Bitcoin is crashing, why is gold losing its appeal as an investment?

The Economist published an article examining why investors dislike gold in the face of rising inflation, financial investment, and politics. It is not as reliable as cryptocurrency.

Rising inflation, middle-class banks were printing money like crazy, and the global power crisis deepened. For those who have loved gold for a long time, these details look like a dream come true. In this environment, even key investors will be tempted to increase the value of their product. So why not make a little more money in 2021 and still record the best annual performance in six years?

Temperature measurement creates a competitive environment for traditional traders. Fine metal does not provide regular income. Because demand appears to be speculative, financial models for calculating whether a property is cheap or expensive do not apply here.

But there is a count that has strong predictive power. Any major movement in gold prices, especially in the post-global financial crisis period, has led to a large swing in real interest rates. Some financial relationships are stable based on the value of gold and the value of Treasury Inflation Protected Bills (TIPS). This is because the lower the profits of the Treasury security contract, the more the worthless gold will appreciate in price.

Part of the reason gold underperformed last year is that the relationship still exists. Despite high inflation, the real yield on the 10-year government bond was -1.06% at the start of the year and -1.04% at the end of the year. Gold closed in 2021 at around $ 1,822 per troy ounce, and hasn't changed much in recent years. But over the past decade, gold has fallen below the reliability of both. If you only hold the iSharesTIPS swap agreement for that period, you will receive a 35% increase, more than double your insurance coverage.

The management also declares the precious metal. As part of Basel III, new rules on bank transfers entered into force in the EU last June and in the UK on January 1 of this year. Federal income or "assets" are determined by law.

In contrast, gold holders, like shareholders, are required to match 85% of their holdings with funds from fixed investment portfolios. This makes it more expensive for banks to hold gold, comparing its drawbacks to government contracts. If gold is not as profitable as ADVICE and regulations are bad, why invest in gold?

For some investors, the answer is clear. Bank and government bonds are short lived, and major financial disasters are often caused by overconfidence in securities. Gold, on the other hand, stands the test of time. The dollar did not become the national currency of the United States until 1863, but people have been interested in precious metals for thousands of years.

However, hot spots as a last resort of preventive management results are also questioned. Cryptocurrencies, especially Bitcoin, have become increasingly important capital markets. This heritage class was once too small to withstand the effects of gold. However, today's two biggest cryptocurrencies, Bitcoin and Ethereum, have a net worth of around $1.3 trillion, ten times more than two years ago. According to estimates by the World Gold Council, there are only more than 200,000 tons of gold in the ground, or about one tenth of the $12 trillion in gold reserves.

In 2020, longtime Jefferies Investment Bank lawyer Chris Wood offered to change his mind. He said the repo-based repo's reduced their securities from 50% to 45% and exchanged 5% more points for Bitcoin. Last November, he increased his Bitcoin quota to 10%, and gold sacrificed again.

Bitcoin's smart price move could temporarily affect the interest of more lenders. Over the past five years, gold has averaged 0.6% per day unchanged, while Bitcoin has averaged 3.5% per day unchanged. But it will not affect in the long run.

As analyst Morgan Stanley has pointed out, gold also underwent significant changes when it began as modern art in the mid-1970s and early 1980s. After the enactment of the Property Law of gold in the United States in 1974, it took almost 20 years for the gold rush to begin.

Therefore, we cannot predict that the temperature will become unnecessary in the future. A stable and secure financial system on the one hand and many expansion and cryptocurrency tools on the other hand put gold in a difficult task.