For all the "gold fools" reading this:
You're telling us that gold is a very nice inflation hedge... can you buy anything with it? Of course not (except for more dollars). We've managed to create a form of money that is actually used as a payment currency.
[Do you see cash-strapped Russia selling oil for gold? Of course not. It goes to show the limitations of gold as a medium of payment.]
Countries are even starting to refuse buying russian gold.
Still not sure I understand economics enough to use the full label of inflation hedge.
Agree Bitcoin has deflationary pressures built it or baked in as people say these days. Agree that over medium and long term, it is inflation resistant.
But in my mind a hedge is something that is anti rather than resistant. So I dont necessarily see Bitcoin as a hedge, though perhaps it is semantics I don't get.
This is just a matter of time tho, when theres less money being pumped into markets like now, and people are lower on money due to inflation, it’s clear that we won’t see Bitcoin pumping up, just because there’s more inflation. So first we’re seeing many assets actually coming down when it first starts. We would see the anti inflation curve happening when trust into the dominant currencies eroded and people try everything they can to save their money from it, but this didn’t happen yet.
So we gotta use longer time horizons, let’s just take last 3 years as reference because in the beginning of 2020 it was clear that major money printing is going to occur. So from that point on market participants could’ve looked for an inflation hedge specifically, even long before inflation gets bad. But it was already foreseeable from that point on.
- Gold appreciated by 21%.
- Bitcoin appreciated by 143%.
- Oil appreciated by 81%.
- Natural gas appreciated by 274%.
We can see that commodities like natural gas, that are short in supply in certain countries, are shooting up in price in the short term during certain market conditions(hard to foresee). Things that people have to buy regardless, aka inelastic demand. But these increases are oftentimes only temporary. Natural gas prices were higher in 2008 than now, while Bitcoin keeps appreciating consistently in value.
In the short term there can be some opportunities that can outperform Bitcoin for people that can anticipate it correctly, but Bitcoin is a safe bet even here. But in the long term a money with absolute scarcity will hedge the best.
Bitcoin is a hedge, but not a mere financial hedge. It's a back up/fall back against a non-elected cabal that makes/creates policies that expand and tighten the money supply, which truly is not sustainable. The fiat system will definitely collapse within itself. It can be debated that, "It would not be today", but my reply to that would be, "Better to be ready, and HODL Bitcoin".
It’s really necessary to have a hedge beforehand, otherwise it would be too late when it actually happened. That’s what many people don’t realise.