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Analysis of the future of Gold in the Cryptocurrency era

The 10/05/2024 in "Financial news"

In the world of finance, two assets attract the most attention. On the one hand, we have gold : a traditional precious metal whose price has been rising steadily for several decades. On the other, we have cryptocurrencies, a revolutionary digital innovation, the most representative of which is undoubtedly Bitcoin.
 
While the yellow metal embodies stability and tangible value, cryptocurrencies offer a decentralised, digital alternative to the conventional monetary system. As an attentive investor, you have probably noticed that the price of gold and the price of Bitcoin have one thing in common : their upward trend. So you have everything to gain by exploring the opportunities offered by these two assets to diversify and grow your wealth.

Gold : a pillar of stability in the face of Bitcoin

 
Gold has a long history as a currency of exchange used throughout the world. Today, its evolution has led it to become a reliable store of value that retail, institutional and professional investors continue to favour. However, the precious metal is now facing the disruptive emergence of cryptocurrencies. Despite this new competition, yellow metal remains a trusted and stable investment on the financial markets.
 

Stability and confidence

 
Gold has a universally recognised intrinsic value. It is distinguished from virtual cryptocurrencies by its tangibility and its long history as a stable store of value. This durability makes gold a trusted asset, unlike cryptocurrencies, whose value can be subject to significant volatility due to their virtual nature and relatively new technology.
 

Investor confidence

 
Institutional and individual investors have traditionally used gold as a bulwark against inflation, economic instability and financial crises. This confidence in the yellow metal as a solid store of value is reinforced by its ability to maintain its value through periods of economic turbulence. For example, during the 2008 financial crisis, gold held its value while other assets fell, enhancing its reputation.

 

Diversifying savings and growing assets

 
Finally, gold is frequently used to diversify investment portfolios and preserve capital. Its low correlation with other asset classes, such as equities and bonds, makes it a key element in creating a balanced portfolio.
 
For example, when equities suffer losses, gold tends to maintain its value or even rise, providing a degree of protection against stock market downturns. This is not at all the case with most cryptocurrencies, which tend to fall outside bull markets.

 

 

Cryptocurrencies - an evolving investment alternative

 
The rise of crypto-currencies, the best-known of which are undoubtedly Bitcoin and Ethereum, has profoundly transformed the investment landscape and offers an attractive alternative to traditional assets.
 
First and foremost, this innovative universe offers the potential for high returns, albeit at greater risk due to the wide fluctuations in their prices. Indeed, their volatility is sometimes extreme. While some, such as Bitcoin, have recorded dizzying rises over the years, this is not the case for all cryptocurrencies. Bitcoin, launched in 2009, has seen its value rise exponentially, from a few cents per token to thousands of dollars in just a few years, reaching over €54,000 per token today. However, this rapid growth has been accompanied by considerable volatility, with prices sometimes fluctuating drastically in the space of a few hours.
 
In addition to crypto-currencies, it is the underlying technology that investors should be interested in : the blockchain. Blockchain offers a decentralised, transparent and secure architecture, challenging traditional financial transaction models. Many supporters of cryptocurrencies see this technology as a promising alternative to centralised financial systems.
 
As a result, cryptocurrencies stand out for their accessibility and liquidity. However, it is important to note that the liquidity of cryptocurrencies can vary considerably depending on the exchange platform used and the size of the transaction. As an informed investor, it is therefore essential to approach this type of investment with thought and caution. The fact is that, while you can win big, the losses can be just as substantial.
 
As a result, gold and cryptocurrencies are not competing assets for investors, but rather complementary ones. In the age of crypto-currencies, the price of gold remains attractive, and is still the asset of choice, both for securing a portfolio and for growing it. Gold's more stable volatility and its status as a safe-haven and, above all, tangible asset mean that it retains its appeal in the face of unpredictable cryptocurrencies, whose prices are far too volatile and can represent too great a risk.
 
If you want to buy or sell the main precious metals - gold/silver/platinum - our website and our Godot & Fils branches are trusted intermediaries for securing your transactions.

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