Gold nuggets VS Cryptocurrency - What should you invest in?
The intense debate over whether cryptocurrency is a good investment continues, and it leaves the majority of people wondering whether they are foregoing a huge opportunity by not buying into the crypto-craze and forking over their cash for some of the most popular coins such as Bitcoin, Ethreum, or Lytecoin. While cryptocurrency values skyrocketed in the past 12 months, they were met with a sobering slash in value by the end of 2017. Many investors panicked, and began to wonder if crypto a significantly riskier investment than buying gold nuggets, or other precious metals.
Hundreds of years ago, merchants needed a standardized form of value that would enable them to trade. This birthed the creation of the first widely acceptable currency: the gold coin. Fast forward to the 21st century, and gold is still the most common investment vehicle worldwide, for numerous reasons.
1. Gold is a physical asset.
The difference between the gold an cryptocurrency, and what gives gold its uniqueness as an investment, is that it’s a physical asset. While many physical assests depriciate in value, gold is used as a measure of value and it’s value only fluctuates in response to the markets demand and supply. It is thus more of financial asset such as stock and bonds only it’s tangible. There are various ways of holding physical gold such as gold dust, bars, coins, flakes and nuggets.
2. Gold has a long history of value.
B.C. Emperor Augustus of Rome used gold to back other forms of currencies where he valued a pound of gold to 45 bronze coins, with other emperors following suit. The backing of currencies against the gold continued well into the 21st century using the gold standard with Switzerland being the last country to use the standard in 2000.
3. Gold hedges against currency valuation changes and inflation.
In the case of a currency drop in value, or hyper-inflation, the currency loses it’s purchasing power. The value of gold hedges against this depreciation of value of the currency since its value is not stacked against a currency, but on its demand.
4. Gold has intrinsic value.
Other forms in which gold is appreciated in their physical forms for more than just its monetary value is as jewelry and collectables. Jewelry accounts for almost 75% of annual gold demand with India gobbling up 27% of the global demand. Gold watches, rings, etc are commonplace, but gold nuggets for sale account for most of the naturally occuring collectables, with over millions of dollars worth sold on a daily basis.
So you’re thinking gold may be a better investment than crypto currency? There are numerous different ways to invest in gold:
1. Gold nuggets, bars or jewelry (physical assets)
2. Gold futures
3. Gold Mutual Funds
4. Gold ETF’s
5. Gold companies
Things to remember when it comes to investing in gold:
1. It is not a get rich quick scheme
While gold can be an income investment by providing a return through dividends from gold stocks, this will often not match the growth of crypto currencies whose value grows much faster. It’s worth keeping in mind though, that the chances of gold’s value taking a large drop in value are miniscule in comparison to a crypto currency’s.
2. Gold is a longer term investment
Gold is regarded by many as a store of value and is a more viable investment for growth investors as opposed to income investors. The value of gold generally rises and falls with the rise and fall of its demand. From 2002 to 2012 gold saw an appretiation of 441.5% in its valuation. The increase in demand of gold in Asia in 2011 saw gold record its highest price per ounce at $1900, though it is currently valued at $1200 at the moment. This is a huge appreciation in value over the past 15 years, and another prime argument for having gold in your invesment portfolio.
3. When buying gold, the purer the gold the better
Gold is purchased in different forms such as bullions, coins, jewelry, flakes and as gold nuggets with coins and bullions being sold in their pure form with the purity being varied. The 24Karat gold fetches more compared to a 14 or 18 Karat gold coin or bullion with 24 Karats being the purest form. The Karat is a measure of the weight of the fine of the gold metal against the total weight which includes the alloy of other metals and the impurities within. Gold nuggets however are rareties in the gold mining scene where whole solid gold pieces are extracted and are sold in their natural formation. The sizes thus determine the price of these gold nuggets for sale and they often retail for more compared to the refined pieces of gold.
While the chances of quadrupling your money by investing in gold are slim, gold can provide a much safer investment alternative to riskier, more volatile vehicles such as cryptocurrency. While crypto currency experts argue that various coins will skyrocket in value, gold has a proven history of growth, and is a popular store of value for many investors for good reason.
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