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Stock and commodities markets

Is Gold Worth Investing Amid Crisis?


Securing assets has always been number-one goal during crises. This is something that worries borth financial experts and plain folks who are far from the  peculiarities of the financial world but who are still witnessing their savings vanish amid inflation and devaluation.
 
Gold has always been considered a safe-haven asset for those who want to prevent their capital from devaluing. You are probably aware of the fact that international governments and central banks conduct reforms, denominate currencies, print money to boost inflation, deprecated some old currencies and create new ones, but gold remains the standard of value of centuries, even millennia.
 
2008-2009 Crisis And Gold
 
The global financial crisis that took place more than a decade ago, triggered a major rally in the gold market, pushing the gold price from 600 dollars in 2007 all the way up to 1800 dollars on 2011. 

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The correction started only 2012 when investors were convinced that the global economy had fully recovered. However, even under such circumstances the price of gold still remains over the level of 2007.
 
COVID-19 Pandemic And Gold
 
The year of 2020 started with an economic crisis triggered by the coronavirus pandemic. The business activity around the globe was frozen. The countries are isolated and trying to minimize the impact. Amid such conditions, the futures of gold started going out of the flat market it had been staying in since 2013.

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In late February - early March the markets witnessed a major asset sellout, with gold seeing a considerable correction. The reason was similar to the one on 2008 - a lack of liquidity. The players with opened marginal positions started reducing their exposure to the market to avoid losing everything upon margin calls. Institutional investors reacted as well. The market crash forced them into selling both risky and safe-haven assets.
 
The Fed and other central banks around the world took urgent steps, which helped a bit but didn't solve the problem. In particular, save-haven assets started recovering. Hedging assets regained their popularity as well.
 
Gold As An Alternative Currency
 
Extensive money printing around the world triggered high volatility in the market of EUR/USD, the key forex currency pair.  That is why gold turned into one of the very few (if not the only one) alternative international currencies, which apparently boosted the demand for gold.
 
According to Ray Dalio, a legendary investor and the founder of the hedge fund named Bridgewater Associates, gold has been a reserve currency for millennia. He predicts gold to hit 2000 dollars per troy ounce. Citi Bank shares this prediction.

Gold and other precious metals are great assets to hedge against stocks. While investors are unwilling to risk, the demand for gold remains high. How long is this going to last? Nobody knows.
 
Other Safe-Haven Assets
 
Apart from gold, the international community of traders and investors considers the following assets as safe-haven assets:
the Japanese Yen, the Swiss Franc, U.S. T-bonds, other precious metals like silver, platinum, palladium.
 
U.S. T-bonds (treasury bonds, treasuries) are included in thousands of investment portfolios all around the globe. They make a considerable part of central bank reserves around the world. 10-year T-bonds are the most liquid ones. They have been behaving similar to gold. Still, you should keep in mind that T-bonds are good for long-term investing while shorter-term investing needs thorough research and testing.

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JPY (yen) and CHF (franc) are safe-haven assets as well. The currencies are often used to hedge risks. Still, these are fiat money, which is why they don't have considerable competitive edge over other currencies. That's probably the reason why most international investors are not using them right now.valyutnaya-para-USDJPY

Bitcoin. Gold Alternative or HYPE?
 
The current crisis seems to be changing investors' attitude to Bitcoin. Previously, it used to be treated as a speculative asset, but today starts to bee seen as a real alternative to fiat money. Chances are, the changes are backed by the fact that cryptocurrencies have become more available and affordable. In particular, BTC futures are now traded on CBOE and CME, and the infrastructure has been growing.

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The Bottom Line
 
The current crisis has already shown us that all safe-haven assets can be useful for hedging to some extent. Even though gold is the king in this aspect, Bitcoin has considerable potential as well.

 

You are free to discuss this article here:   forum for traders and investors

 

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Goldman Sachs is back in the game

20 years ago, Goldman Sachs used to be a Wall Street legend and a dream company to work for graduates with a financial degree. Over the last few years, the bank has been a loser with thousands of disappointed employees, managers, and investors. However, the other day Goldman Sachs made an attempt to get back in the game.

Publication date: 16 October 01:17 PM

European ETFs - Decent Alternative to American ETFs

The mentioned PRIIP rules are forcing the financial service providers and brokers to publish a specific set of info documents including the so-called KID with the key info on certain investment and insurance products. Since the funds coming from outside of Europe do not conform to these requirements, they cannot be offered to EU residents as investment products.
Publication date: 19 September 01:48 AM

Warren Buffett Keeps Loading Up On Bank of America's Stock

Berkshire Hathaway keeps loading up on Bank of America's stock. This time, during the period of July 31st - August 4th, they purchased over 13,6 million shares, which cost 337 million dollars. The average prices was 24,81 dollars per share. With that being said, Berkshire Hathaway now owns 1,03 billion shares of the stock, which is 26,15 billion dollars in dollar terms. As for the Federal Reserve, they agreed to increase the fund's share to 24,9%.

Publication date: 12 August 01:39 AM

WTI Price Drops After US Oil Inventories Report

Today, another crude oil inventories report has been released by the USA:

Publication date: 03 June 12:21 PM

Remember the Key Rules of Investing in Stocks

Without further ado, let's consider a bunch of principles of investing in stock, which will put the odds of succeeding in this business in your favor:

Publication date: 11 March 01:14 AM

Apple Patents iPhone Without Ports And Holes, Device Expected In 2021

It seems that the release of the long-awaited iPhone without any ports or holes is getting more and more portable. Apple has always favored minimalistic designs, especially over the last 5 years. In 2015, almost all of the classic ports were deprecated in MacBooks in favor of a single one - USB-C Thunderbolt 3. In 2017, iPhone 7 got rid of the 3.5mm audio jack.

Publication date: 05 March 08:20 AM

Gold Sets New Records

The gold market is insane. The gold futures price set a new major high in New York. In particular, the dollar price of the precious metal set a new 7- year high. With that being said, maybe you should add gold to your investment portfolio along with BTC? Well,lat's ponder upon this question.

Publication date: 14 January 01:23 AM

Brent Prices Drop Down To $61/b

The concerns over the global demand for crude oil are getting back to the market again. The current trading week has been a week of discounts. Earlier today, Brent oil saw its price drop down to 61 dollars per barrel. The WTI price dropped all the way down to 56 dollars per barrel. The supply side has got an upper hand.
Publication date: 27 September 04:52 AM

Gold Prices Are Getting Stable After Monday's Rally

Last week was rich in the information about various financial markets, which could exert downward pressure on gold prices. Strange as it may seem, the situation in the ore market was relatively calm. Eventually, the week closed in the green zone. Those gains mainly had to do with Friday's gold rally. International traders and investors reacted to the information about another global economic slowdown coupled with the trade war between the United States and China as well as the current situation in the Middle East, and started loading up on gold as a safe-haven asset, which eventually pushed the prices higher. 

Publication date: 24 September 05:15 AM

Oil Prices Have Made The Biggest Rally In History

Gold, yen, and oil currencies are getting more expensive. The strike came for an unexpected direction. Saudi Arabia's oil facilities were attacked, which increased geopolitical risks in the region and simultaneously undermined the global oil supplies. That was basically the reason why crude oil prices made the biggest rally in history but then moved back a bit and are still trading over 10% higher relative to the start of the trading session. 
 
Publication date: 16 September 03:26 AM