Live Metal Prices / oz
Gold: 1245.18 USD
Silver: 14.69 USD
Platinum: 803.50 USD
Palladium: 1191.50 USD
Rhodium: 2570.00 USD

Precious Metals vs Cryptocurrencies - An Investment Overview

Investing can be a good financial strategy for individuals looking earn some extra money for the future. This world we live in has many different investment options - stocks, bonds, real estate, precious metals and art are some of the most popular. Some investments, however, are safer and more secure than others. With all investments comes risk. Making the right investing decisions can sometimes be tricky. Let’s compare gold and cryptocurrencies, two of the best returning investment choices that are available right now.

Precious metals (gold):

Precious metals have been around and acted as a store of value for thousands of years. People trust in them because of their ever-increasing demand and value. They retain purchasing power over time, and they can pull countries out of terrible economic conditions. Gold is, of course, the most popular precious metal to invest in. It has some similarities to Bitcoin. For example, it responds similarly to poor economic conditions. Gold, like Bitcoin, is also not regulated by any government body. So, these factors make gold a very desirable thing to invest in for indiviuals, particularly those skeptical of government financial interference.

Cryptocurrency (Bitcoin):

Cryptocurrency is a much newer concept than gold. Its creation was caused by recent changing market trends and digitization. We will talk about Bitcoin only because it is the dominant cryptocurrency in the crypto market just like gold is the most influential precious metal. This makes these two somewhat comparable.

Bitcoin caught the eyes of investors in recent times because of its decentralized nature and unregulated price. The system appears to be reliable. Bitcoin can also be “mined" or earned as a reward for making the transactions happen on the blockchain.

Many people have invested in Bitcoin in the past two years, which accounts for its huge price increase in 2017. The similar trends between Bitcoin and gold have been identified by many financial experts. Let’s compare certain aspects of both of these assets.

The tough times:

A good investment is what saves you from starving on a rainy day, right? The value of an asset is directly proportional to how it behaves during poor economic conditions. For many investors, gold is a safe haven asset to invest in because it outpaces even hyperinflation to retain its value. It is good both for short and long-term investment.

Bitcoin, however, is a different thing when it comes to investing for a longer time. Because many of investors just buy Bitcoins for a short time to benefit the price increases, it can show extreme downturns quite quickly. The downfall of bitcoin after December 2017 is a good example of this. Bitcoin also has not been available long enough for investors to understand how it will behave in poor market conditions. Gold is tried and tested.

Price fluctuations:

The main goal of an investor is to earn some money by benefiting the price fluctuations of his asset.

Bitcoin’s price fluctuations are extreme. One minute its up and the next minute its down. Bitcoin once recorded a whopping 6% decrease in its value in under a mere 15 minutes - that can be a nightmare for any investor.

Gold, on the other hand, fluctuates slowly and is always somewhat predictable. The risk is very low when you are investing in gold, and you can prepare for a bad time in advance.

Unpredictability:

Bitcoin's value is neither controlled by any government nor a company; it price fluctuates according to supply and demand. Moreover, some other factors can influence its value, for example, the difficulty level of the Blockchain, and electricity costs. 

Gold, because of its matured market and strong influence on global trade, is less unpredictable. The price is controlled by factors like the oil price, supply of gold in the market and economic and political conditions.

Conclusion:

Both Bitcoin and gold have strenghts and weaknesses when it comes to investment choices. And the best investment portfolios are ones that contain a variety of investment products.

Gold is known to fluctuate slowly. If you are looking to invest a larger amount of money for a longer time period, you should certainly consider gold.

But if you want to try something different with a high fluctuations and larger risk, Bitcoin is a better choice.