A Catalyst for Collapse
Inflation, FED intervention, Equities vs Commodities and considerations on the mitigation of risk in uncertain times
The Covid-19 pandemic reshaped almost every aspect of human endeavors, including investments. During the lockdown that accompanied the pandemic, relative prices of goods went up, and this had ripple effects on the global economy.
The fiat currencies were fast losing their purchasing powers. The cryptocurrencies were also fluctuating in prices. With the unstable environment at that time, it was obvious that an alternative mode of investment was necessary.
This brought the attention of most people back to gold, begging the question: what about this yellow metal is providing a sense of security to individuals and investors. What advantage does it have over others?
Whenever there are uncertainties and inflationary instability in the financial markets, gold has always been a safe store of value. Over time, this has been made possible through its risk aversion and shock-resistant qualities.
Afees Salisu along with two other popular bullion industry researchers, as at the beginning of this year, carried out a study about the credibility of gold as a safe haven during Covid. Their papers concluded that gold is a better alternative to the United States stocks, crypto, and even other precious metals.
Moving on, the crash of the stock market in early last year heralded a bearish trend that shook almost every stock investor. The end of this crash gave a baton to the Covid-19 economic recession. Seeing the severity of the crash, some investors started looking for a safer alternative.
While examining the volatility of fiat currencies and cryptocurrencies, on the other hand, the inflation affected the market worth and purchasing power of some benchmark fiat currencies like the U.S. dollar.
Bitcoin and altcoins looked like a safe alternative during Covid, but the current dip has proven the irony. Aside from stablecoins, other cryptocurrencies dance to the declining tunes of the Covid-19 economic recession.
Now, let's come to gold or digital gold:
On July 20 this year, the spot price of gold was $1,820 per ounce. Even though there were times that its price fell slightly below this, it was nevertheless within the circumference of the above price.
These statistics and analysis of gold's resilience amidst economic turbulence make it smart for investors who are worth their salt to diversify their portfolios accordingly. However, that is still subject to individual research and decisions.
Although investing in this precious metal might look conservative, history shows how it becomes a haven during economic downtimes. It has proven itself to be a way of gaining financial security amidst fluctuations and inflations.
Warren Buffet, a billionaire who leveraged the stability of gold, remarked thus: "I have no views as to where gold will be in the next five years, but the one thing I can tell you is it won't do anything between now and then except look at you."
Stability may be Buffet's key message here but Gold's trajectory in the last 20 years shows a roughly 600% return.
In the uncertainty that Covid 19 relentlessly brings, could gold be one of the few constants to future-proof an investment portofolio? Follow xbullion Twitter, Linkedin, or Facebook to stay up to date with gold trends and reports.
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