Has gold lost its shine? The last 20 years would certainly show gold as an asset that’s just grown over time but 2021 is a different story. Gold is down by 9% while other classes including real estate, equities and the dollar have risen. What’s surprising is that the dollar value generally moves in tandem with precious metals, but even the greenback has grown by 3% this year.
During a recession, the typical course of action would be to use gold as a hedge against stock market volatility. However, a newer approach is challenging this tried-and-true safe haven strategy, which has proven to be effective in previous instances. Bitcoin, which was introduced in 2009, marked the beginning of a new era in the history of digital currencies. With many exchanges like
simplifying crypto, Bitcoin has gained tremendous traction among retail investors.
As the dominant cryptocurrency, bitcoin possesses many of the characteristics of a general currency, as well as some distinct characteristics that may make it a viable shelter. However, it is up to the individual investor to decide if bitcoin is an appropriate safe haven during times of market turmoil.
With gold moving sideways and cryptocurrencies seeing a massive resurgence over the last two years, we’re drawing a case to understand which one’s the better investment – gold or bitcoin?
Gold: The all-time safe asset
Gold has been present for thousands of years as a safe and reliable asset. A key reason why people respect gold is that it is a reliable source of protection that has stood the test of time, whereas Bitcoin has not been around during a big financial crisis such as the Great Depression (even though it was created specifically to avoid such a crisis).
Central banks, significant government organisations, pension funds, and astute wealth management offices have always had a portion of their assets invested in gold.
Gold value slowing down:
Even though gold prices have fluctuated in the short term, much like the stock market, the precious metal’s value has stayed relatively steady over time. In light of the fact that we are living in a period of high market volatility, it may be prudent to invest a part of your portfolio in gold.
Gold prices can rise as a result of inflation, making it a good inflation hedging investment. When prices rise, the worth of fiat currencies declines, but the value of gold normally increases too. With that being said, however, Bitcoin is slowly growing as an asset with incredible potential for both short- and long-term investing.
India, which is one of the largest investors in gold worldwide, has also seen a massive boost to its bitcoin industry. Thanks to crypto exchanges like CoinSwitch Kuber and the likes, more people are investing digitally in cryptocurrency like Bitcoin, right from the comfort of their homes. This begs the question – Is cryptocurrency really the future of investments?
Bitcoin: The digital gold
Bitcoin is the most valuable cryptocurrency in the world, measured by market capitalization.
Unlike the stock market, which is only open for trade through the week from 9:30 a.m. to 4:00 p.m. EST, the cryptocurrency exchanges are open 24 hours a day, seven days a week, allowing traders to exchange Bitcoin and other digital products or assets around the clock.
Another important characteristic of Bitcoin is that it has a finite supply, which means that there will only ever be a total of 21 million Bitcoins in circulation at any given time. That means, if your bet on Bitcoin turns out to be positive, it will only increase in value with time.
Bitcoin is similar to gold in that it is not issued by a central banking system or a federal government. Bitcoin is a decentralized cryptocurrency that is produced by the collective computational power of “miners,” individuals and groups of people who work to verify transactions that take place on the Bitcoin network, and are then compensated with bitcoins in exchange for their time, computing power, and effort.
In order to prevent the market from being oversaturated, the Bitcoin protocol specifies that these awards be halved on a regular basis, guaranteeing that the final bitcoin will not be awarded until approximately the year 2140. Now, if you’re looking to invest, here are some pointers to help your decision making:
Comparing the two:
Gold will always hold its value for many years and will increase with time. If you’re looking for a comparison between the two, here are a few for starters:
- Transparency: The ancient trade, weighing, and tracking systems are flawless. It’s difficult to steal, counterfeit, or otherwise taint the metal. Bitcoin’s encrypted, decentralized system and complex algorithms make it tough to manipulate, making it one of the most secure systems being developed for the future.
- Rarity: Gold and bitcoin are both rare. So, by 2140, all 21 million Bitcoin will be in circulation thanks to the mining reward halving. While we know there are only 21 million bitcoins, we don’t know when all the gold will be mined. Some firms are investigating mining gold from asteroids in the future.
- Baseline value: Gold has long been utilised for a variety of purposes, from jewellery to dentistry, electronics, and more. Aside from refocusing attention on blockchain technology, bitcoin has significant intrinsic value.
Millions of individuals lack banking services and basic financial services like credit. These people can transmit money around the world for free with bitcoin. Bitcoin’s actual potential as a non-banking alternative has yet to be fully realised.
- Flow: A fairly liquid market exists for both gold and Bitcoin.
- ROI: Gold, however, has not seen much growth this year. If you had invested Rs. 10,000 in each on Jan 1st 2021, your Bitcoin investment would have returned approx. Rs. 39,000 today! (Source)The same investment in gold would have remained largely unchanged.
Which one is a better investment for 2021?
