bonds. You will eventually lose money rather than make it.
- 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)
- 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)
- Instead, the economy improved, stocks rebounded, and gold plunged, losing 28 percent of its value in 2013. (aarp.org)
- If you take distributions before hitting 59.5, you'll owe a 10% penalty on the amount withdrawn. (lendedu.com)
- This is a 15% margin that has shown no stable direction of growth but fluctuates seemingly at random. (smartasset.com)
- Saddam Hussein's Invasion Helped Uncage a Bear In 1990 – WSJ
- Want to Keep Gold in Your IRA at Home? It's not exactly legal – WSJ
- Do You Need a Gold IRA to Get Retirement?
- What are the Options? Types, Spreads and Example. Risk Metrics
Online buying gold and silver is the best way to purchase it.
Before you can buy gold, it is important to understand its workings. The precious metal gold is similar to platinum. It's rare and often used to make money due its resistance and durability to corrosion. It is very difficult to use and most people prefer to purchase jewelry made of it over actual bars of Gold.
Two types of gold coins are available today: the legal tender type and the bullion type. Legal tender coins are designed for circulation in a country. They often have denominations like $1 or $5 or $10.
Bullion coin are not intended for investment. However, their value will increase with inflation.
They aren’t exchangeable in any currency exchange. For example, a person who buys $100 worth or gold gets 100 grams. This gold has a $100 price. For every dollar spent, the buyer gets 1 gram of Gold.
You should also know where to buy your gold. If you want to purchase gold directly from a dealer, then a few options are available. First, go to your local coin shop. You can also go to a reputable website such as eBay. You may also be interested in buying gold through private sellers online.
Private sellers are individuals who offer gold for sale, either at wholesale prices or retail prices. Private sellers typically charge 10% to 15% commission on each transaction. A private seller will usually return less money than a coin shop and eBay. This option can be a good choice for investing in gold because it allows you to control the price.
You can also invest in gold physical. You can store physical gold much more easily than you can with paper certificates. However, it still needs to be safe. You need to make sure that your physical gold is safe by storing it in an impenetrable container like a vault or safety depositbox.
When buying gold on your own, you can visit a bank or a pawnshop. A bank will provide you with a loan that allows you to purchase the amount of gold you desire. Small establishments that allow customers to borrow money for items they have brought are called pawnshops. Banks often charge higher interest rates then pawnshops.
Another way to purchase gold is to ask another person to do it. Selling gold is simple too. It is easy to sell gold by contacting a company like GoldMoney.com. You can create a simple account immediately and begin receiving payments.
By: Jamie Redman
Title: Commodity Analyst Mike McGlone Highlights Bitcoin's Disappointing Performance Against Gold
Sourced From: news.bitcoin.com/commodity-analyst-mike-mcglone-says-gold-glitters-over-bitcoin-as-crypto-to-metal-ratio-plunges-post-2021/
Published Date: Sun, 04 Feb 2024 22:30:21 +0000