Is Gold or Bitcoin a Better Investment in Today’s Economy?

April 7, 2017 at 8:11 PM 1 comment

If you are looking for somewhere to invest your hard-earned money, it is harder than ever to find traditional investments that will bring in a good return. Despite a slight rise in interest rates over recent months, banks are still offering less than 1% rates, and it is little wonder that so many people are looking to less conventional alternatives.

The alternative investment market covers diverse commodities that are market resilient and can be traded online. Some of these typically include gold and bitcoins and according to Lear Capital, even though the cost of precious metals continues to be influenced by so many different factors such as Central Bank purchases, the strength or weakness of the U.S. dollar, economic instability, money printing around the world, these, alongside venture capital and fine art have a far lower correlation to the overall financial markets than traditional investments like stocks, bonds and even real estate.

Difficult financial times

These remain difficult and uncertain financial times, both in the USA and globally. The most important thing to bear in mind is to manage your finances with eyes wide open and regularly look at your budgeting. But if you do find that you have a little surplus to put away, simply leaving it in the bank could cost you money in the long run. This is when you might seriously consider investing your wealth elsewhere.

Real estate has traditionally been seen as a good alternative, but this can be fraught with risk, and of course means your money is tied up and cannot be easily accessed if you suddenly need it. So how about gold and bitcoin – could they be for you?

Gold versus Bitcoin

At first glance, these commodities could not be more different. After all, one is a precious metal that has been used as a form of exchange for thousands of years and is widely regarded as a sound long-term investment. The other is a coded, crowdsourced virtual currency that did not even exist ten years ago. However, the common factor is that these are both commodities that can be easily traded online, and that can potentially realise excellent returns. Unlike property, they are also highly liquid and can be converted to cash at the click of a mouse.

Fluctuating values

Like all commodities, both are subject to drastic price fluctuations. From its introduction till 2013, the bitcoin price rose gradually from zero to almost $200. It then rose dramatically to more than $1,000 in the space of a few months, almost surpassing the price of gold. This proved unsustainable, and over the subsequent three years it steadily dropped to just under $400. The price of gold has also shown variation, though not to quite such a dramatic extent. It reached an all-time high of almost $2,000 an ounce in 2011, which also dropped significantly to around the $1,000 mark in 2016.

The moral of the story is simple. Greater potential returns also carry higher risks. While both gold and bitcoin can be great investments, it is always wise to take good independent advice before you invest your hard-earned money.

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1 Comment Add your own

  • 1. Adam Duncan  |  April 14, 2017 at 4:16 AM

    Hope 2017 will be the year bitcoin’s price stabilizes over $1500.

    Reply

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