With high inflation and uncertainty in the economic field, investors are looking for safe havens for investment, which is always gold at the forefront, and some also offer digital currencies.
Investing in gold has proven time and time again to be a safe investment, even in times of inflation, but according to a report in the Wall Street Journal, investing in cryptocurrencies has so far proven to be like “speculative investments.” .
In this report, it is briefly stated: Digital currencies are not a substitute for gold.
The paper lists the advantages of investing in gold, as demand for it comes from multiple sources and central banks and investors own it in a variety of ways, whether for wealth protection or even to generate returns.
The constant demand for gold as jewelry is also one of the most important advantages of investing in it, not to mention that it is a key component in various electronic devices.
Even when financial markets are under pressure, investors buy gold as a “safe haven” and even when the economy is booming, consumers buy more jewelry and electronics.
From the beginning of December, the price of gold returned to the upward trend and was above the level of 1780 dollars per ounce in the world markets.
One of the important points that support investing in gold is that it is widely owned around the world and mined in almost all countries.
A report published by “CNBC” indicates that gold has not performed well in the context of high inflation this year, and despite trading as a rare commodity and a safe haven, prices in September were lower than their peak in March. The past decreased by about 20%.
He points out: One of the main factors of gold’s performance is the strength of the US dollar, which recently reached its highest level in the last two decades, and with the economic recession in China and Europe, investors are struggling. This means that investing in gold does not perform well when the dollar is strong.
Compared to gold, we find that the demand for digital currencies is limited to “investment” and investors see it as a “high-risk, high-return bet.”
The “Wall Street Journal” report shows that cryptocurrencies are subject to high price volatility, as their prices rise and fall depending on “speculators’ accumulation.”
Although digital currencies are available to everyone, for example, entities in five countries control 80% of the Bitcoin network’s mining capacity, and 2% of the owners of the process own 95% of all Bitcoins in existence.
The report shows that gold moves in isolation from equity markets, while cryptocurrencies do not follow this pattern.
A report published by Rat Bank confirms that Bitcoin and other digital currencies still don’t have much time to know whether they can be an effective way to hedge against inflation.
This shows that it is relatively easy to buy and sell digital currencies and gold, but gold has a more “acceptable” advantage in its transactions.
Source: Lebanon Debate
