Gold, Silver and Bitcoin: How These 3 Assets Have Protected Wealth in Uncertain Times
Written by
Sean Bryant
Edited by
Cory Dudak
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
Is there a foolproof way to avoid large portfolio swings? Whether you are young in your investment journey or are nearing retirement and looking for a way to avoid large dips in your portfolio’s value, it’s important to understand what history says about storing wealth.
In this article, we’ll cover how gold, silver and bitcoin fare during uncertain times and what this means for your portfolio.
Gold Shines During Uncertain Times
Gold has historically been a strong hedge against inflation. This means that as volatility increases in the market, gold remains relatively stable. Not only does gold hold its value, but it’s also a liquid asset. For example, you can walk into any pawn shop or jewelry store and sell your gold on the same day.
During the pandemic, the value of gold grew stronger. In fact, in January 2020, the price of gold was at $1,581 per ounce, according to Macrotrends. By the end of 2020, the price grew to $1,895, which is an almost 20% gain. Part of the reason gold remains a stable investment during uncertain times is that it is globally recognized as valuable.
Silver Remains Stable During Uncertain Times
Silver has been used alongside gold during uncertain times; however, it isn’t as stable as gold. The intrinsic value of silver is heavily dependent on its use as an industrial commodity and a monetary metal.
Looking back to January 2020, the price of silver was at $18.012 per ounce. By December 2020, the price had appreciated to $26.396 per ounce. This represents an over 46% price increase. The gold-to-silver ratio reached a high point in 2020, causing many investors to shift part of their portfolio into silver to protect against uncertain times.
Bitcoin Fluctuates During Uncertain Times
Bitcoin hasn’t been around for centuries like gold and silver, making it much more volatile. Large gains and losses are common, especially depending on economic factors like monetary policy, unemployment and inflation.
In January 2020, the price of bitcoin was at $6,985.47, per Yahoo Finance. However, at the start of the pandemic, the price dropped to $4,970.79 on March 12, 2020. While the price did rebound to $29,001.72 by the end of December 2020, the decline in the share price shows the volatility of bitcoin during uncertain times.
Preserving Your Wealth During Uncertain TimesÂ
Storing wealth during uncertain times will look different for every individual, depending on their risk tolerance. For example, some investors will choose to hold stable investments such as gold and silver, while others might be more willing to hold volatile investments, such as bitcoin.
While gold and silver do appreciate over time, it’s often at a much slower pace compared to investments with a higher degree of risk. In our above examples, bitcoin increased by over 300% during 2020. Even though the price dipped during a period of economic uncertainty, it recovered and grew exponentially.
Creating a balanced portfolio is the best way to preserve your wealth while still capturing appreciation. This might look like splitting your portfolio’s value across gold, silver, bitcoin and other investments.
More From GOBankingRates
