do it asap 1. During the financial crisis and afterwards gold prices skyrocketed

Question

do it asap

1. During the financial crisis and afterwards gold prices skyrocketed. Discuss why gold prices changed. Is gold always a good investment in uncertain times? Why has gold's performance changed now? Is it possible that Bitcoin will replace the function of gold in the future? Discuss. 2. Explain all the following risk types and make an example about each of these cases. Please also provide a detail explanation how these types of risks may interact with each other under certain circumstance. a. credit risk b. interest rate risk c. foreign exchange risk d. country or sovereign risk e, technology risk f market risk g liquidity risk

Explanation / Answer

Gold prices rise when people lack confidence in governments or financial markets. The political chaos equates to more interest in gold as a safe haven. Gold serves as a hedge in times of inflation and currency devaluation. Currency values fluctuate but gold values stay comparatively more stable in the long term. Gold is attractive as a low-risk, solid investment. Investors may buy gold when they believe their paper money will decline in value.

As interest rates increase, gold prices may soften as people sell gold to free up funds for other investment opportunities. But in most cases, gold is still believed to be one of the safest media of investing ones hard earned money.

Gold is one of the most liquid assets in existence and it's value is not affected by national borders, the same cannot be said about bitcoin. Market for gold is far larger and mature than that of bitcoin but the latter is definitely enjoying rising adoption. Broad acceptance is still a long way off for Bitcoin. What makes gold so liquid is the immense size of its market. The larger the market for an asset, obviously, the more liquid it becomes.

Security is a major drawback facing the bitcoin community. Gold depository have full insurance coverage which is absent in case of bitcoin, leaving them more vulnerable to cyber crimes involving thefts.

With such an extreme degree of volatility, most people buy bitcoin for the sole reason of selling them sooner at higher prices. This is pure speculation, not hedging, which makes my point clear that Bitcoin can never really replace the function of gold as safe source of long term investment.

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