Gold or Bitcoin – Which Should You Buy?

At first glance, they could not be more different. Gold is the most ancient investment commodity of them all, something by which wealth has been measured since time immemorial. The earliest stories handed through history have always featured gold as the most prized asset, on which kingdoms, princesses and life itself is valued.

Bitcoin, on the other hand, is very much an invention of the new millennium. The cryptocurrency cannot be held, touched or hidden in underground vaults. It exists only in the virtual world, and is mined through complex computer algorithms.

From a volatility perspective, the two types of investment could not be more different, either. Gold is seen as the safe haven – in case of some world-changing disaster, it is the one investment that will always hold its value. The volatility of Bitcoin, however, is little short of terrifying.

Two sides of different coins

Perhaps, though, it is because of these differences that we so often hear gold and Bitcoin being discussed in the same sentences. One provides almost a foil for the other, and it could be argued that getting the right balance of the two in your investment portfolio is the ideal solution.

The case for gold

Ask any investment analyst whether investing in gold is a good idea, and you will invariably get a reply in the affirmative. Demand is consistently high, and will remain so as long as we continue to wear jewelry and buy home electronics. Supply is consistently low, and again, that is not going to change until such time as interplanetary travel is mastered and we find a rich gold source somewhere in the far reaches of the galaxy.

You do not have to be Warren Buffett to know that demand outstripping supply is only going to send the value of gold in one direction. Like anything, there will always be short-term fluctuations, but the long-term upward trajectory has consistently held true throughout history, and it will continue to do so.

How about crypto?

If gold is the slow and steady safe haven, Bitcoin represents everything that risk-averse investment strategists hate but keen gamblers find so compelling. Buy Bitcoin at the right time and sell it shrewdly, and you can make millions. Of course, that means the converse is also true, and it is oh, so easy to get burned and lose everything.

Recent volatility has become so extreme that the Bank of Montreal actually put a block on transactions with cryptocurrency exchanges.

So much for the differences – but there are similarities between Bitcoin and precious metal – indeed, in some circles it has been described as “digital gold.” Bitcoin also exists in a limited quantity – mining uses a vast amount of computer processing power – and the number of people getting involved means that demand outstrips supply.

A balanced portfolio

Ultimately, there is a place for both investment types in the modern portfolio. Balancing that portfolio will depend on current market trends, and even more importantly, your personal risk appetite. This is why it always makes sense to speak at length to an independent financial advisor before committing to a significant investment.

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