After years of disappointing price action, gold suddenly sprang to life last week on the news of the Russian invasion of Ukraine.
It came close to breaching its all-time high above $ 2,000 an ounce (oz), but retreated to $ 1,900 / oz by the weekend as the fears and uncertainties propelling gold appeared to recede.
Bitcoin, often touted as a form of digital gold, lost ground to gold, as shown in the graph below.
Bitcoin vs gold
“While many believe Bitcoin to be digital gold, the long-term correlations between these two assets remain low,” says Brett Hope Robertson, head of investments at the crypto platform Revix.
“Bitcoin has traditionally behaved more like a tech stock, but with an inflation hedge aspect to it due to the hard cap on its supply. As we start to see more people look to disconnect themselves from government-backed fiat currencies I think we could see Bitcoin turn from a risk-on asset to becoming a risk-off asset of the digital age. ”
What’s the best safe haven asset?
Analysts point to a multitude of reasons behind the latest gold price surge, while Bitcoin (BTC) has been down 23% since the start of the year. Gold’s rise is being driven not just by the Ukraine conflict but by worrying inflationary trends in the US and Canada, where inflation is at its highest level in nearly four decades. This is likely to remain a problem for several years to come, and that provides tailwind support for gold.
Hope Robertson says there is a general derisking in financial markets, with the tech-heavy Nasdaq down nearly 17% from its peak in November 2021 and the S&P 500 down about 10% from its peak reached in January 2022 – while Gold is up 9% over the same period.
“Along with the humanitarian tragedy unfolding in Ukraine, this conflict will significantly impact the global economy,” according to precious metals news portal Kitco. “Ukraine is the third largest exporter of wheat. It is also an important player in the energy market. This new conflict threatens global food and energy supply chains, which could drive higher inflation. ”
How has gold performed?
Gold is up 8% over 12 months, having languished for much of the last year.
Since bottoming in 1999, gold has been up nearly seven-fold and has remained in a bull market for 15 of the last 22 years.
That said, gold has been overshadowed by cryptocurrencies like BTC, which is up more than 4,500% over the last five years. Investors looking for supercharged returns were drawn to the face-numbing returns being achieved in cryptos, yet that too may be undergoing a shift. BTC is down 23% since the start of 2022, while gold is up more than 8%.
Could this be gold’s time to shine?
“I think we are seeing a fundamental shift in the world’s financial markets that is positive for gold,” says Hope Robertson. “Inflationary pressures [are coming] out of the US, with a 7.5% inflation print. This is quite a bit higher than in SA, and that hasn’t been the case for many decades. Add to that the geopolitical tensions in Ukraine, and further supply chain issues that will effect growth – [these] could play into support for gold remaining strong. ”
Is there an easy way to gain exposure to gold?
Blockchain technology has come to the rescue of gold investors by allowing them to purchase a digital version of gold, fully backed by real gold, at the click of a button.
That solution is PAX Gold (PAXG) – a digital asset.
Each token is backed by one fine troy ounce (t oz) of a 400 oz London Good Delivery gold bar, stored in Brink’s vaults. If you own PAXG, you own the underlying physical gold, held in custody by Paxos Trust Company.
South African FinTech Revix introduced PAX Gold (PAXG) in early 2020.
Revix offers PAX Gold as a standalone product for investors keen to gain exposure to gold, but without the hassle of storage, insurance and security.
Not only that but Revix is offering 0% buy-in fees on PAXG purchases using ZAR for one week, starting on March 4 and ending on March 10, 2022.
You can learn more about PAX Gold here.
Revix brings simplicity, trust and great customer service to investing. Its easy-to-use online platform enables anyone to securely own the world’s top investments in just a few clicks. Revix guides new clients through the sign-up process to their first deposit and first investment. Once set up, most customers manage their own portfolio but can access support from the Revix team at any time.
For more information, please visit www.revix.com
This article is intended for informational purposes only. The views expressed are not and should not be constructed as investment advice or recommendations. This article is not an offer, nor the solicitation of an offer, to buy or sell any of the assets or securities mentioned herein. You should not invest more than you can afford to lose, and before investing, please take into consideration your level of experience, investment objectives and seek independent financial advice if necessary.
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