Crypts versus metals in the face of the crisis

The strong crisis of the variable income and fixed income has prevented the price of the precious metals
Stock photography. Gold bars

PHOTO/SVEN HOPPE  -   Stock photography. Gold bars

Alternative investments are booming in the face of the general downturn. The severe equity and bond crisis has boosted the price of precious metals and crypto-currencies as safe havens. The bitcoin has reached annual highs of over 11,200 dollars, while the gold ounce is moving in a zone of absolute maximums over 1,950 dollars.

This momentum has reopened the debate on which of these assets has the greatest potential to become the main focus of investors' interest in protecting their money in a context of economic recession.

Still far from its historical peak of nearly $20,000, bitcoin has fluctuated virulently since its origins, suffering spectacular advances and significant falls without solution.

In the fall of 2017, the price of bitcoin rose from less than $5,000 to $20,000 in just one year, before falling back below $7,000 in April 2019 and dropping below $3,500 by the end of the year after the bubble burst.

That movement is being reversed again. Especially after some American analysts have recommended this product for those investors who are afraid of entering the gold market because it is too bullish after reaching historic highs in recent days.

But the truth is that both assets have begun a particular and dazzling bullish run in the midst of an avalanche of investors betting on alternative assets to cash and the stock market, weighed down by the COVID-19 pandemic and the resulting economic recession. Added to this are other major sources of uncertainty such as geopolitical tensions between China and the United States, low treasury bond yields and the weakness of the dollar.

In this scenario, analysts say that bitcoin is gaining a reputation as a form of digital gold. Until now, gold has been known as the best safe haven asset - bitcoin, which shares its key characteristics of being a store of value and scarcity, could even displace gold from its position as the world becomes increasingly technology-driven.

In fact, they say, bitcoin has the potential to become a safe asset with similar characteristics to gold, but in a digital format.

Other analysts, however, continue to prefer the metal to digital currency at this time, mainly because of the weak dollar, interest rates and the prospect of rising inflation. Bitcoin may have its day, but it is still "not a valid currency" to compete with gold, these analysts say.