Due these uncertain conditions which have impacted on the lives of numerous people along with that of the world economy, there have, however, been financial instruments that have typically shown an opposite direction while figures moved in downward trends.
Predominantly Gold, followed closely by Silver, has been a store of value. While considered as physical commodities, they have both shown an increase in interest despite the uncertain times the financial markets are facing.
The purpose behind this article is to indicate, for informational purposes, which of the financial instruments, between Gold, Silver, or Bitcoin, could be more beneficial where investment and trading is concerned.
Analyzing the most recent investment options
Before investing in- or trading financial instruments, it is imperative that thorough research and analysis be done not only on the asset itself, but also current charts, graphs and patterns compared with the global situation at large.
It will not merely suffice to utilize existing knowledge, should the trader of investor be in possession of such, but it is also advisable to seek expert opinions as it can provide crucial insights required for successful trading and investing.
Traders and investors alike need to inspect the current asset and market situation and consider the impacts as result of Covid-19 which have caused a rapid decline in major indices, assets, and economic vales alike.
It is also imperative to consider that with great parts of the global economy reopening, the markets are showing sharp increases, with stocks showing especially high increases as businesses return to normal functions under the guidance of strict health regulations.
With the current situations, there have been numerous financial experts who have reported that figures shown may not indicate, accurately, the current financial market situation.
Despite the increases present in stocks and indices, the economic figures derived from the last quarter’s financial results still show significant impact due to worldwide lockdowns that have been imposed, and still shows sluggish performance in operations.
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Based on this, it is most likely that the increase present in the value of stocks is attributed to the correction in markets after having experienced sharp declines paired with numerous expectations from traders in the hopes of further improvements and positive outcomes.
With the end of another quarter looming closer, the figures for the end of June are bound to display some level of accuracy and will be a substantially more accurate measure to determine the current position of the global economy.
When considering this, it may also indicate that there will be a sharp decrease in both stocks and indices before a steady rise towards stability and continuity resulting in increased reliance on the instruments that are considered ‘safe haven’ assets.
The opportunities that exist in investing in- and trading Gold, Silver, and Bitcoin
Despite the overall risks and complexities that exist in trading financial assets, traders should consider taking sharper turns as assets may depress returns which could result in the rapid decrease of values when considering major assets, as previously identified.
Occurrences such as these inadvertently influence ‘safe-haven’ instruments such as Gold and Silver which have, thus far, shown strong positions despite the global pandemic.
There are, however, numerous experts that predict that Gold will see historical high levels while Silver will combat this with equally higher levels due to the increase in demand for this financial instrument.
Both Gold and Silver possess significant potential for large moves where value and pricing is concerned even though markets are not capable of direct moves, fluctuations, corrections, and other movements are apparent.
Due to this, an analysis cannot be regarded as a form of advice or as a marker to indicate investment and traders should thus employ both technical and fundamental analysis before making a significant decision instead of relying on technical analysis alone.
When evaluating Bitcoin and its position in the financial markets, it is expected to move towards higher levels in addition to substantial increases in vale. Despite substantial fluctuations in other markets, cryptocurrency trading showed resilience.
Stocks and indices experienced substantial fluctuations during the early stages of the pandemic, whereas cryptocurrency moved into a strong position alongside Gold and Silver as a ‘safe-haven’ financial instrument with an increase in value as the demand for it increased.
Traders should, however, note that Bitcoin and cryptocurrency trading has gained in popularity recently with a lot of market participants not quite convinced of their significance against fiat currencies such as the USD, EUR, GBP, and numerous others.
Gold and Silver have, in turn, proven their value in the various applications that they are used and despite technological advances, the uses for these two precious metals have not decreased, but it has shown a steady demand, if not an increase.
Gold and Silver both display a history of value along with displaying sustainability when considering various economic circumstances and conditions, resulting in the value remaining, and even increasing steadily, subsequently attracting more investors.
While predictions on the value and popularity of Bitcoin amidst other cryptocurrencies are rather promising, traders are still warned of the risks involved as they are substantially higher when compared to that of Gold and Silver.
In addition to this, the cryptocurrency platforms show significantly higher volatility due to the volumes bought, sold, and traded on a daily bases but this should not discourage traders as it is still considered a stable avenue for profit in the long-run.
Risk Management
Broker legitimacy and risk management provisions
One of the most crucial factors to consider when trading financial instruments is the legitimacy of the broker that facilitates trading activities and it is imperative that traders only use well-regulated brokers to ensure that client fund security can be guaranteed.
It is imperative to ensure that the broker facilitating trading activities offers negative balance protection to avoid losses exceeding the balance of the trading account, resulting in traders being liable for the costs to bring the account balance back to zero.
Financial Instruments and trading risks
Often traders are inclined to trade assets that present more risks due to the opportunity for great profits especially for traders who can harness the volatility presented in financial markets.
As a result, it is imperative for traders to have adequate risk management protocols in place to aid them in minimizing the risks which could lead to substantial losses that may often exceed their initial deposits.
One of these risk management protocols involves opening smaller positions over a variety of financial instruments instead of investing lump sums into one single instrument and risking the loss of the invested capital.
When faced with high market volatility, it is imperative for traders to adequately evaluate their exposure to risks, their willingness to be exposed to such risks, and the way in which they can compensate for losses resulting from such risks.
Leverage and margin
Trading leveraged and margined instruments alone carries substantial risks, and traders need to ensure that they can apply leverage correctly to avoid losses exceeding the balance of their trading account.
Final Thoughts
When considering whether to invest in- and trade Gold, Silver, or Bitcoin it will depend solely on the trader’s trading needs and objectives as each financial instrument involves its own risks and provides its own rewards.
Traders will need to outline their objectives and needs in their trading plan before researching financial instruments that they wish to trade along with researching trading strategies to use with each financial instrument as some strategies can only be used on one instrument.
While these instruments are considered a ‘safe-haven’ it does not imply that the effect of Covid-19 has not spread to these markets and traders will have to rely on both technical and fundamental analysis before making informative trading and investing decisions.
Post published in: Business