Beat the banks, make money and get justice

11Onze Recommends Finança Litigis, a product that allows you to profit from the compensation that banks in the UK have to pay for having committed wrongdoing against their clients. We explain how it works.

A few weeks ago, 11Onze Recommends presented Finança Litigis to its community for the first time. Now, it is time to publicise this amazing product throughout La Plaça. What is it about? Profit by fighting the abuses committed by the big banks.

The first location to do this is the UK where, for years, banks sold personal insurance policies to their customers using all kinds of malpractice. Those abuses have already been condemned by the courts and have opened the door to more than 60 billion euros in claims with a success rate of more than 90%. Shocking figures for the banking industry.

In this context, 11Onze Recommends works with an English provider that offers financing to the law firms that carry out these lawsuits, in exchange for part of the profits. You thought that the banks would always win? Well, not any more!

What profits can be obtained?

You can find all the information about Finança Litigis on the 11Onze Recommends website. The objective is to achieve a profit of more than 27% in relation to the average inflation in Spain. It is, therefore, a product that lets your money appreciate much more than inflation, allowing you to gain purchasing power. All this, in a context of low profitability and high volatility, which makes Finança Litigis a very valuable product. Standard & Poor’s A insurance covers the litigation capital.

All the information about Finança Litigis can be found at 11Onze Recommends.

How can you preserve the value of your investments when everything seems to be falling apart? Gold is an indispensable ingredient in any diversified investment portfolio because of its long-term performance and liquidity.

Gold is the precious metal par excellence. Scarce and highly prized, it has been used for thousands of years to preserve wealth. And this has not changed in the 21st century, as it has appreciated in 16 of the last 20 years, according to Statista.

Three key characteristics make it an attractive asset for any investment portfolio: long-term profitability, as the data is positive if we analyse its appreciation over the last decades; its role in diversifying and reducing the overall risk of our investments; and its liquidity, as it can be easily bought and sold, even when conditions in other markets are difficult.

A shield against inflation

Gold generates relatively strong returns in all economic cycles. As the World Gold Council points out, over the past 50 years the price of gold has risen by almost 11% per annum on average. This is comparable to US equities and considerably better than US bonds.

Gold offers a good return in good times, when demand for gold in jewellery and technology increases. But its attractiveness grows especially in times of difficulty as it is seen as a safe-haven asset.

The World Gold Council points out that gold has appreciated by more than 20 % on average in periods with inflation above 5 %. According to data from this organisation, almost half (47 %) of the demand for gold in 2021 was for investment and more than 7 % went into the vaults of central banks.

The need to diversify

A golden rule, no pun intended, for any investor is not to put all your eggs in one basket. In other words, putting all your savings into a single asset class is very risky because it exposes you to the ups and downs of a single market. This is why it is recommended to diversify investments and include various types of assets in investment portfolios so that gains in some assets can offset unexpected losses in others.

Hence, gold’s great attractiveness as a complement to other assets, especially at times when equities and other riskier investments are under pressure. Portfolios that include gold are less likely to experience extreme ups and downs.

On the other hand, if we compare the evolution of the gold price with the US dollar and other currencies that have been used as safe havens, we find that in the 21st century the major currencies have depreciated by more than 90% against gold. And if we look further, we see that in the last 100 years the major currencies have lost 99% of their value compared to gold. 

No liquidity problems

The third advantage of gold is that it is a very liquid asset. The value of gold bullion is closely linked to the world market price for unrefined metals, which is updated 24 hours a day and is accessible to buyers and sellers at all times.

Investors can buy and sell gold whenever they wish, even during periods of extreme stress in the financial markets. This is obviously not the case for other assets as art or antiques, for example.

Given all these factors, it is not surprising that the World Gold Council’s analysis has concluded that adding 6-10% of gold to the average US investor’s portfolio will tangibly improve their performance, with good long-term returns.

If you want to discover the best option to protect your savings, enter Preciosos 11Onze. We will help you buy at the best price the safe-haven asset par excellence: physical gold.

