Inflation is inevitable just like what happened in the great inflation of the 1970s and many people are starting to panic. The people are beginning to decline their trust in the Federal Reserve when it comes to managing their monetary policies. Some are not confident with Congress’ spending anymore. People are anticipating market corrections left and right, and others may even be predicting a downright crash.
With these things happening, it’s not surprising for investors to protect their money and get out of various investments before everything can be wiped out. Safeguarding their assets is a priority, but this should often be carefully planned. You need to know what you can gain from a specific asset and when is the right time to invest in it. Some people are following the principles that are shown to work each time.
When stocks, bonds, and mutual funds collapse, investors tend to see that the price of gold and other precious metals is rising as well. They consider gold and silver to be safe havens where they can park their money for the meantime. Even if these metals are affected by a sudden market downturn, the losses are not as bad as the stocks. Moreover, the value of gold recovers quickly, and it can outperform many company stocks in times of recession.
During the financial crisis in 2008, the stock market peaked in October 2007. However, the lowest point was hit in March 2009. When these events happened, gold had lost its value in 2008, but if you’re looking at the overall picture, the overall gain from 2007 to 2009 was about 25%. This is better if you compare it with the losses of the stock market indexes that suffered almost a 50% decrease.
Cryptocurrency Came into the Picture
Today, a new competitor has come to town, and it’s in the form of cryptocurrency. Bitcoin is now one of the more popular cryptocurrencies, and it was born from the ashes of the 2008 recession. Satoshi Nakamoto and other developers vowed that the crisis would never happen again, deeply distrusting the monetary authorities.
One of the primary purposes of bitcoin is to provide stable coins that can’t be inflated, unlike any other fiat currency like the dollar. There’s a 21 million limit and a controlled production, so there will be no chance of creating bitcoins. The dollar has decreased its purchasing power by almost 98% since 1913, but this is not going to happen with bitcoin, where many investors are hoping that it will increase in value in time.
In this way, many investors see bitcoin as digital gold. Many of the earlier disciples of BTC have even claimed that this cryptocurrency is even more valuable and superior to gold. You can know more about your choices when you click here. However, is it enough to invest in for the long-term?
Crypto and Precious Metals Volatility
One of the benefits of gold is its stability in price that can last for many years. Investors love to add precious metals into their portfolios because they are relatively stable, and they don’t have to worry even if the stock market is doing well. Even if bullion and gold coins have minimal growth, they don’t essentially lose their intrinsic value, which can affect many bond markets.
In time, the price of gold and other precious metals is in an upward trend as well. If you compare the prices today over the past five decades, you can see a significant improvement in performance that can be compared to that of stocks. Over the past 20 years, many have even noticed that gold has surpassed the stock markets in times of pandemics and recessions.
On the other hand, some cryptocurrencies have seen very explosive growth in the first ten years of their creation. It has even experienced almost a $9 million percent in the first decade alone. It went into an all-time high of $64,000 and is hovering at $60,000 in October 2021.
However, many investors discovered that cryptocurrencies are very volatile. It took the stock market a year and a half to lose about 50% of its value, while it only took BTC a record of two months. This is why a lot of investors are wondering whether they can still trust this asset.
Future Price Growths
Many investors would want to see their portfolios grow and gain in value, which is the entire point of investing in something. The significant growth of bitcoin and other cryptocurrencies brings in more markets for investors to explore this unknown world. However, the question still remains about the sustainability of these digital coins and whether you should add this to your individual retirement account.
On the other hand, gold and other precious metals are gaining in value over time. They were considered safeguards for wealth portfolios, and they are a hedge against inflation. These are the more stable assets that you can count on when there are economic downturns. Be more informed with the downturns on this site: https://marketbusinessnews.com/financial-glossary/economic-downturn/.
The future for these shiny precious metals is bright because there’s always the fear of a weakening economy. Others are predicting that their demand will outstrip the mines’ production and will make their prices go up even more.
Cryptocurrencies may still operate in an uncertain place, and it’s essential to research before considering them. Track the records of these assets and consult with your financial advisor about the following steps to take. If you’re considering cryptocurrencies, you should get out while the going is good and watch out for what happens next.
