6 reasons More Gold Investments Won’t Produce Gold in 2022

According to Business Standard, gold has been trading at its highest level since June 2021. Performing at about $1,900 per ounce in the international market last February 22, the chemical element with atomic number 79 still proves to be the safest investment. However, with the advent of cryptocurrencies and money-making options, will gold maintain its shiny yellow standing?

Gold as the safest investment

Gold is inarguably rich in history and value. It represents royalty and wealth. By tradition, investors consider gold as a sentry against market volatility and currency fluctuations. With the pandemic and a looming geopolitical conflict in the northeast, gold remains a good inflation hedge, or does it? The yellow metal was superbly performing in 2020 but had significantly wadded about 10% in 2021. 

The stock market is like a vast world wide web for the affluent. A person has to develop certain ‌business acumen to make timely power moves. It’s a given that you must have a high-risk appetite to have a high return on investment. If you want to know if it’s still worth investing in gold, keep reading.

Real Gold or Gold-Plated: True Value

It’s tempting to think that what has stayed the longest would also be the safest haven. In times of doubt, a truly valuable asset retains or increases in value. Although it can’t be helped that investment prices negatively fluctuate during declines, gold is likely to lose those gains during upturns.

FundExpert managing director, Brian Dennehy, says that gold has recently not behaved as a good inflation hedge. He emphasizes that inflation is not the only material risk, and on the contrary, deflation is a heavier risk.

The Gold Standard Won’t Earn Rewards

In the words of the late UK Prime Minister Winston Churchill, “those that fail to learn from history are doomed to repeat it.” Such immortal utterance was delivered as part of his 1948 speech to the House of Commons.

This maxim still proves relevant, six to seven decades later, when the recession in the US brought about by the 2007-2008 economic crisis lasted for almost two excruciating years. And even rewind to a much darker, distant past in the time of the Great Depression, which lasted nearly four years, and would have spanned much longer if America didn’t drop the gold standard.

Gold is no currency

Safe is an abused word at this point to describe gold as an investment. However, there’s a loophole with this insistence. You buy your basic needs and luxury items with money, not gold. Physical gold is at most only kept in a vault that has no chance to circulate.

Vox also expressed the pitfall of gold-backed money. It’s more industrially and aesthetically useful, mixed with other raw materials. Fiat money is still the economically practical thing for banks to secure and transact.

Popping prices as international tension traverses

Oil price hike greets the world today. Some are switching on gold investments, and this could be alarming. Gold prices seem to thrive in crisis situations, and the SPDR Gold Shares ETF (GLD) reaching up 0.68 to $1,924 per ounce, as of noon ET February 24.

Fear currently motivates the worldwide market impact. Making reflex market decisions in the presence of increasing tensions is not encouraged. Missing massive, progressive swings in stocks, which ‌happen during the initial collapse, can have a debilitating impact on one’s returns.

People move to shiny, new things

The list goes on for why you should put that gold on hold. The most plausible reason would be, aside from not earning interests and impurities, are modern and better gold alternatives. You can still opt not to abandon gold entirely, like investing in sovereign gold bonds (SGBs), maybe.

The thing is, everything is digital nowadays. The stock market keeps on expanding like a black hole. Cryptocurrencies like Bitcoin, Ethereum, and Ripple have built a hub for those seeking additional income or widening their financial horizon. However, like gold and physical money, cryptocurrencies are fungible, so they can be exchanged for one another.

Cryptocurrencies appear to be the domain of elite and regular stock traders, so it’s already not uncharted territory. Let’s slide down with the 4x objective on our microscope and focus on an even smaller, regulated plane concerning NFTs. What are NFTs, and are they different from cryptocurrency?

 The Rise of NFTS

Some investors today, especially those creative geniuses, invest in non-fungible tokens or most popularly called NFTs. It has been the talk of the town, a town called TikTok.

An NFT is a digital asset that stands for both concrete and abstract objects as art, music, and in-game features. As the dawn of cryptocurrencies proliferates, so are the assets that make use of them. TNFTs are usually encoded with similar fundamental software embedded in various cryptos, but it’s important to note that NFTs and cryptocurrencies only resemble each other in terms of programming.

For those who have a passion for pursuits in media and pop culture, NFT buzz sells like hotcakes. Who doesn’t want to own their work? Still, many people don’t have access to it or even know it. Besides learning its technical jargon or, say, a computer science background to appreciate it more, controversy surrounds NFTs.

It has the danger of encroaching into someone’s data privacy, as in the case of altered or distorted digital images and videos. Based on a crypto expert’s critique, there’s an absence of a cryptographic relationship between the image that an NFT attaches to and its token.

Other than cybersecurity issues, the blockchain-based token poses adverse effects on the environment. Since it’s a money-making asset, it utilizes a sizeable amount of computing power which means too much energy consumption.

Gold vs. NFTs

Obviously, unlike gold, it’s not really something tangible. While NFTs have been tethered to computer codes, gold has been tethered to the Earth as a treasured resource. It might be useless to subject them to a match because they could be an improbable perfect match.

As reported in Business Insider, the head of a chief bullion dealer says that gold-linked NFTs could be the future, specifically for crypto enthusiasts-slash-investors finding for security in super-volatile markets. 

It’s safe to say that the future of gold will still survive in the next ten years, although not physically. Gold is still everywhere: from your ring to your luxurious dwelling. One just has to be shrewd when to bet on it.