Deposits of value are assets, currencies and commodities that do not devalue over time. Gold and other precious metals have historically been the ultimate stores of value, while in recent decades the major shortcomings of fiat currencies have become apparent.

As Investopedia notes, “a store of value is essentially an asset, commodity or currency that can be saved, retrieved and exchanged in the future without deterioration in value” when we exchange it for goods or services: if it is worth ten apples today, we should eventually be able to exchange it for at least ten apples anytime in the future.

Gold and other precious metals have been considered throughout history as the quintessential stores of value because they have a virtually unlimited lifetime. And, if we look at the evolution of gold prices over the last decades, we see that an ounce has gone from trading below $300 when the euro came into circulation in 2002 to over $1,900 today.

On the other extreme, perishable commodities such as apples are lousy stores of value because they decompose within days and lose all their value. Although certain commodities, such as those in the food sector, may temporarily rise in price depending on the market situation, their perishable nature prevents them from being considered stores of value.

Modern money fails as a store of value

Obviously, the euro and other fiat currencies are very poor stores of value because they do not appreciate in value at the same rate as the products and services they are used to purchase. Although our currencies should be a reasonably stable store of value, inflation means that the coffee we used to buy in a bar for one euro a few years ago now costs us considerably more. Our money is depreciating by the day.

Richard Nixon put an end to the gold standard in 1971, which until then obliged the countries of the International Monetary Fund (IMF) to maintain a fixed exchange rate against the dollar and the US Federal Reserve to back its currency with gold. Since then, we have been using fiat currencies, i.e. currencies that are legal tender but are not backed by any valuable asset. All central banks can manufacture money as they see fit and their only collateral is the trust of the public.

Logically, if the amount of money in circulation increases at a higher rate than the goods and services that can be purchased with it, the imbalance between supply and demand causes prices to rise. Therefore, our money is devalued.

A reasonably stable currency is essential for a healthy economy. A poorly functioning monetary unit as a store of value discourages saving and hinders trade. Its ill effects are obvious if we take a look at the cases of hyperinflation that some countries have experienced throughout history.

Precious metals as a safe haven

For more than two millennia, many economies have used gold and other precious metals as an exchange currency because of their durability, relative scarcity and ease of transport. Moreover, in recent decades gold has played an important role as a safe haven asset. Its demand has tended to soar in times of economic uncertainty, as evidenced by last year’s data, the highest demand since 2011. Gold’s long experience attests to its ability to serve as a long-term store of value.

In general, other assets such as real estate, works of art, antiques and certain collectables have also shown that they can play this role. Although their value may fall at times, they tend to appreciate in value over the long term thanks to more or less constant demand and a very limited supply.

Their major disadvantage compared to gold is that they are very illiquid assets: it is difficult to sell them immediately if we want to do so for a reasonable price. Moreover, these markets require a good deal of knowledge and suffer particularly in economic downturns, when there is a greater tendency to turn to stores of value.

What about crypto-assets?

It is more difficult to assess whether crypto-assets will ever be considered stores of value, as they are too new. It is true that bitcoin is based on the principle of scarcity, a characteristic of stores of value: a limited number of bitcoins are generated each year and there is a predetermined cap. However, like so many other crypto-assets, its major drawback is that it has no intrinsic value. Almost all of its value is currently subjective, which is fertile ground for volatility. 

However, as bitcoin becomes widely accepted as a means of payment and is used in an increasing number of transactions, its value will strengthen and the likelihood of it becoming a long-term store of value, beyond occasional volatility, will increase.

If you want to discover the best option to protect your savings, enter Preciosos 11Onze. We will help you buy at the best price the safe-haven asset par excellence: physical gold.

Once again, this year, the ‘La Grossa de Cap d’Any’ raffle will distribute thousands of euros in prizes throughout Catalonia. Here are the prizes you can win, how to collect them, and how much tax the state keeps.

