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U.S. Global Investors, Inc. (NASDAQ:GROW) Is A Risk Mitigated Bitcoin Stock

U.S. Global Investors, Inc. (NASDAQ:GROW) Is A Risk Mitigated Bitcoin Stock
Written by
Chris Sandburg
Published on
November 27, 2017
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Bitcoin is now hovering in and around $10,000 a piece on the open market and interest in the decentralized currency has never been more fervent.Despite this dramatic increase in general public interest, however, the number of publicly traded companies through which a trader or investor can pick up an exposure to the space remains limited.One that just flagged up on our screener is U.S. Global Investors, Inc. (NASDAQ:GROW).Some reading might already be familiar with this one but likely not as a bitcoin and blockchain play – the company was initially set up by a US Military Colonel as an investment group for personnel. Basically, the group invested its funds in everything gold – mining companies, explorers, raw metal, everything. GROW Daily ChartNow, however, the company is branching out from its gold and commodities roots and into technology – specifically, bitcoin and the blockchain.And markets are awarding it for doing just that – U.S. Global Investors is up more than 125% over the last few days, with the primary driver behind this run being its announcing of a strategic investment in a company called HIVE Blockchain Technologies Ltd (CVE:HIVE).As part of the deal, U.S. Global Investors picked up 17 million shares of HIVE and the company's CEO and chief investment officer, Frank Holmes, was appointed as the non-executive chairman of the Board of Directors of HIVE.The question now becomes, is the upside run justified?We think so. We have actually covered HIVE on a couple of occasions in the past, highlighting the company's business model as being potentially disruptive in this space.Basically, Hive has secured a couple of large-scale mining facilities and is working to process bitcoin transactions (through the hash power available at said facilities) as well as creating a stock of new coins, with the goal being to hold and sell for gains farther down the line. The company has some pretty smart strategic alignments, in particular, one with a company called Genesis Mining, which is a very well known name in the space, and as part of our previous coverage we have suggested that this alignment makes it one of the most interesting bitcoin and blockchain stocks on the market today.So, in line with that statement, the acquisition of 17 million shares of HIVE by U.S. Global Investors very much highlights the latter as one to watch.The difference between an investment in HIVE and an investment in U.S. Global Investors is that one is very much a direct bitcoin exposure, while the other offers some degree of diversity — with it – a degree of risk mitigation on an allocation at this stage. To put this another way, HIVE's share price is very much tied to that of the underlying asset – bitcoin. This is going to bring with it an understandably large amount of volatility as bitcoin continues to fluctuate into early next year.In contrast, while U.S. Global Investors is now tied to bitcoin to some degree, it's overarching market capitalization isn't rested solely on the swings and roundabouts of bitcoin's underlying price.Of course, this degree of mitigation also serves to limit any potential upside, given that a company like HIVE is likely going to move higher and further on any positive developments in the bitcoin space than will U.S. Global Investors.Bottom line here is that this move by U.S. Global Investors has served to offer a layer of bitcoin-type exposures to the (as mentioned) limited selection that's available right now. That is, an option for an investor to pick up an exposure to bitcoin through a company that's not entirely dedicated to the crypto space, offering a degree of risk limitation that (many will argue) is sorely needed in this sector right now.We will be updating our subscribers as soon as we know more. For the latest updates on GROW, sign up below!Image courtesy of Mirko Tobias Schäfer via FlickrDisclosure: We have no position in GROW and have not been compensated for this article.

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