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Investment Test in Q2: S&P 500 vs Gold vs Bitcoin

Investment Test in Q2: S&P 500 vs Gold vs Bitcoin

Since the outbreak of the Coronavirus in China late December, financial markets saw a tremendous fall that encouraged shrewd investors to buy assets at cheap prices that they may not see once again.

As is well known, market crashes mainly confer very good investment opportunities, but it is not that easy to figure out what is the best asset to put your money in.

While diversifying your funds between assets seem to be a wise solution, some investors will bet on investments that provide the highest return over a short period of time.

One the top comparisons that we have been seeing recently is between stocks, gold and Bitcoin. In other words, the battle between high-risk assets, classic safe haven and a relatively new fierce contester in the financial world.

Global stocks jumped 17 percent in the quarter that ended on June 30, according to the MSCI's All-Country World index, with equities on Wall Street recording their best performance in more than 20 years.

S&P 500 Strongly Rebounds

Given its broader scope and the large-cap companies included in the index, the S&P 500 is considered a key benchmark to U.S. stocks and global shares in general.

The S&P 500 augmented more than 20 percent in the second quarter, marking its biggest quarterly gain since the last quarter of 1998.

The enormous stimulus measures announced by central banks worldwide, led by the Federal Reserve, quelled market tensions and lifted equities in the April-June period.

Economic data released recently showed some resilience and strong rebound, thereby raising hopes of witnessing a V-Shaped recovery after lockdowns imposed to contain the spread of the Covid-19 pandemic.

Despite the robust recovery in the S&P 500, following the hefty losses incurred in the first quarter, the index is still far from the peak of 3,393 points registered in February.

Gold Resumes Bullishness

On the other side of the equation, gold, the most famous refuge asset during panics, controversially emerged as a winner during the same period.

The yellow metal locked more than 13 percent rise in the second quarter, climbing to a high of $1786 an ounce on June 30, a level not touched since October 2012, becoming few steps close to the psychological level of $1,800.

Unlike the S&P, the precious metal surged 3.76 percent during the first quarter, noting that it is still moving in a bullish direction since hitting a trough of $1160 in August 2018.

Bitcoin Marks Astonishing Comeback

Moving to the Bitcoin, which is still considered a nascent investment and is deemed neither risky asset nor a refuge, which means that it is not an easy task to link to either stocks or gold.

However, some analysts argue that the Bitcoin is meanwhile closer to equities than gold, as it is more related to technology due to its underlying blockchain system.

The leading cryptocurrency in terms of market capitalization edged up 41.95 percent in the three months through June 30, underpinned by the halving event that took place on May 11.

The Bitcoin’s second historical halving reduced the block reward to miners from 25 to 12.5. That simply cut the frequency of creating new coins and thus the available supply in circulation.

What’s Next?

For the coming months, predicting a similar path to the S&P 500, gold or Bitcoin could be misleading, as gains were limited in late June due to the resurgence of the pandemic.

Coronavirus cases has totaled 10,827,443, with fatalities of 519,390, where the U.S. recorded more than 48,000 coronavirus cases on Tuesday, the most of any day of the pandemic.

Fears of a second wave of corona infections is currently dominating investors’ vibes, making it inadequate to anticipate the continuation of the stellar performance of the three aforesaid assets.

Fed official highlighted “extraordinary” uncertainty and “considerable risks” to the outlook of the U.S. economy, amid “substantial likelihood” of additional waves of virus outbreaks, with the potential to cause a drawn-out period of economic weakness, minutes of the Fed released on Wednesday said.

American employers may have created 3,037,000 jobs in June after a job-creation pace of 2,509,000 in May, while the jobless rate may have retreated to 12.4 percent from 13.3 percent, the NFP report due later in the day may signal.

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