Ultimately, the question boils down to – what should I invest in 2021? Gold or Bitcoin? Let’s help you figure that out:
Bitcoin gained a massive market cap of $1 trillion in early 2021. However, the market crashed and most of the gains got washed out around May. It still managed to rally itself and is now valued at ~Rs. 34 Lakh/1 Bitcoin, a big raise from its January price of Rs.21.38 Lakh.
If we go with this data, then 2021 looks like it is the year of Bitcoin. Despite a market crash in May 2021, it rallied to stabilize at a respectable rate this year.
With these pointers in mind, you can make a smart decision and invest in Bitcoin if you’ve not started already. It holds a face when compared to gold, and with emerging trends, bitcoin and other cryptos are just going to continue growing with time, even if the volatility factor is high.
Also, the availability of apps and crypto exchanges such as
makes it all the easier to go forth and make investments a simple process, making bitcoin an asset that you should consider.
Disclaimer: The above content is non-editorial, and TIL hereby disclaims any and all warranties, express or implied, relating to the same. TIL does not guarantee, vouch for or necessarily endorse any of the above content, nor is responsible for them in any manner whatsoever. The article does not constitute investment advice. Please take all steps necessary to ascertain that any information and content provided is correct, updated and verified.
Canada’s third-largest pension fund beefs ups plan to cut carbon emissions
CALGARY, Alberta/TORONTO (Reuters) – Ontario Teachers’ Pension Plan Board (OTPP), Canada‘s third-largest pension fund, announced on Thursday new interim targets to cut the carbon emissions intensity of its portfolio as part of a plan to reach net-zero emissions by 2050.
OTPP, which manages C$227.7 billion ($180.11 billion) in assets, plans to reduce emissions intensity by 45% by 2025 and 67% by 2030, from 2019 levels.
Fellow pension fund Caisse de dépôt et placement du Québec also has a net-zero target by 2050, but environmental campaigners said OTPP’s interim targets are the strongest climate commitment yet from a Canadian pension fund.
Ziad Hindo, OTPP’s chief investment officer, said the fund would be looking to invest more in clean-energy companies, as well as firms offering software and services that allow other companies to transition to a lower carbon economy.
“Climate change permeates the entire investing landscape. Tackling it requires substantial effort and massive amounts of capital,” said Hindo. He compared the climate sector today with the technology sector in the 1990s, and predicted it would cause huge disruption across every industry.
OTPP is increasing staffing across various asset classes to keep up with growing investment in the climate sector, Hindo added. The fund’s portfolio currently includes more than C$30 billion in green investments such as renewable energy, energy storage, electrification, electricity transmission, energy efficiency and green real estate.
Unlike some large pension funds in the United States, OTPP is not divesting from oil and gas altogether, although it stopped actively investing in listed exploration and production companies in 2019.
“OTPP will need to go further if it wants to be considered a global leader on climate,” said Adam Scott, director of pension activist group Shift. “While this announcement describes how the OTPP will invest in solutions to the climate crisis, it makes no mention of how it will eliminate its exposure to the causes of it, namely high-risk fossil fuels.”
($1 = 1.2642 Canadian dollars)
(Reporting by Maiya Keidan and Nia Williams; Editing by Peter Cooney)
A16z in talks to back CoinSwitch Kuber in first India investment – TechCrunch
A16z is inching closer to making its first investment in a startup in India, the world’s second largest internet market that has produced over two dozen unicorns this year.
The Menlo Park-headquartered firm is in final stages of conversations to invest in Indian crypto trading startup CoinSwitch Kuber, three sources familiar with the matter told TechCrunch. The proposed deal values the Bangalore-based firm at $1.9 billion, two sources said. Coinbase is also investing in the new round, one of the sources said.
CoinSwitch Kuber was valued at over $500 million in a round in April this year when it raised $25 million from Tiger Global. If the deal with A16z materializes, it will be CoinSwitch Kuber’s third financing round this year.
TechCrunch reported last week that CoinSwitch Kuber was in talks to raise its Series C funding at up to $2 billion valuation. The report, which didn’t identify a lead investor, noted that the Indian startup had engaged with Andreessen Horowitz and Coinbase in recent weeks.
Usual caveats apply: terms of the proposed deal may change or the talks may not result in a deal. The author reported some details about the deal on Wednesday.
The startup declined to comment. Coinbase and A16z as well as existing investors Tiger Global and Sequoia Capital India did not respond to requests for comment.
The investment talks come at a time when CoinSwitch Kuber has more than doubled its user base in recent months — even as local authorities push back against crypto assets. Its eponymous app had over 10 million users in India last month, up from about 4 million in April this year, the startup said in a newspaper advertisement over the weekend.
A handful of crypto startups in India have demonstrated fast-pace growth in recent years — while impressively keeping their CAC very low — as millions of millennials in the South Asian nation kickstart their investment journeys. Several funds including those with big presence in India such as Accel, Lightspeed, WEH and Kalaari recently began working on their thesis to back crypto startups, TechCrunch reported earlier.
B Capital backed CoinDCX, a rival of CoinSwitch Kuber that has amassed 3.5 million users, last month in a $90 million round that valued CoinDCX at about $1.1 billion.