Since 2013, ‘La Grossa de Cap d’Any’ draw is held every 31 December. A draw created by Loteries de Catalunya with the aim of taking advantage of the popularity of the Extraordinary Christmas Draw held throughout Spain, to have a Catalan raffle, the first autonomous community to have a Christmas lottery, which benefits our territory.

Every year 100,000 numbers are put on sale, from 0 to 99999, with a total of 50 series, five of which are in electronic format. The price per ticket is 10 euros, and they can be bought at the usual Loteries de Catalunya points of sale or in some supermarkets. The draw is broadcast live on TV3 at around 12:30 pm.

The prizes

The ‘Grossa’ of 2022 maintains the normal distribution of 5 big prizes, with the following retributions for winners:

• The first prize of €200,000 per ticket, €20,000 per euro played.
• The second prize of €65,000 per ticket, €6,500 per euro played.
• The third prize of €30,000 per ticket, €3,000 per euro played.
• Two fourth prizes of €10,000 per ticket, €1,000 per euro played.
• Three fifth prizes of €5,000 per ticket, €500 per euro played.

Prizes expire 90 days after the date of the relevant draw and are subject to the usual lottery winnings taxation. In this case, prizes exceeding €40,000 must be taxed, after which 20% of the amount received must be paid.

You can collect prizes of up to €120 at any authorised establishment that has a terminal, although these outlets can optionally pay prizes of up to €1,999.99. You can also collect rewards of €50 or more in cash or by bank transfer at CaixaBank branches or at the Loteries de Catalunya Customer Service, Information and Prize Payment Office at Carrer Enric Granados, 33, Barcelona.

How to invest the money

Depending on the amount of the prize and our economic situation, the winnings can be used to cover the odd hole and little else. Still, if we are lucky enough to have healthy personal finances, we have different investment options.

Given the levels of inflation in recent months and the low returns banks are giving us on our deposits, it may be tempting to choose investment options that give us a higher return. Even so, it should be borne in mind that the higher the return, the more risk we have to take.

Currently, bank deposits offer little return, but Guaranteed Funds can easily and safely provide a return on the money earned. As the name implies, guaranteed funds guarantee all or part of the capital invested, as well as a fixed return over a period of time.

If you are worried about the possible recession next year, investing in precious metals may be the best option if you want to avoid the devaluation of your money. The value of precious metals is much more stable in times of crisis like the current one, and gold is considered the ultimate safe haven asset.

Investing in property is one of the most popular options, but buying a property as an investment requires a minimum knowledge of the real estate sector. On the other hand, it is important to take into account maintenance costs, especially in periods when we cannot make the investment profitable through renting.

In any case, whether you are planning to invest the money you have earned, or whether you want to spend it on something you are looking forward to, you should think carefully about what you are going to do with the money before rushing into a decision spurred on by the moment of joy you have just uncorked the Cava.

If you want to discover the best option to protect your savings, enter Preciosos 11Onze. We will help you buy at the best price the safe-haven asset par excellence: physical gold.

What are the advantages and disadvantages of bullion coins compared to gold bars? What is their history? What does their value depend on? Here are the answers you need.

The first official coins were minted around the 7th century BC in Lydia, in present-day Turkey. They were made of electro, an alloy of gold and silver. From then on, virtually all the great states of antiquity created gold or electro coins.

For centuries, gold and silver became the materials from which coins of the highest value were made. This was because they are solid metals, easy to handle and relatively scarce, which prevents overabundance.

Of the two, gold has always been more prized for its greater resistance to rust and corrosion. In addition, its golden colour and lustre have made it very attractive to most civilisations, which have made this precious metal a symbol of wealth and status.

A new concept of gold coinage

In the second half of the 20th century, the concept of the bullion coin appeared. This is a coin minted in precious metal, the value of which is fixed not by the face value of the coin, but by the value of the metal contained in it, to which a premium is added for the coin’s manufacturing process.

In these cases, what is important is the amount of precious metal it contains and its purity, rather than the possible numismatic value it may have because of its design. Of course, when the price of gold rises, the value of the coin also rises. 

