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Goldbugs Move to Bitcoin

NEW YORK (TheStreet) -- There is a certain group of people, and you know who you are, predicting and even rooting for an economic apocalypse.

In politics these people are called losers. In economics they're called goldbugs.

Absolutely certain that, since their policies aren't in fashion, the doomsday predictions of their candidates must certainly come true, the goldbugs have been all over the TV, hawking gold as the last hedge against disaster.

I know. The TV guys are selling gold, not buying it. The best hint that an asset class is about to fall apart is when it's hawked on TV. I knew the housing bubble was real when I started seeing commercials in the last decade about "fortunes to be made in real estate."

When everyone is getting in, it's time to get out.

Now I hold shares in a gold-backed mutual fund myself. I consider it a form of insurance for my portfolio. If the value of stocks turns decisively down, commodity values are likely to rise, and at that point my insurance becomes worthwhile.

But it's not something I'm hoping for. I like to see the value of my gold shares fall. It demonstrates to me that markets are working. Chances are my stocks are going up when that happens.

Still, despite the fact that gold has now fallen decisively to less than $1,300 an ounce, and the goldbugs are being laughed off the screen, there remains a valid fear trade out there, a place for those of a goldbuggy nature to hang out and say, "I told you so."

That place is Bitcoin.

Bitcoin is digital currency, digitally created, housed on servers and spent through electronic wallets. Since their introduction in 2009, they have become the investment of choice for those who choose not to believe in investment. 

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