The last year has been something of a rollercoaster for the world’s markets with everything from oil to cryptocurrency and stocks to foreign exchange passing through a series of significant peaks and troughs. 2020 saw the price of oil dip into the negative, and certain currencies flail while others soared. For investors, it was a prime time to invest in the markets and speculate on price movements.
But if you had to choose between the USD or gold for your investment activities, which would be the best bet in the current environment?
Gold has been a historically solid investment. The precious metal was previously used for currency, first as actual coins, and later as the underlying asset. That way of doing things has all but died out now but the value of gold as a commodity has remained.
In general, the value of gold has remained somewhat constant. It doesn’t tend to be influenced by social, political, and economic factors, but this changed recently. In mid-2001, the price of gold per ounce dropped to less than $400, a significant decrease from its usual values above the $1000 mark.
Since then, however, it’s increased quite rapidly, peaking at $2,044 before dropping once again. In fact, so far in 2021, its overall value has decreased – the first time its value has dropped since 2018.
But with a history of holding value, gold is seen as something easy and reliable to invest in, or speculate on.
The US dollar, the official currency of the United States, is also considered the main currency of business globally. Its strength means that many governments around the world hold it in their own reserves, and many places outside of the US will accept it as legal tender. Over the years, there has been speculation that it’s losing its dominance but this has never really come to fruition.
Like every currency, the dollar has had good and bad times. In August 2011, it reached its lowest ever moment, but since then it has shown a good recovery. A period of rapid growth in 2014 and 2015 has been bolstered by an upwards trajectory since. There were some dips towards the end of the 10s but nevertheless, the dollar persisted.
The dollar will always remain a popular investment option, but it is susceptible to a wide variety of political, social, business, and economic factors, making it a somewhat volatile choice.
There are various ways that traders and investors seek to profit from price fluctuations of various assets and commodities. One method that is rising in popularity is that of contract for difference trading. Investors that want to trade CFD futures do so via online platforms. Instead of investing in the underlying asset, for example, purchasing gold or dollars, they simply try to estimate how the price will change over a set period. This removes some risk for investors as they are not left holding an asset that is worthless, should a particular market crash. It also provides them with the flexibility to speculate on increases or decreases, depending on their individual forecasts.
There are never any guarantees when investing. To hope for the best results, you should stay up to date with current affairs, financial news, and financial forecasts. Arm yourself with information to help you make the best investment choices possible.