In recent years, there has been a proliferation of alternative investment opportunities, including new emerging asset classes such as cryptocurrency.
While cryptocurrency has garnered significant attention and hype, it is important for investors to carefully consider all of their options and to fully understand the risk to reward ratio of each potential investment. Primarily speaking from the fact of the Crypto Crash that has taken place over the past year – we’ve personally seen a herd of investors flock from the risk-on asset to the risk-off asset: Gold.
Here are a few factors to keep in mind when it comes to investing in cryptocurrencies during times like these. Further down, we also include some insight on why it could be advantageous for one to buy gold in Switzerland.
Historical performance of gold
Gold has long been seen as a stable and reliable investment. It has a history of retaining its value over time, especially in times of economic turmoil. In contrast, the value of cryptocurrency can fluctuate significantly in a short period of time. For example, in 2017, the price of Bitcoin, the most well-known cryptocurrency, rose from around $1,000 to nearly $20,000 in just a few months.
However, it has also experienced sharp declines, such as in 2018 when its value plummeted by more than 50%. While it is possible to make substantial profits from cryptocurrency, it is also a highly risky and speculative investment while gold has a much longer track record of stability. Over the past 50 years, the price of gold has fluctuated, but it has generally trended upwards over the long term. This makes it a relatively safer investment, particularly for those who are risk-averse or who are looking to preserve their wealth gained through crypto investments.
Gold as a hedge against inflation
Another reason to consider investing in gold is that it can act as a hedge against inflation. Inflation is the general increase in prices over time, which can erode the purchasing power of an investor’s money. Gold is often considered a good hedge against inflation because its price tends to rise along with inflation. This is because the value of gold is not tied to any particular currency or government, and it is not subject to the same economic forces as fiat money.
Cryptocurrency, however, is largely dependent on supply and demand, and it is not a physical asset that can be used as a store of value in the same way that gold is. While it is possible that the value of cryptocurrency could increase in the short term, it is less reliable as a long-term hedge against inflation.
Gold as a diversifier
Diversification is an important aspect of any investment portfolio, as it helps to spread risk and reduce the impact of any one particular investment. Gold can be an excellent diversifier, as it is not correlated with asset classes such as stocks, bonds, and real estate.
This means that the performance of gold is not directly pegged to the performance of these assets, and it can potentially provide a buffer against an investor’s portfolio should one sector they invest in be heavily down.
Cryptocurrency, on the other hand, is highly correlated with riskier assets, such as stocks, and it is often considered to be a speculative investment. This means that it is more likely to move in tandem with those riskier assets, and it may not provide the same level of diversification as gold.
Gold as a store of value
Gold has been used as a store of value for centuries, and it is widely recognized and accepted around the world. It is a tangible asset that can be easily stored and transported, and it has a long history of retaining its value over time.
In contrast, cryptocurrency is a digital asset that is not backed by any physical commodity, and it is subject to the risks of cyber-attacks. While it is possible that the value of cryptocurrency could increase in the short term, it is less reliable as a long-term
Buy Gold Switzerland
Finally, buying gold in Switzerland can be an attractive investment due to the country’s favorable tax treatment of gold. In Switzerland, gold is tax-free, making it a more tax-efficient choice for some investors. Overall, the combination of Switzerland’s long tradition of valuing gold, well-developed infrastructure for buying and storing gold, and favorable tax treatment makes it an attractive location for investing in gold.
While every investment has its own risks, when it comes to growing, protecting and overall being a wise investor, we lean on historical numbers and performance that has been tested through centuries: Gold.