Bitcoin will remain useful but may not replace gold

Peter Cardillo, chief market economist, Spartan Capital Securities LLC, remains bullish on gold as an asset class. “There will be a place for Bitcoins, but I do not believe it is going to replace gold or paper currencies,” he said.

In terms of the stimulus, what is it that the markets would be watching out for?
The markets are happy about getting more stimulus. There is a good possibility that we will get (a package of) $1.9 trillion which is good in terms of growth. The economy is picking up speed. We saw the effects of the stimulus in December. More stimulus is obviously going to have a real booming economy here. Janet Yellen has been saying that it is better to over stimulate than not to over stimulate because the risk factors are greater than perhaps the market might be anticipating. I think what she is basically talking about is the high rates of unemployment and that is the basis for this administration wanting to take the chance in over stimulating the economy.

What is your outlook on gold and oil?
I think the real reason for the hesitation in oil market is due to the fact that the Saudis have indicated that they will probably be raising production next month. The market is somewhat fearful that OPEC might be taking its foot off the breaks a little too soon. What we are seeing here is a market that has not really declined very much. It is probably going to be capped around the $60 level. With the global economy regaining in the second half of the year, oil prices are probably headed higher but for now we may just stick around these levels.

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As far as gold is concerned, it has been very disappointing. From a technical standpoint, it is under a bearish grip at this time. There are many many reasons to own gold at this time, perhaps never like before. This in spite of the fact that there is no inflation. There is a lot of speculation in Bitcoin and that has taken the glitter off from the gold market. That is not to say that gold is finished, not by a long shot. Gold prices are headed much higher. Sooner or later, people are going to realise that the move in Bitcoin is more of a speculative move than of any real fundamental reason. There will be a place for Bitcoins, but I do not believe it is going to replace gold or paper currencies. Will it be useful? Absolutely! But at $50,000 or $100,000, I think it is ludicrous and it reminds me of the 1990 dotcom episode.

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