Gold has been regarded as a “safe haven asset” for a considerable amount of time. This implies that investors rush to purchase gold during times of uncertainty in order to prevent their money from being lost. However, throughout the course of the last several months, unexpected behaviors and fluctuations in gold prices have been driven by covid-19. Within this blog article, we investigate the limits of gold as a means of storing value, particularly under challenging circumstances such as a pandemic that affects the whole world. The question that we ask ourselves is: how secure is gold in times of crisis? Moreover, in these times of uncertainty, what possibilities does money or bitcoin present? In order to have a better understanding of the subject, let’s start by having a look at the events that have occurred in the gold sector over the last several weeks. because of the haste to protect money In times of uncertainty, the conventional “rule” is that the price of gold will climb as investors strive to protect their capital. This tendency is expected to continue (and as they try to escape market volatility). As we would have anticipated, the first market “slump” that was caused by covid-19 resulted in a spike in the price of gold. Additionally, an extensive number of mines all around the globe that were contributing to fresh gold supplies were shut down by the COVID-19 virus. This shortage of gold supply (as a result of COVID-19) was so significant that Max Keiser, the host of the Keiser Report, made the following prediction: “I predict — and this is not only the ultimate use case but the ultimate irony — that once people realize that they cannot get gold, they will start flocking en masse into bitcoin.” As the host of the Keiser Report, Max Keiser As a result, the price of gold continued to grow despite the fact that mines all over the globe were closing down, the supply was decreasing, and demand was only increasing. The price of gold increased by seven percent from the ninth of February and the ninth of March in the year 2020. A significant number of gold investors were overjoyed. In times of crisis, however, is gold truly a secure investment? What happened to gold after that is something that is both astounding and unexpected. As a result of the turbulent couple of weeks that the markets went through, a great number of enterprises found themselves in precarious financial positions. In order to pay out salaries, bills, and suppliers that would otherwise go unpaid, many of these firms (and consequently investors) required to support their enterprises with cash in order to ensure that their businesses remain operational. These investors were in such desperate need of cash that they quickly sold off their gold bars in order to get their hands on some cash. As a direct consequence of this, the price of gold dropped by twelve percent in only ten days. Following this, we see a spike in the price of gold as governments propose ways to stabilize our economy. As a result of the recent surge of currency in circulation in the economy (click here to read about how the Federal Reserve is prepared to produce a limitless quantity of money), individuals are turning back to gold products. The price of gold is also rising as a result of the growing demand for gold, which is now taking place. When we take a look back over the previous few weeks, we can see that the regular behavior that we see in gold prices was flipped on its head at the same moment when a catastrophe was about to occur (with the covid-19 pandemic more precisely) a tale that you’ve heard before? You may have read our blog article titled “Egypt is Limiting Daily Cash Withdrawals” if the idea of frantically trying to get cash seems similar to you to you. A hurried effort was made by Egyptians to safeguard their personal fortune, and they raced to the banks to withdraw thirty billion Egyptian pounds, which is equivalent to two and a half billion Canadian dollars, in only three weeks. Because, as a general rule, major banks are only obliged to retain 10 percent of their client deposits in actual currency, this was a nightmare for banks. As you can guess, this had a significant impact on the financial sector. The remaining sum of money does not present itself. The fact that individuals crave cash during times of distress is shown by this. really quickly. In the event of a catastrophe, what benefits may bitcoin provide? In contrast to gold mines, the fresh quantity of bitcoin that is put into circulation is always predictable, regardless of the number of miners who are actively mining during that time period. The quantity of coins is something that is always known to the public, regardless of how high or low the price of bitcoin may go. It is still possible to anticipate the supply of bitcoin and the amount of new bitcoins that will be issued, regardless of what is going on in the political realm in any area of the globe. and predictability is a quality that is very desirable to investors. They will be able to have a greater degree of certainty about the existing and future supply of bitcoin if they anticipate it. Bitcoin, on the other hand, is not produced in large quantities when economies are in a state of crisis. So what exactly can we take away from all of this? There is a possibility that the demand for a safe haven asset is impacted (and, one might argue, driven) by the volatility of the markets and the desire for liquid assets. In this context, bitcoin comes into play. The quantity of bitcoin is as predictable as the supply of gold, yet this cryptocurrency has the liquidity of cash. To put it another way, bitcoin has many of the same qualities that gold and currency do. Bitcoin has the most guaranteed supply (there are now 21 million tokens in circulation) and is as liquid as cash, despite the fact that Gold, Cash, and Bitcoin all share the same investors who are looking for a stable store of value over time. Because of this, we at netcoins are firm believers in the long-term advantages that bitcoin offers. As individuals have been looking for more “liquid” repositories of money, we have already seen a large surge in activity on the netcoins platform in recent weeks. This is something that you could have anticipated taking place. Beginning the process of buying and selling cryptocurrencies in Canada has never been simpler than it is now, thanks to the lightning-fast verification, the user-friendly trading interface, and the friendly client success staff they provide.
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