Just over a year ago Bitcoin was hanging on to its status as the speculative star. Commentators like me who had doubted it in the summer of 2017 were proven very wrong as the cryptocurrency trebled to top out at $20,000 in December 2017.
But last year this bubble burst. By the end of 2018 bitcoin was trading below $3,000. More than a thousand copycat cryptocurrencies joined the graveyard at www.deadcoins.com.
Bitcoin is a currency you cannot actually use to buy anything. Its unstable price means it is not a store of value either, although it takes vast amounts of electricity to power up the computers to mint it.
What this computer-code money did become was a speculative bubble, in the grand tradition of bubble assets. These arise at times of excess liquidity in markets and often have little tangible value.
Think dot-com companies without any profits in 2000, tullip bulbs in 1637, collecting postage stamps in the 70s. It’s fine if you time your purchases correctly, but a disaster if you come in at the wrong time.
One former Dubai journalist I know now sits on the island of Fiji in the Pacific Ocean counting the millions he made as an early Bitcoin miner. He also knew when to get out.
There are two major problems with speculations: picking the right speculation; and when to exit before the inevitable crash.
More solid speculations such as property or shares will fall as well as rise in value, but when it comes to something like Bitcoin and the me-too cryptocurrencies, you have to wonder if you ever possessed a real asset in the first place.
Just because something is traded and assigned a value, and talked about by journalists and analysts on TV, does not make it real.
If you erase your hard disk containing this computer code - for that is all Bitcoin is - it simply vanishes as happened to the unfortunate London IT worker James Howells who threw away his laptop containing 7,500 bitcoins worth $56 million in 2013. Even wallets held by third parties have been hacked. By contrast bank accounts are always backed up. Nobody lost a cent on 9/11.
Indeed, the idea of a currency without a central bank to operate it always scared me off. What, nobody to keep inflation under control? Who needed another currency anyway? What could it really add?
Well that is all history now, or is it?
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The truth is that once the great story behind a bubble asset has been rumbled it is almost impossible to push its value back up again.
Of course, Bitcoin did have some other big price falls on its 10-year journey to $20,000.
But once you have a truly epic bust - with a great many people losing a load of money - then convincing enough investors to reflate the price to that level again is not going to happen, or at least not for a very long time.
Silver is a somewhat comparable speculative alternative to Bitcoin. It has been used as money since the dawn of civilisation, albeit as monetary metal not computer code.
In recent years silver has become more of a speculative asset than a currency, although it is also a very useful industrial metal. It’s vital for smartphones and other electronic products.
Between 2000-2011 the price of silver rocketed from $3 to $49 an ounce. That was its biggest bubble since the previous one in the 1970s, which ended at $50 per ounce in 1980.
What other commodity is currently cheaper than it was in 1980? None.
Silver acts as a leveraged play on the gold price as the supply of silver is tighter than gold. So, when the king of monetary metals rises in price the queen makes double that gain.
Therefore, if you reckon 2019 is going to be a great year for the gold price then you should do much better speculating in silver.
Gold bulls are back. There is a general consensus that this should be a good year for safe haven assets like gold because the political and economic outlook is very uncertain and financial markets became highly volatile in the fourth quarter of 2018.
Moreover, gold prices are still depressed from their $1,923 all-time high of 2011.
Suddenly talk has switched from Fed interest rates hikes to whether interest rate hikes will be possible at all in 2019, or whether rates could even come down. Certainly that is what the falls in US treasury bond yields indicate.
Further falls in stock market prices culminating in a climatic sell-off - possibly this Spring due to the Brexit and Chinese trade war - would be met by lower interest rates and the return of quantitative easing.
The last time this happened in 2009-11 gold prices more than doubled and silver shot from $8 to $49 per ounce.
Anybody with a speculator’s eye will have noticed that 600 per cent gain in a little over two years for silver. Could that be about to happen again?
Peter Cooper has been writing about finance in the Gulf for two decades
