What Should You Buy? Bitcoin or Gold?
The typical move could be to hedge against the stock volatility is gold. It is proven to be an effective method in the past, yet a new alternative challenges the traditional safe haven. Bitcoin is the new asset with currency properties, yet with some unique features, which make it a viable haven. Such differentiators along with loyal and vocal backing have led bitcoin to be an alternative means to minimize exposure to the stocks safely.
There are some factors that make the gold a strong asset. It is valuable as a material for the consumer goods including electronics and jewelry and it’s scarce. No matter what the demand, the supply remains low disproportionately. Gold can’t be manufactured like the company problems new shares or federal bank prints some money. It should be dug up from the processed and ground.
Gold has no correlation with the assets like currencies as well as stock indices. Precious metal used to be tied to Dollar until year 1971 when President Nixon has severed ties between gold and US currency. Since then, people who don’t want to ride the stock market swings to their maximum extent have invested in the gold. Gold as a precious metal, helps soften the blow and even profits when there is stick market correction, defined as decline of ten percent or more. All in all, gold is a great asset to have in the bear market. Typically, gold performs well during the corrections for the reason that even if it does not rise, this asset remains static while some decline is a bit beneficial as a hedge. In addition to that, as many people flee stocks as well as invest in gold, the cost will rise accordingly. Alternatively, people will likely buy-silver.
Bitcoin Taking the Scene
Bitcoin is the cryptocurrency that’s blockchain-based, which shares several properties with gold counterpart. As a matter of fact, most have considered bitcoin as digital gold because of its weak relationship with some assets-stocks.
Like gold, there’s a limited amount of the digital gold. It should be mined, even if not with the use of drilling machinery. But rather, the digital currency is basically mined with total computer power of its wide network of users that process the transactions on blockchain for small amounts of bitcoin.
Balancing Your Portfolio
In the face of declining stock market, you might wonder which is better than gold and bitcoin. Well, gold is still considered as a winner even if this could change soon. Gold is a smart addition to portfolio because of its real value and historical reliability, yet bitcoin is beginning to be a worthwhile option. The modern investors can be smart to keep small amount of both in the account, yet must be wary of over-investing in the currency with opaque future. If bitcoin may prove its value, gold could have a real competitor for your safe-haven asset.
If you are still confused between gold and bitcoin, asking for professional advice may be beneficial.