Bitcoin, Gold and the Dollar: Where to Park Your Money in Turbulent Times

In turbulent economic times, the question always comes back around: where should you park your money to keep it safe?

Turbulent economic times often bring about a pressing question: where should you park your money to keep it safe?

From the glittering allure of gold to the ever-resilient U.S. dollar, and even the controversial yet increasingly considered Bitcoin, investors are once again hunting for safe-haven assets. Let’s take a closer look at the current landscape and what some seasoned experts have to say.

Gold: The Traditional Safe Harbor

For centuries, gold has been the go-to refuge in times of financial storms. And it seems that, once again, it’s fulfilling its historical role. According to algorithmic trader Gilles Santacreu, gold has “played its role as a safe-haven asset perfectly” during recent market upheavals. Some investors have even taken profits from their gold holdings to cushion the blow from plummeting stock prices.

If you’ve ever chatted with a long-time investor, chances are they’ve told you about a time when gold kept their portfolio afloat during a rough patch. It’s almost a rite of passage in the world of finance.

The Dollar: A Recession Reflex?

While gold shines, the U.S. dollar is quietly solidifying its dominance. Félix Baron, founder of the Independent Investors Club, suggests that it might be a smart move to “buy a little dollar” right now. His reasoning? If a recession hits, governments around the world will scramble to repay debts — most of which are denominated in dollars.

“As long as the dollar remains the world’s reserve currency, it will continue to strengthen,” he points out. In a personal anecdote, a mentor once told me that in any global crisis, there’s always one thing people trust: the greenback.

Bitcoin: A New Kind of Safe Haven?

No discussion on safe-haven assets would be complete without considering Bitcoin. Is it truly a safe-haven asset? Well, it depends on who you ask. Hardcore Bitcoin enthusiasts — often dubbed “Bitcoin maximalists” — argue that one Bitcoin is always worth one Bitcoin, market price notwithstanding.

However, a more nuanced reality emerges. Over the weekend, Bitcoin slipped below $75,000, mirroring a dip in major stock indexes like the Nasdaq. But it’s worth noting that Bitcoin’s drop was less severe compared to other cryptocurrencies, some of which saw price plunges of 20% in just a few hours.

Jean Guillou, co-founder and Chief Investment Officer at Vancelian, weighs in, suggesting that Bitcoin is "still a good asset in the crypto space." In the conversation, he compares Bitcoin to Ethereum, highlighting that the latter has been steadily losing ground against Bitcoin since 2022 — making Bitcoin a smarter bet for those with a medium to long-term investing horizon.

Bitcoin as a Reserve of Value?

There’s a subtle distinction between a safe-haven asset and a reserve of value. And Bitcoin seems to straddle both worlds. Félix Baron further explains that Bitcoin’s limited supply — capped at 21 million units — gives it characteristics similar to traditional stores of value.

As more bitcoins are mined, scarcity will likely push its value upward. “If you didn’t jump on Bitcoin when it was at $78,000, maybe now’s your chance,” he hints.

For many, this reminds me of the early days of digital photography. Back then, skeptics scoffed at the idea that digital files could ever replace traditional film. But today, it’s nearly unthinkable. Similarly, Bitcoin’s journey from a fringe concept to an increasingly accepted form of wealth preservation continues.

A Word of Caution

Despite the enthusiasm surrounding these assets, it’s crucial to keep in mind one golden rule of investing: only invest what you can afford to lose.

Whether it’s in traditional markets or the fast-paced world of crypto, the potential rewards are always accompanied by risks. And as history has shown, even the safest bets can sometimes surprise us. So, while these investment opportunities hold promise, they should be approached with care, good research, and a hefty dose of humility.