The events in the markets, both PM's and cryptos, have left me debating with myself as to which is a better sector to be in, when our inevitable economic reset occurs. As I am an investor in both sectors, and find both to be of much merit, the debate over which will be the big "winner" come meltdown time.
There is much positing of opinion to be found across cyberspace, with good arguments coming from both camps. On one hand, the crypto pundits eschew the benefits of digital currency as attractors. Wide accessibility, convertibility, and most importantly, decentralization, are very compelling points to be made for cryptos. On the other side of the fence are the precious metals aficionados, putting forth the benefits of honest, tangible, real money; with the addition of the metals' long history as money recognized worldwide.
At this point, you may be asking yourself, "I know all this, but what's with the *$#&ing marbles?!?".
Funny you should ask!
After much debate, taking both sides and playing devil's advocate with both, I was still undecided UNTIL a rather peculiar mental picture clarified much for me. The argument for which asset will benefit more really hinges on popularity versus accessibility. On one hand, cryptocurrencies have been all over the headlines around the world, gained millions of fans, and is thus more "visible" to the average person. On the other hand, the metals have long history and tradition, along with its current suppressed price, keeping its popularity alive. Excellent points for both, but which will be turned to more, raising its market price higher relative to its competitor?
That's when the picture leapt into my mind. An image of a table with a wide platter holding a bunch of mason jars, each with a funnel inserted in them. The platter is a metaphor for the PM market. The jars represent cryptocurrencies, the funnels being the exchanges. Added to that was a bucket full of marbles, representing investors. The marbles were then poured into the funnels, to roughly simulate the expected financial "flight to safety" with the onset of the market reset (revaluation). Some marbles (investors) made it through the funnels (exchanges) and into the jars (cryptos). However, there was too high a volume of marbles trying to make it through for the funnels to handle all of them. Quite soon, the marbles overflowed the funnels, dropping to the platter (precious metals) below.
The logic flowed like the marbles. Those who invested in cryptos early had an easier time getting through the exchanges than those who were late to the party. When the trickle becomes a flood, the exchanges will be overwhelmed, with many not being successful in getting through. Being unsuccessful with the exchanges, they will then (over)flow into the metals. However, the metals market itself is only so large, so the REAL latecomers (there is NO "fashionable" lateness in investing) will be out of luck making it into either market, and will get a piece of neither.
Albeit strangely metaphorical, the answer was clear to me. BOTH cryptos and PM's will do well, but the actual "winner" is yet to be determined. For cryptos, the challenge will be to facilitate the exchanges, allowing more investors into the space (bigger funnels). Metals, on the other hand, will be dependent on the physical availability of the metals. The more metals available, the larger the "platter". To win, both sides will need to meet their respective challenges.
"So who will be the big winner?" you may ask. Ultimately, nobody will know until the smoke clears.
