Can gold and Bitcoins investment prove to be safe in case of a trade war?
Trump’s first action was against companies that bring cheap labor from Asian countries using H-1B Visa. After that, Donald Trump has already declared his intention to impose tariffs on imported washing machines, cars, electronic items, steel, aluminum, etc. Except for vehicles that come from Europe, most of the other things come from Asian countries.
To be honest, if Asian countries can levy special tariffs on American products, why can’t the United States do the same back home? Afterall, every country has the right to protect its businesses and jobs.
American President has the authority to take such drastic steps under Trade Expansion Act of 1962, Section 232 which allows him to impose tariffs on specific items and put curbs on imports. Obviously, this is going to impact European and Asian economies as well. So, both, long-term and short-term investors need to be cautious while putting their hard-earned money on the commodities market.
Markets started showing negative signs as soon as President Donald Trump declared his intention regarding charging tariffs on multiple items. These signs are justifiable; traders are anxious as the world might witness trade wars soon in the form of sanctions against American products. Now the central question, can gold or Bitcoins prove to be safe bets?
Gold or Bitcoins
Individuals who invested in Bitcoins before three years have made 1700 percent profit on their investment. So, everyone wants to invest in cryptocurrency and have this piece of cake. On the other hand when it comes to the list of alternative investment returns, gold remains to be one of the key drivers. Gold can enhance the portfolio’s overall performance by adding liquidity, diversification, and assured returns up to a certain percentage.
Bitcoin can offer relief to traders during a trade war
Bitcoin prices fluctuated between December 2017 and February this year, but so did gold prices, especially, during the last year when the conflict between North Korea and the US reached a very high level.
Famous American analyst Brian Kelly recently interacted with journalists and shared his opinion about how traders can hedge fears of losses during the coming months.
After moving downward during the last three months, Bitcoin is moving up once again. It jumped up as much as 6.5 percent during the first week of March. Perhaps, Bitcoin can prove to be the new gold in case of a trade war. Investors should consider putting their money on the cryptocurrency, said Kelly.
Kelly believes the dollar’s value would possibly decrease in the coming months; thus, prices of some items may rise. Besides, dollar, several other currencies may become weaker. In such situation, hard assets like Bitcoin would perform well as their supply is fixed.
Not just Kelly, but most of the analysts suggest investors put their bet on deflationary items. Something that’s available in fixed supply even during an inflationary environment.
Gold remains one step ahead of Bitcoins?
These days, you can trade with CFDs on gold as well as Bitcoin and other cryptocurrencies using platforms like Admiral Markets.
No doubt, at present, some traders might hesitate to consider gold as a safe haven for investment. However, if you are a long-term, patient investor, gold might just prove to be your perfect cup of tea.
The perceived scarcity and value make both, Bitcoin and gold attractive for investors. However, gold remains to be genuinely finite in nature because the amount of the precious metal that can be mined is very limited. There is no other source of gold as of now. On the other hand, Bitcoins are mined on the basis of protocols that can possibly be changed in the future to allow more mining. Thus, as far as scarcity factors are concerned, gold remains one step ahead.
Commodity traders consider gold futures contracts as their favorite. Gold offers better value also because it is used in a variety of industries. Besides jewelry, it is used in dental applications, electronic items, home décor items, and so on. You can walk to any pawnshop around the world and quickly sell your gold item to get cash instantly. The same cannot be said about Bitcoins, unfortunately.
The cryptocurrency is as valuable as gold no doubt. But, Bitcoins are not a physical commodity, and there are very few businesses as well as online stores that accept payments in Bitcoins. Gold remains one step ahead even as far as regulation is concerned. The precious metal is traded in organized financial markets, thus, not a cause of concern for regulators.
As far as volatility is concerned, apparently, Bitcoin remains more venerable. It experiences price swings very often. These days, it is also facing competition from other cryptocurrencies. Market pressure does impact gold prices as well, but not as much as crypto currency’s price.
Gold trade offers transparency
Again, gold gets one point more due to the ease of tracking. Gold markets are legal and transparent. Thus, there are lesser chances of misquoting, stealing or creating a sort of bubble.
As Bitcoins and most of the other cryptocurrencies are designed to evade tracking, it’s challenging to track the overall market as well. A Tokyo, Japan-based MT.GOX Bitcoin exchange was recently attacked by hackers and caused its crash. Millions-worth Bitcoins have been allegedly stolen, but the exact amount is still a secret. So, tracking and transparency go for a toss when it comes to Bitcoins trading. However, the digital currency allows traders to trade anonymously and make highly-encrypted, untraceable transactions, which gold cannot.
Investing in cryptocurrencies might become difficult if countries around the world start imposing taxes and design regulations around the same. On the other hand, there are no restrictions as far as buying gold is concerned. You can buy it in physical form, trade in gold CFDs, or purchase stocks of gold mining, selling companies.