Is Gold Really Safe In Times of Crisis?

The Rush To Safeguard Wealth

The general “rule” in times of uncertainty is that the price of gold will increase as investors look to safeguard their wealth (and as they try to escape market volatility). So, as we’d expect, the initial market “slump” driven by COVID-19 increased the price of gold. Additionally, COVID-19 shut down a lot of mines worldwide that were contributing to new gold supplies.

gold in its raw form

But, Is Gold Really Safe In Times of Crisis?

What happened to gold next is both fascinating and unexpected.

A Familiar Story?

If panicking to secure cash sounds familiar, you may have read our recent blog post “Egypt Is Limiting Daily Cash Withdrawals.” In a panicked attempt to save their personal wealth, Egyptians rushed to the banks to pull out 30 billion Egyptian pounds (2.7 billion CAD) — in just 3 weeks alone. As you can imagine, this was a nightmare for banks because as a general rule large banks are only required to hold 10% of their customer deposits in real cash. The rest of the money does not exist. This shows how during times of crisis, people want cash. And fast.

What Can Bitcoin Offer In Times of Crisis?

Unlike gold mines, the new supply of Bitcoin that is released into circulation remains predictable regardless of how many miners are actually mining. The supply of coins remains public knowledge no matter how high or low the price of Bitcoin goes. No matter what’s happening in the political sphere, in any part of the world, the supply and new issuance of Bitcoin still remains predictable.

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Adam Media

Adam Media

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Marketing, content, copy and all the other words, based in Vancouver, Canada.