Bullion coins or gold bars?

Although the premiums or surcharges on the price of contained gold are lower for bullion and bars than for coins, many investors prefer the latter.

One reason is their collectable potential. Gold coins that are preserved in good condition become somewhat more coveted as they age, which is not the case with gold bars, which are valued purely for the amount of gold they contain.

Moreover, because their weight per unit is generally lower, they do not require the investment of a large amount of money, which makes them accessible to small investors.

Finally, the process of verifying their authenticity when selling them is simpler. Thanks to their particular design, weight and dimensions, each type of gold coin is very difficult to counterfeit.

A bit of history

The first modern investment coins were minted in South Africa in 1967. They are the Krugerrand, which are still in production today. Investment coins became popular between the late 1970s and the 1980s, when the Maple Leaf in Canada (1979), the American Eagle in the United States (1986), the Britannia in the United Kingdom (1987) and the Philharmonic in Austria (1989) began to be minted.

Some of these coins have a face value. For example, in the case of the Britannia coin, it is £100. However, as this value is lower than the value of the gold it contains, the real value at any given moment is determined by the price of gold and its numismatic value. In this sense, as the Fábrica Nacional de Moneda y Timbre indicates, the rarity and the degree of conservation of the piece are essential.

Some pieces are often coveted for reasons that go beyond a mere investment mentality. The numismatic value of the craftsmanship, design, historical significance, commemorative value and physical condition of a piece can drive collector demand. This means that, proportionately, the price of some coins is considerably higher than that of bullion.

Up to now, with Preciosos 11Onze, it has been possible to purchase gold bullion. From now on, we also offer the option of buying Krugerrand and Britannia gold coins. Gift gold, for tomorrow’s future.

If there is one thing that characterises the cryptocurrency market, it is its high volatility. As it is a relatively small market in which a large part of the cryptocurrencies are concentrated in a few hands, speculation by large investors tends to generate large fluctuations due to their pulling power and the intangible value of cryptoassets.

The financial crisis of 2007-2008 led Satoshi Nakamoto to create a cryptocurrency that would escape the traditional financial system: bitcoin. In the first transaction, which took place at the beginning of 2009, its value was residual: only 0.00076 dollars.

Since then, the price of bitcoin has soared, albeit with enormous volatility. If we analyse its evolution over the last two years, we can see that it went from less than 10,000 euros in September 2020 to more than 50,000 half a year later, only to fall back below 30,000 four months later. And, after further rallies, which took it to a valuation in November 2021 of 58,358 euros, its historical maximum, the successive falls of the “crypto-winter” have placed it at around 20,000 today, practically a third of its higher value.

Bitcoin is no exception. Volatility is also affecting other cryptocurrencies. For example, ether lost two-thirds of its value between April and June, going from more than 3,000 euros to less than 1,000 euros, before rising back above 1,900 in mid-August and dropping below 1,400 from mid-September onwards.

Terra luna, the most notorious case, went from being worth more than 80 euros at the beginning of May to being practically worthless in little more than a week. And yet it was a ‘stablecoin’, i.e. a cryptocurrency whose value is linked to that of another currency, commodity or financial instrument, which should provide more stability. 

Little tangible value

Cryptocurrencies have gained a lot of prominence in the financial world in recent years. A report by the Bank of Spain estimates that the cryptoassets market reached a capitalisation of $2.8 trillion in 2021, approximately 1 % of global financial assets.

Even so, they still lack the acceptance of traditional assets such as equities or gold. Economists such as Paul Krugman and business leaders such as Warren Buffett have even described them as a “mirage” and have even predicted their demise.

It is true that the gold or equity markets are no strangers to speculation either, but gold or listed companies have a more obvious intrinsic value. Gold has long been used as a medium of exchange and is a reasonably stable commodity in terms of price, demand and supply. Listed companies, on the other hand, have properties, customers, cash flows and income statements that give them a more tangible value.

