Posted on April 4, 2022
Should investors invest in Commodities or crypto
Some people are of the opinion that commodities are good investments. In contrast, others believe that there is more money to be had in investing in cryptocurrencies. As an investor, you may have to choose between these options eventually. But what is the difference between a commodity and a cryptocurrency? And which one do investors seem to think is a better option? These are questions many people have.
First of all, let’s consider the differences between a cryptocurrency and a commodity. Cryptocurrencies are digital assets whose value is based on rapid, anonymous transfer of funds. They are designed to be “mined”, or created, by computers solving complex mathematical algorithms with the use of software. Even so, the most popular cryptocurrencies, Bitcoin and Ethereum have experienced major price declines over past months.
Commodities, on the other hand, are tangible assets that can be used for consumption or production. Most people will have no difficulty understanding the purpose of an ounce of gold, for example. Commodities are usually affected by factors such as supply and demand. They also tend to be more stable in price than cryptocurrencies. Gold or silver, for example, may not appreciate far from their current prices over a month period but they aren’t likely to depreciate either.
Major types of commodities investments.
The big four types of commodities you can invest in are gold, silver, petroleum and agricultural products. Each has its pros and cons, but all are relatively safe investments.
Gold is considered a safe-haven asset because investors can use it as a hedge against inflationary pressures. Additionally, gold has historically been very valuable and is thought to be a smart investment for this reason. However, unlike other precious metals such as diamonds and platinum, gold does not have a wide range of industrial uses.
Silver is slightly lower in value than gold and doesn’t have the same storage or practical uses but it does have some long-term value even if its price isn’t rising at the moment. Investors can use silver as a hedge against inflation too.
Platinum is one of the few precious metals that have industrial uses, making it an attractive investment for investors who like to diversify. It doesn’t have the same value that gold has but it does have a growing use in jewellery and automobiles. Platinum is also harder to mine than gold or silver so its price will rise over time as demand rises.
Investing in oil has long been considered a safe investment choice. However, the price of oil can be extremely volatile and has declined by more than 40% in the past year. Additionally, to invest in oil you have to be interested in the stock market and willing to ride out market volatility.
Agricultural products investment.
Investing in grains such as corn, wheat or soybeans is one of the easiest commodities to understand. Even other types of agricultural products, such as pork bellies or frozen orange juice can provide investors with stable returns.
Which investment is better Commodities or crypto?
Each type of investment has its strengths and weaknesses. Some people may prefer a commodity investment because it’s easy to understand the purpose and value of what they are investing in. Other investors may want to avoid volatility associated with cryptocurrencies. Another point to consider is that some investors accept the risk of price volatility associated with cryptocurrencies but not commodities.
The choice between commodities and cryptocurrency depends on an investor’s needs, resources, financial situation and preference. If you’re interested in less risky investments, you’ll probably have more success with a commodity investment than a cryptocurrency investment.
In either case, it’s difficult to predict which investment will do best in the future. Investing in cryptocurrencies can be very lucrative but it requires a certain level of risk tolerance and some knowledge of how this market works. Investing in commodities may not require as much risk tolerance but the investments don’t have the same potential for a large return. That said, if you have time and patience and are willing to diversify your portfolio, both commodities and cryptocurrencies may pay off down the road.
For more commodity advice visit J. Rotbart