The novel coronavirus has severely impacted the financial markets and has brought economies across the globe down on their knees. Luckily, there are many ways to preserve one’s wealth during the COVID-19 pandemic—mainly through gold and silver shares and bitcoin.
October 5, 2020 | AtoZ Markets – The COVID-19 pandemic has affected the world’s economy in ways no one could ever imagine. Never before has the world experienced a situation where people are urged to stay home, work remotely (if possible), or not work at all. The self-quarantine and social distancing precautions implemented are meant to save lives and reduce any health risks the pandemic brings. Ultimately, the goal is to “flatten the curve” so that hospitals and medical centers are not overwhelmed with the amount of patients.
However, with the safety precautions in place, people’s finances are suffering—particularly people who work in retail, entertainment, travel, education, and hospitality, to name a few affected industries. Alongside these hard-hit industries are the devastating effects of COVID-19 on the markets—with many people feeling the repercussions right now.
Unfortunately, the American population is suffering heavily from the pandemic. At the time of writing, the United States is the country with the highest number of confirmed cases as well as deaths (according to Statista). Alongside the ongoing rallies in several states, the economy is suffering heavily.
Preserving your wealth during the Covid-19 pandemic
With everything mentioned above, many Americans are looking at different alleyways to protect themselves financially from the ongoing economic crisis. Luckily, there are many ways to preserve one’s wealth—mainly through gold and silver shares and bitcoin.
Preserving wealth through Gold and silver shares
Precious metals are tradable minerals found on exchanges around the world. With a limited amount of these minerals, their value relies heavily on their scarcity.
Gold is the most popular precious metal in the world. Over thousands of years, it has developed to have roles in both the industrial and financial sectors. Gold is malleable, has a high resistance to heat, and conducts electricity. Mainly, the demand for gold comes from jewelry (accounting for 50% of the demand). However, according to The Balance, “forty percent of gold production each year finds its way into stockpiles or holdings by investors and governments around the world.” This 40%, in turn, is used to create coins, bullion (gold bars or coins stamped with the amount of gold it contains, as well as the gold’s purity), medals, and bars.
Silver, on the other hand, although it’s not as valuable as gold, still has the power to attract investor demand. Its industrial uses include solar panels, computers, phones, and other electronic devices—all of these require components made out of silver.
The logic behind using metals like gold and silver as a means of wealth preservation is that although they may not increase your wealth over time, they can preserve the wealth you’ve worked hard for over your lifetime. No matter where you are, metals like gold and silver will have value due to their finite quantities—unlike fiat currencies, which can be created willy nilly and are subject to inflation.
There are a couple of ways to invest in gold:
- Jewelry – Easy to acquire, but often has high markups and questionable resale values.
- Physical gold – You have direct exposure to the gold and tangible ownership over the gold, but it can be challenging to liquidate and there’s no upside other than gold price changes.
- Gold certificates – You still have direct exposure, but there’s no need to own the physical gold. However, these certificates are often only as good as the company that backs them.
Other forms of investment include gold ETFs (exchange-traded funds), gold mining stocks, and many more.
Using Bitcoin to preserve your wealth
Gold is referred to as a “safe-haven asset.” According to IG, a safe-haven asset “is a financial instrument that is expected to retain, or even gain value during periods of economic downturn.”
Although there has been some debate about it, bitcoin has also been referred to as a “safe-haven asset.” It certainly has the aspects of a safe-haven asset: it’s easily convertible to cash with all the exchanges and peer-to-peer (P2P) marketplaces out there (liquidity), it also has a limited supply (the demand is constant—the growth of supply will never outweigh the demand), and it’s permanent (it will never rot or decay over time).
Despite bitcoin being mostly known for investment, it has its practicalities in wealth preservation, among other real-use cases.
For the preservation of your assets, bitcoin can make a viable money reserve. In fact, people are starting to use bitcoin as a hedge for economic crises (such as the crisis we’re experiencing now). By using bitcoin for this purpose, people can protect their assets as well as have a plan B in case of financial disaster.
Other than that, bitcoin also has the power to prevent inflation. Imagine a scenario where the value of your fiat currency is rapidly dropping (like what’s happening in Venezuela). The more volatile a country’s economy becomes, the more dangerous it becomes to hold fiat currency. To prevent “financial suicide,” people convert their assets into bitcoin wealth.
Additionally, bitcoin also provides people with a financial passport. In regards to the unbanked and underbanked populations of the world, a financial passport is extremely crucial. It allows people to participate in the daily transactions they were once barred from.
Uses such as these are helping bitcoin’s case as a safe-haven asset—proving that the cryptocurrency started by anonymous creator Satoshi Nakamoto was meant to be for more than just investment.
Health = Wealth
In trying times such as these, we have to do all we can to protect ourselves—physically, emotionally, and financially. Our frontliners are doing everything in their power to contain this virus, and it’s only right that we do the same. However, by imposing self-quarantine on ourselves and staying at home, it poses not only the question of wealth preservation but earning an income as well. Unfortunately, some people do not have the luxury of working remotely. This type of situation is where assets such as precious metals and cryptocurrency come in handy.
These two types of assets allow us to preserve our wealth as well as earn an income—all in the comfort of our own homes, especially when it comes to bitcoin.
With the advances bitcoin trading has seen over the years, it has never been easier to buy and sell bitcoin. Along with those advances come several real-use opportunities alongside wealth preservation, such as making payments, sending remittances, and earning through the power of e-commerce.
I genuinely hope that everyone out there is staying safe and sanitized. Eventually, things will return to normal, but we have to learn how to play the hand we’re dealt. So for now, it seems like trading gold or silver shares and bitcoin will have to do.
This article “How to Preserve Your Wealth During the COVID-19 Pandemic” has been contributed on behalf of Paxful. However, the information provided herein is not and is not intended to be, investment, financial, or other advice.