While no one can deny that blockchain provides benefits such as security, decentralisation, cost reduction and speed, it is still tricky to specify the real value that cryptocurrencies bring to their owners. And that is fertile ground for volatility. 

A poorly regulated market

Nor does the lack of a governing or controlling body, as is the case with fiat currency, shares or bonds, help stability. In this sense, progressively increasing regulation could contribute to greater adoption, although over-regulation could be counterproductive.

Hence, the European Union has published a proposal for a regulation affecting cryptoasset issuers, exchange platforms and digital currency wallets. This regulation aims to facilitate the supervision of the sector and prevent market manipulation.

The power of the whales

Without a clear real value, cryptocurrencies are highly speculative assets, so they are much more sensitive to one-off movements by large investors, which trigger chain reactions up or down.

It should be borne in mind that the cryptocurrency market is still very small compared to other assets and that a considerable part of it is in the hands of a few investors, known as “whales”. Per Wimmer, founder of Wimmer Financial LLP, has even warned that the cryptocurrency market is dominated by ten whales.

This may be an exaggeration, but the truth is that, according to the US National Bureau of Economic Research, by the end of 2020 a third of all bitcoins were in the hands of just 10,000 investors. This concentration means that their decisions can more easily destabilise the market, as their relative weight is much greater. 

Speculative manoeuvres

In order to get rich, some whales start selling a large volume of cryptocurrencies at below-market prices. This triggers panic and sales by small investors skyrocket. Once the price bottoms out, the whales take the opportunity to buy back more cryptocurrencies.

Massive adoption of cryptocurrencies, which would reduce the relative weight of large investors, would therefore help to stabilise the market. This would require them to be on a par with fiat currencies so that they are perceived as a stable value and can be more easily exchanged for goods and services. Utility is a key element in establishing the value of an asset, and the potential of cryptocurrencies is still being explored.

Media noise

The subjective value of cryptocurrencies also makes them very sensitive to media noise. For example, when Tesla announced that cryptocurrencies would not be accepted as a means of payment, the value of bitcoin plummeted, while Elon Musk’s support for dogecoin on Twitter was enough to send the value of this cryptocurrency soaring. 

If the news around a cryptocurrency is positive or an influencer generates positive sentiment towards it, demand and price increase. The opposite happens when the news or sentiment is negative.

It is still too early to tell whether markets will stabilise in the future and cryptocurrencies will be able to be traded like fiat currencies. What is clear is that the amount of capital invested in cryptocurrencies would have to grow a lot for volatility to be reduced.

If you want to discover the best option to protect your savings, enter Preciosos 11Onze. We will help you buy at the best price the safe-haven asset par excellence: physical gold.

Central banks’ gold purchases soar to a record high of almost 400 tonnes in the third quarter of 2022. An upward trend that is reflected in the jewellery sector and consumer demand for gold bullion and gold coins.

As reported by the World Gold Council (WGC) in a study published on 1 November, central banks bought a total of 400 tonnes of gold in the third quarter of the year. This figure almost doubles the previous record achieved in 2018, when a purchase volume of 241 tonnes was recorded.

The entity also notes that this marks the eighth consecutive quarter of net gold purchases by central banks, bringing the year-on-year total since the start of 2022 to 673 tonnes, four times more than the data reflected in the same period of 2021, and the highest volume since 1967.

Central banks in countries such as Turkey, Uzbekistan, Qatar and India are among those that bought the most gold in the third quarter of 2022, according to the WGC report, but it should be noted that major gold buyers such as China and Russia do not publish data on their precious metal reserves and purchases.

Similarly, high inflation spurred demand for gold bullion and coins from commercial investors to a six-quarter high. In this regard, China stands out, where purchases of bullion and coins almost doubled to 70 tonnes from the previous quarter.

But the price remains low. Why?

Since the beginning of the year, gold prices have fallen by around 6%, reaching lows not far from those seen at the start of the sanitary crisis in 2020, before its value soared at the end of that same year. In fact, the gold price has not recovered much after losing 20% of its value since the peak reached last March, despite rising 6.25% last week, up 5.85% on the previous month.

