For the second year in a row, considering only traditional markets, we predict that we will see the best performing asset class in the future to represent the future of investing in the digital currency and perhaps the entire marketplace. The value of bitcoins has increased dramatically in the last two years, reaching new highs not seen in many years. With more consumers than ever being able to access the global marketplace for their money, investors are realizing the incredible liquidity of this digital asset.
When we consider what will be the best performing traditional assets over the next 5 years, we find three distinct categories that emerge. The first is gold and silver, which both show strong gains in value despite the current Uncertain World Index (USD/CHF). In addition to benefiting from the current commodities boom in the United States, silver and gold have benefited from the increase in trade deficit of the U.S. in the last decade. As the world continues to look towards the future in uncertain times, these precious metals are providing steady gains in value with additional potential for significant appreciation.
The second category of assets that we believe will benefit from the volatility in the price of bitcoin is metals such as gold and platinum. As mentioned in the previous article, the increase in value of the Digital Assets has created an environment that is ideal for investors who have made a long term investment into gold or platinum. Both of these precious metals are increasing in price while decreasing in value from a historic perspective. With a long history of success, there is no doubt that people will continue to purchase the physical asset to protect against inflation. In the upcoming months, we are likely to see a further increase in the value of the metal as the Uncertain World Index continues to impact the U.S. economy.
Perhaps, the best illustration of how an investor can profit by using the volatility in the value of the digital asset is with the financial system of the United States. As we have mentioned throughout this article, the current status of the American economy is being driven by investors who have made long term investments in the traditional financial system. As these investors continue to recover financially from their losses, they are likely to begin purchasing shares of stock from the newly re-consolidated financial system. As stock prices begin to increase, the cost of these shares will become cheaper and more easily traded onto the secondary market. This will drive up the price of gold and silver further while adding to the overall gains of the investors.
When you consider how volatile gold and silver are, it is easy to see how the volatility of the digital asset has driven gold and silver prices higher over the last several months. Investors have become obsessed with protecting their portfolios from the losses that occur when one of these precious metals experience what is called a “hard kick” in the market. A hard kick occurs when the price of a particular asset goes above the point where most traders feel comfortable buying. An example of this can be seen in the run up to the Chinese market release, when traders began buying gold in anticipation of its surge in value.
In the run up to the Chinese market release, many traders began selling all of their physical gold as the value of the virtual asset increased. It seems that many of these same investors have now reversed their position, selling off their assets rather than holding on to them as they watch the value of their precious metals spiral upwards. The future for these commodities is bleak, and investors will once again be forced to make a major investment in order to secure their position. Unfortunately, in this time frame, the gains created by using an asset class called bitcoin is considerably larger than the losses created by holding physical gold.