Policymakers in India have been debating on the status of digital currencies in the South Asian market for several years. India’s central bank, Reserve Bank of India, has expressed concerns about private virtual currencies though it is planning to run trial programs of its first digital currency as soon as December.
About 27 Indian startups have become a unicorn this year, up from 11 last year, as several high-profile investors — and global peers of Andreessen Horowitz — such as Tiger Global and Coatue have increased the pace of their investments in the South Asian market. Apna announced earlier on Thursday that it had raised $100 million in a round led by Tiger Global at $1.1 billion valuation, becoming the youngest Indian firm to attain the unicorn status.
Groww, an investment app for millennials, is in talks to raise a new financing round that would value it at $3 billion, TechCrunch reported on Wednesday. The startup has engaged with Coatue in recent days, the report said.
Why Canadians are still struggling to understand investment fees – The Globe and Mail
Financial advisory fees remain a confusing subject to the vast majority of Canadian investors despite a decades-long effort by the investment industry and its regulators to provide greater clarity and transparency. That means financial advisors remain in the ideal position to help close that comprehension gap.
According to the results of a survey the Mutual Fund Dealers Association of Canada (MFDA) released in June as part of a more expansive research report, fewer than one in five Canadian investors could identify correctly what types of costs are included in current fee summaries.
“The challenge we have today is that most investors don’t get a full picture of all the fees,” says Jean-Paul Bureaud, executive director of the Canadian Foundation for the Advancement of Investor Rights (FAIR Canada), “they only get a partial picture and they might not appreciate that it’s a partial picture.”
Advisors can clarify that to clients relatively easily by making clear that current fee summaries only include the fees for advice and trailing commissions on mutual funds, he says, and that other costs – such as fund management fees and operational costs – also apply.
Advisors can also ensure investors understand as much as possible by avoiding “using all kinds of fancy terms for all the different types of fees,” Mr. Bureaud says.
In fact, the MFDA’s report states, “Even experienced investors struggle to understand key terms and how their choices influence the type and amount of fees they pay.”
That means even when dealing with sophisticated clients, advisors should not assume “MER” is universally understood to stand for management expense ratio, or what it means. Breaking down jargon such as “trailing commissions” in simple terms – perhaps as an annual fee the advisor receives each year a client holds a particular investment – will also help avoid misunderstandings.
Instead of simply noting what fees are or are not included in existing disclosures, the MFDA report urges advisors to get as close to total cost reporting as possible.
London-based global firm The Behavioural Insights Team ran an experiment on behalf of the MFDA testing four formats of expanded cost reporting. Three of them specified investment fund charges while the fourth, known as the “control” option, included only a disclosure that other charges, such as fund management and operation costs, applied.
Only 23 per cent of investors exposed to the control option were able to identify their total cost of investing correctly, while between 54 per cent and 70 per cent of investors exposed to the other three options were able to do so.
Karen McGuinness, the MFDA’s senior vice president of member regulation and compliance, says part of the reason the experiment succeeded was a focus on using plain language.
“When we did the format, initially, we were using industry terminology because it was just second nature to us, but we brought in the behavioural research firm and they were the ones who said we need to set up this information in a way that’s more easily digestible for the average retail investor,” Ms. McGuinness says.
Nevertheless, the MFDA report warns that dealers and advisors shouldn’t assume sharing more cost information will always lead to better comprehension among clients as they will eventually hit a point of diminishing returns.
Rather, the report recommends they should “eliminate any information presented in the fee summary that is unlikely to be useful to investors. People have limited attention [and] this is especially significant when information is complex.”
To establish a baseline for how much any given client already understands – and therefore how much education advisors should attempt to provide – regulators have developed a number of quick and straightforward tools for that purpose.
For example, the B.C. Securities Commission runs the InvestRight website that includes fee calculators and a short quiz designed to gauge investors’ overall comprehension of investment fees.
“It only takes about five minutes to answer the questions, and a lot of people would be surprised at what they learn,” says FAIR Canada’s Mr. Bureaud.
The Ontario Securities Commission (OSC) operates a similar website – GetSmarterAboutMoney – that offers even more comprehensive tools and resources.
Meanwhile, regulators are working on a new set of disclosure rules to replace the second phase of the customer relationship model (CRM2) that has been in place since 2016. The goal of what’s being called CRM3 is to provide what the MFDA’s Ms. McGuinness calls “total cost reporting,” as it should get disclosures as close as possible to breaking down all the fees investors pay and not just those their advisor receives.
Although there’s no timeline for when CRM3 will be complete, Greg Pollock, president and chief executive of Advocis, says advisors will need to be more transparent with their clients on fees before the current bull market goes bust.
“Investors tend to look at the bottom line, and if they see that year-over-year returns are looking pretty good, they don’t get too focused on the fees simply because they’re satisfied with the overall performance,” he says. “But it does raise the question of what happens in a bear market when performance suffers. That really gets people’s attention.”
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