This apparent incongruity, given the increase in demand, has several possible explanations. On the one hand, rising interest rates in the United States and Europe, as well as the strength of the dollar and of government bonds, which generate a higher yield for investors and are also considered safe-haven assets, explain part of the fall in the price of gold.

On the other hand, many financial investors sold shares in gold-backed ETFs as interest rates rose. The subsequent selling of gold bullion by ETFs caused the price of physical gold to fall by as much as 8% in the third quarter, while stimulating demand for jewellery gold.

Still, most financial analysts predict that the price of gold will rise significantly again in 2023, following the possible fall in the value of the dollar and treasury bond yields, continuing the trend prevailing over the past five years, in which gold has seen its value increase by 37%.

If you want to discover the best option to protect your savings, enter Preciosos 11Onze. We will help you buy at the best price the safe-haven asset par excellence: physical gold.

In the last year, negative news has been accumulating in the cryptoasset market. After the bankruptcy of crypto-asset platform FTX and the loss of almost three quarters of the value of bitcoin in a year, the future of cryptocurrencies seems more in doubt than ever.

The Super Bowl is the world’s most expensive advertising showcase. In its last edition, held in February, nearly 7 million dollars were paid for a 30-second advert, something within the reach of very few companies. One of them was FTX, the world’s third-largest crypto asset platform at the time. Its ad compared cryptocurrencies to some of mankind’s greatest inventions, presented the company as “a safe and easy way” to access this market and ridiculed the sceptics.

Just a few months later, FTX filed for bankruptcy and threatens to leave more than a million people around the world without their money. Founder Sam Bankman-Fried’s empire collapsed in just one week.

Following the sudden drop in the price of the FTX token in early November, Bankman-Fried requested a bailout from Binance, the world’s largest digital asset exchange platform. Although Binance initially agreed to help him, a few hours later it backed out, citing mismanagement of funds and other irregularities. On 11 November, FTX had no choice but to announce in a tweet the filing for bankruptcy proceedings and the resignation of Sam Bankman-Fried as CEO.

Possible contagion

As with many cryptocurrency companies, FTX’s house of cards was built on expectations of revaluation. When investor confidence crumbles, nothing can stop a catastrophic spiral that eventually takes down the company, which in FTX’s case had reached a valuation of $32 billion at the beginning of the year.

Given its size, the aftershocks of FTX’s collapse are expected to be prolonged and devastating. The first victim could be the Crypto.com platform, which in recent months had already made massive layoffs due to the turbulent situation in the crypto-asset market. Its token Cronos has lost more than half of its value in less than a week.

Sources indicate that the platform deposited more than $1 billion in FTX, of which it was only able to recover about $100 million. However, Crypto.com’s CEO has denied this on Twitter, claiming that its exposure to FTX is less than $10 million. The truth is that his message has failed to calm the markets, which continue to fear the collapse of this platform.

The risk of a new “crypto-winter”.

The collapse of FTX and the crisis at Crypto.com come against a backdrop of doubts about the future of cryptocurrencies. After reaching a valuation of 58,358 euros in November 2021, the successive falls of what became known as the “crypto-winter” and the uncertainty of the last few days have pushed bitcoin below 16,000 euros, which means it has lost almost three-quarters of its value in a year.

As we explained in the article “Cryptocurrencies, a highly volatile asset”, bitcoin is no exception. Volatility has also affected other cryptocurrencies in recent months. For example, Ether lost two-thirds of its value between April and June, falling from more than €3,000 to less than €1,000, before rising back above €1,900 in mid-August and dropping below €1,200 in recent days.

Terra Luna, the most talked-about case until the FTX debacle, went from being worth more than 80 euros at the beginning of May to being practically worthless in little more than a week. And yet it was a ‘stablecoin’, i.e. a cryptocurrency whose value is linked to that of another currency, commodity or financial instrument, which should provide more stability.

