Investment: Is Gold better than Property, Shares and Crypto?

A brief history of all markets

The beauty of investing in gold is that because of its durability, finite supply, and reliable demand, it retains its value. Or at least never falls to zero. Unlike cryptocurrencies, gold has a long, proven track record of providing a safe haven during economic uncertainty by retaining its value while other assets crash or depreciate.

Learn more about the value of gold in NZ at Gold Survival Guide.

The property market also offers investors safety as property is another tangible asset that, in most cases, also retains its value and never falls to zero. Property investments also have tax advantages, not found with gold, crypto, or stocks. Furthermore, property prices also generally follow an upward trend over time.

Property can also provide fixed returns through rental income, along with the capital gains when the property is sold. The main disadvantages of investing in property are that it requires a large capital investment, it lacks liquidity, and it can require time and money to maintain it.

Like property, stock markets, such as the New York Stock Exchange (NYSE) or New Zealand’s NZX, have also demonstrated consistent growth over time, but are vulnerable to sudden market fluctuations and changing economic conditions.

Share market investing can be seen as riskier than property or gold because more factors can influence stock prices. However, share market investing has some advantages, such as it not requiring a large capital investment, its liquidity, and the passive income it can return through dividends.

Cryptocurrency is decentralised digital money that is based on blockchain technology, for example, Bitcoin or Ethereum. Many cryptocurrencies, including Bitcoin, are finite and decentralised, which provides security for investors looking to protect their wealth when faced with uncertain economic conditions.

According to Investopedia, cryptocurrencies offer high liquidity and a low barrier to entry. The main disadvantages of investing in cryptocurrencies are that they are very volatile and lacking in government regulation. Holding cryptocurrency also comes with some safety concerns, if, for example, an investor forgets their crypto wallet password or falls victim to a hacker.

Current Property Market

The current US property market is described as “red-hot” by Fortune, as low-interest rates, employees working remotely, and first-time millennial homebuyers entering the market saw demand increase and property prices reach record levels during the pandemic.

Fortune applied seven forecasting models to the current US property market, as well predictions from leading financial services companies, such as Goldman Sachs and Fannie Mae, to report that while no solid consensus emerged, property prices would likely continue to increase, but less aggressively, with property price growth predicted to follow the historical average in the US during 2022.

The New Zealand property market is predicted to see house price inflation ease, but affordability worsen, according to a Reuters poll of 10 property market analysts taken in November 2021. The Reuters poll predicts that house price growth will slow dramatically, with an average increase of 4% predicted for 2022. 

However, a New Zealand Treasury report, published in December 2021, predicts house prices to increase by 10.4% in 2022, down from 29% in 2021, which is in line with house price growth slowing in 2022.

Current Share Market

Russell Investments’ 2022 Global Market Outlook reports that international stock markets are currently being affected by a global supply shortage, stalling Chinese economic growth, and fears over rising interest rates, growing inflation, and uncertainty around the pandemic.

Recent predictions from analysts at major banks, published by Forbes, suggest the S&P 500 will slow in the coming year, with Bank of America predicting it will reach 4,600 points, which is around 2% less than its current December 2021 level. Morgan Stanley predicts the S&P 500 to fall slightly more than the Bank of America predictions, while JPMorgan, Goldman Sachs, and Wells Fargo predict modest S&P growth in 2022.

Current Crypto Market

Interest in cryptocurrencies has skyrocketed this year as more businesses and financial institutions have accepted it as a payment method or added crypto to their portfolio. However, cryptocurrencies have continued to demonstrate volatility, with one Bitcoin nearly reaching a high of more than $68,000 USD; while also reaching lows of $30,000 USD throughout 2021 (the equivalent of a 40% fall in price).

Source: Trading View

Going forward, Time reports cryptocurrencies will likely see regulations introduced, which many experts believe will ultimately be good for the crypto industry. Investors wary of China’s recent ban on all crypto transactions can find some comfort in Federal Reserve Chair Jerome Powell’s recent comments that he has “no intention” of banning cryptocurrency in the US.

Further institutional adoption of cryptocurrencies is also likely to continue through 2022. Dave Abner, head of global development at Gemini, a popular cryptocurrency exchange, told Time, “We’ve seen a tremendous amount of inflow of attention, and that’s going to continue to drive the growth of the industry for a while now.”

Interested in crypto? Check out this page: “How to Invest in Bitcoin & Cryptocurrencies”.

Why is Gold a better choice?

Interest rate increases, inflation, and concerns around the pandemic make for uncertain times. During times of uncertainty, gold has consistently performed as a “safe haven” asset as it keeps its value while other assets decline. Uncertainty also typically sees an increase in the price of gold as investors sell other assets and look to buy gold.

The Bloomberg chart below shows gold retaining its value while US equities fall during major market corrections.

Despite its benefits, gold is not a foolproof investment. It is still vulnerable to economic and political influences and shifts in supply and demand. However, as we move into 2022, the uncertainty caused by interest rate increases, higher inflation, and concerns around the pandemic make gold an attractive option for investors looking to protect their wealth during uncertain times. Want to find out more? Contact the experts at Gold Survival Guide today!