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Can investment in forex and gold prove to be better than buying cryptocurrency?

 

September 17, 2018 (Investorideas.com Newswire) Forex, gold, and cryptocurrencies are three of the top ten investment options preferred around the world. But the most critical question that comes in every novice investor's mind is- which is the safest investment option out of the three? Here're some points that can answer questions related to all three investment options.

Invest in gold, forex or cryptocurrencies

Forex trade also referred to as FX or foreign exchange, involves buying foreign currencies and selling them at a better rate to make profits. The world witnesses around $5 trillion worth of FX transactions on a daily basis and most of this trade is due to speculative purchases made to make money. To start FX trade, you need to open an account with an online broker and a good internet connection to run the trading platform. The software offers a variety of tools that can help the trader to monitor various currencies from around multiple nations and analyze the reasons behind their movements to predict future positions. The transaction fees charged on each transaction may vary from one online FX broker to the other.

Investing in the precious metal is often referred as a "hedge against inflation" since several decades. It may not offer a good long-term average return, but is the safest bet compared to other investment options. You can invest in gold by buying jewelry, coins, bars, gold CFDs, mutual funds, or also by investing in companies that are into mining the precious metal. These days, people prefer to go for digital options rather than buying the physical form of gold. CFDs can be purchased and sold easily within seconds. An investor might have to pay a transaction fee while buying or selling gold CFDs, mutual funds, stocks, etc. depending on the digital platform that's used for transactions.

Cryptocurrencies are perhaps the most popular form of investment options around the world. The younger investors prefer digital currencies like Bitcoins, Ripple, Ethereum, Monero, Dash, etc. Traders buy digital coins and then sell them as soon as there is an upward movement in its price. Investors can buy and sell the digital currency with the help of specially designed digital wallets that operate in several countries. Investors who invested money in Bitcoin back in 2009 have become millionaires today.

What are the risk factors in these three investment options?

Investors in FX do face risk factors, but of course, not as much as in the cryptocurrency market. Most of the FX traders lose money due to lack of strategy, poor risk management, and of course, lack of knowledge about the currency that they bet on. Using leverage in an unprofessional manner may also widen losses. Lastly, problems in the country's economy may result in its home currency's devaluation. One must be able to study the selected currency's past movements and judge the future. In some countries, the forex trade between two foreign currencies is illegal. So, the traders in such nations need to buy foreign currencies using the home currency.

Gold offers a smaller profit on investments. But, the risk factors involved in buying/selling gold digitally are lesser. However, if you plan to invest in physical items like bars, jewelry, make sure that you buy the same from a reputed supplier. Storing physical gold can prove to be costly as it involves hiring lockers for storing the same at a bank or secured storage facilities. There are no restrictions on buying gold CFDs or even the physical form of the precious metal in most of the countries around the world.

Bitcoin is the cryptocurrency that comes into everyone's mind when there is a debate about digital money. The currency had managed to gain global acceptance until recently when several cryptocurrency scams started surfacing from around the world.

Cryptocurrency trade is hugely complicated. The digital currency's use and business have been banned in multiple countries. An investor needs to buy the money only from a genuine wallet that operates under license of the relevant central bank in the country because several organizations run Multi-level Marketing Bitcoin scams in the name of cryptocurrency trade. Servers of cryptocurrency wallet companies often become the target of cyber attacks. Recovering money even from wallet companies after a cyber attack can prove to be a tedious and litigious task.

Most of the prominent banks around the world are not rejecting cryptocurrencies or endorsing them either. Almost all the cryptocurrency prices show volatility. Even news about some country or the other banning Bitcoin can result in a fall in prices within minutes. Take the recent report about Goldman Sachs plan to abandon their cryptocurrencies trade desk plan as an example. Bitcoin's value was reduced by $1,000 as a result of this news. Almost all the cryptocurrencies witnessed a fall in their value due to this story. Their value is moving downward since December 2017. Thus, it remains to be the riskiest investment option. Many developed and developing countries have banned the crypto trade, and several of them are considering a ban or new regulations to control the transactions.

Should one invest in cryptocurrencies? The answer lies in a statement made by Warren Buffett during his interaction with investors in May this year. He pointed out that digital currency trade is rat poison squared and the price surge is due to the mystique behind it. People, who don't understand its background, often end up getting more excited about it.

What's the possible future for the three investment options?

There's no certainty when it comes to cryptocurrency trade, and even former Bitcoin investors might ask novice traders to stay away. Due to the risk factor, people are once again looking at forex and investing in gold as legitimate investment options.

You may not get exceptional returns from investing in the precious metal. However, looking at the possibility of a trade war between the US and Europe, China, the precious metal is once again being referred as a safe investment option. You can invest in gold CFDs if you wish to take advantage of your speculative instinct.


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