The commodities that are in stiff competition with one another in 2022 are gold and crypto. Gold has historically been a safe haven among the asset class compared with crypto. With the emergence of crypto over the past decade, it has quickly become a commodity that investors have invested in.
Gold and crypto have their advantages and disadvantages when it comes to investing in those commodities. Whether you decide to invest in one commodity or both, it’s important that the investment you make does not cost you financially over time.
Our latest blog will cover the battle between gold vs. crypto. We’ll look at the differences between both commodities, the state of play with gold and crypto prices, and what’s the best commodity to invest in for 2022.
The differences between gold and crypto
While gold and crypto share many things in common, there are also stark differences between the two. If you’re looking to add these two commodities to your investment portfolio, it’s worth doing your research so you make an informed decision on what commodity to invest in. We’ll look at what makes gold and crypto different from each other.
What makes gold different from crypto?
Gold has been used as a store of wealth for thousands of years. Across the world, this yellow metal has been owned not only by individual investors, but also central banks and institutional investors. The commodity can also be used to create jewellery, as well as manufacture electronic components.
Unlike digital assets, gold can be stored physically in personal safes, bank vaults or safety deposit boxes.
According to the World Gold Council, gold is seen as a safe haven. The precious metal’s track record means that in economic downturns, it can maintain or increase its market value.
What makes crypto different from gold?
Investors who invest in crypto over gold may find that there are noticeable differences with the two commodities. With crypto, you cannot touch the asset as digital currencies exist digitally only. Whereas with gold, it is tangible.
Cryptocurrencies can also exist as a digital payment network and can be accepted by some online retailers to pay for items.
When it comes to how crypto is stored digitally, it’s through a public ledger that’s called the blockchain. The investor can access their assets through a personal online wallet, known as a private key.
State of play with gold and crypto prices
As an investor, you want to make sure that you get a good return on investment on whatever commodity you invest in. The value of Bitcoin and gold can go up or down, depending on how the markets react to the prices of the individual commodities.
Looking at the state of play with crypto and gold prices, cryptocurrencies are vulnerable to greater price volatility compared with the yellow metal. While there have been spikes in gold prices historically, most notably with the COVID-19 pandemic in the past couple of years, the price of gold has always had a value, and has even risen greatly in the long term.
Pros of gold vs. crypto
Making an investment in any commodity comes with its share of pros and cons. For any investor’s portfolio, gold can be a valuable asset compared to crypto. Here are the pros of investing in gold:
Hedged against inflation
The value of gold is influenced by inflation. It means that the price of this precious metal tends to go up when the purchasing power of currencies go down, making it a valuable commodity among investors. There are a couple of ways you can invest in this asset, through gold coins, or gold bars.
Investing in gold is easy for new investors
For new investors, investing in gold is straightforward and has never been as easy as it is today, due to the internet. At Atkinsons Bullion, we can guide you on your way to help you make the right gold investment for your portfolio.
Diversify the assets you have in your investment portfolio
In uncertain times, investing in gold can allow you to diversify your investment portfolio. Investing in multiple commodities can sometimes help protect your investments from the risk of volatile fluctuations in market prices.
Cons of crypto vs. gold
Unlike gold, which is often a safe and valuable asset to invest in, investing in crypto comes with a lot of risk. As crypto is a relatively new commodity, it comes with plenty of disadvantages. Here are the cons of investing in crypto over gold.
The crypto market is highly volatile
If you invest in crypto, you should be aware that the market is vulnerable to volatile price fluctuations. One minute, the digital currency’s value can go up, the next minute, it can crash. The high unpredictability of crypto means that if you invest in the wrong currency, you could lose what you’ve invested.
Vulnerable to losing your assets
If you’ve made a sizeable investment in crypto, you can be vulnerable to hacking or losing your assets due to security or technical issues. It’s also possible that you could lose the private key that enables you to access your coins due to hardware or security problems. This means that you could lose your entire crypto portfolio through no fault of your own, costing you a lot of money.
What’s the best investment? Gold or crypto?
When it comes to the best investment you could make for your portfolio, our opinion is that gold easily wins out over crypto. The yellow metal has historically outperformed other assets during times of high inflation, making it an attractive asset to invest in compared with digital currencies. If you’re looking to invest in a commodity that is less prone to sudden price crashes, you should consider investing in gold. More than just some code in a computer system, gold is an investment you can see, touch, and truly own.
If you’re looking to invest in gold as part of your portfolio, we can advise on the best investment options for you. You can speak to our team of experts who will be able to assist with any questions you may have about investing in gold over Bitcoin and other cryptocurrencies.
Please note that buying commodities can come with some risk. Price volatilities, market, and credit risks are some of the risks involved when investing in any type of asset.
This blog represents one person’s opinion only. Customers should conduct their own research and take advice before making an investment. We do not offer investment advice.