If you follow the news, gold price has been skyrocketing in the last few months and reached its all time high of $2074.88 in August. The last all-time-high price was in 2011 at $1896.5. One of the main reasons to explain the soaring price is the uncertainty in the economy, so investors choose to put their money in gold, which is the traditional go-to safe-haven.
Just on August 14, investment guru Warren Buffett, for the first time, invested $560 million in Barrick Gold, pushing up the price by 20% at market close. If you also follow Berkshire Hathaway, you know Buffett has been very much against buying gold. He once said, “(Gold) gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.” But then he changed his mind in the current volatile market environment. It’s understandable that gold as a way to preserve the value of money, it gets pricier with more money flooding in.
But is it the only asset that can store the value of money? Speaking of that, the new generation of investors would disagree. With the blockchain technology getting more attention and more mature, Bitcoin as a digital currency has become another go-to safe-haven. In July, the price of Bitcoin returned to $10,000.
It’s true that more institutional money is also looking into Bitcoin to be part of their investment assets after its crazy hype back in 2017. It also happened in August that MicroStrategy, a Nasdaq listed company, bought 21,454 bitcoins under their new capital allocation strategy and used it as a way to store the value of money for their shareholders.
There are even people saying that Bitcoin is replacing gold to become the most valuable asset in the world. What’s backing up this belief? As far as I understand, the number of bitcoin is limited to 21 million. Based on the supply-demand law, once the supply is limited and demand is high when “the big money” acknowledges the value, the price is going to rally.
So which one is a better investment to store value? It’s hard to call out the winner. Bitcoin is heavily relying on the technology and now there’s no proof that it can scale. At this stage its value is still not well justified and mostly speculated and fluctuated. If you are more a risk seeking type of investor, it might serve you well. Gold will probably stay around as the traditional go-to safe-haven and store of value for another few decades (before Elon Musk brings humankind to mine in other asteroides, but who knows). To invest in gold, there are a few options, including directly buying physical gold, gold ETFs/mutual funds, or indirectly investing in gold miners/companies. Here are some ETFs (you need to check if they are available in your broker and note that they don’t serve as financial advice.).
What do you have at the moment to store value, gold or bitcoin? Or what are you planning to invest in to preserve your cash? Comment down below.
Until then, stay calm and invest with peace.