Although crypto-assets continue to have many enthusiasts, more and more portfolio managers assume that the structure of this market is too risky and the losses are too great. The notion of bitcoin as the new digital gold, a safe haven in turbulent times, has faded. As a result, many institutional investors are turning their backs on crypto-assets to increase their participation in theoretically safer markets, such as precious metals.

In any case, the current crisis in the cryptocurrency market reminds us of the importance of having a diversified portfolio to protect us from sharp falls in the valuation of any of our assets.

Session on cryptoeconomics

If you want to learn more about the crypto-assets market, on 22 November at La Plaça we will be hosting Susana Rodríguez Urgel, founder of The Digital Advisory Board, who will be speaking live about cryptoeconomics in the second chapter of “Que no faltin!” series.

This expert in cryptography and one of those responsible for “the commercial and digital transformation of Telefónica” more than a decade ago, as James Sène, president of 11Onze, pointed out, promises a provocative session open to debate. If you are interested in participating live to raise your doubts and questions, you can write to [email protected]

If you want to discover the best option to protect your savings, enter Preciosos 11Onze. We will help you buy at the best price the safe-haven asset par excellence: physical gold.

Gold is traditionally regarded as the best asset for inflation protection, a reliable hedge against the risk of losing purchasing power. However, some investors see government bonds as a safer alternative to invest their money in the face of market uncertainty. We analyse the advantages and disadvantages of these two options.

Gold purchases over the past three years have had a stellar performance with record highs for investors and have seen a 40% rise in value. The safe-haven status generally attributed to gold has been confirmed by the uncertainty caused by the pandemic and subsequent inflation, which has penalised the performance of other assets. Once again, gold has provided a valuable hedge against an uncertain future.

Some economists argue that gold only increases in value when a currency is devalued or in a context of high inflation, and that it does not offer adequate returns in other market scenarios. While it is true that gold tends to increase in value in times of financial instability or currency devaluation, these are not the only factors that increase its valuation above average. For example, in the period from 2013 to 2020, inflation was very low, and the most damaging effects of the crisis and economic instability had already been overcome in much of the world, yet the value of gold rose steadily.

Even so, we have to bear in mind that, if we choose to invest in gold through an investment fund or ETF, we will not own the precious metal, which means it loses much of its intrinsic value, and it is a model that gives more versatility, but requires basic stock market knowledge that requires professional intermediaries in the sector. When you buy physical gold, you own the metal, whereas when you invest in digital gold, you have a right or an option. Moreover, because it is not a book entry, you cannot suspend payments. Unlike other financial assets, gold can always be on hand.

Government bonds

The biggest attraction of buying government bonds is that we are assured of a certain return, positive or negative, on the investment. This may seem contradictory, because historically, when someone lends money to someone else, they charge them interest, and therefore it may seem difficult to understand why some bonds are trading with a negative return.

This apparent inconsistency is due to the fact that some large investors seek safety in safe-haven assets, such as government bonds, during times of financial market turbulence. The 2008 crisis, with the collapse of Lehman Brothers and other banks, showed that the Deposit Guarantee Fund, which in Spain covers 100,000 euros per customer and institution, is nothing more than a consolation prize if we are talking about deposits of millions of euros.

Therefore, when we are talking about investment groups with large amounts of money, it may be preferable to buy bonds from countries with the highest credit rating (AAA), even when they offer a negative yield, since, unlike banks, this guarantees us pretty much all of our assets. Still, there may be a speculative motive: buying debt with a negative yield in the expectation that this yield will fall further so that the price of the bonds will rise.

This is a scenario that is hardly applicable to the medium or small investor, who tends to buy securities issued with a nominal value and which pay an explicitly determined interest on the investment, quarterly, every six months, or at maturity. And yet, they can also be traded on the stock market to offer investors the possibility to sell or buy before their maturity.

Security and profitability

Before investing, there are many factors to consider when deciding which financial asset is most suitable for us. And it is vital to assess the risk we are willing to take and to clearly define our investment objectives. As a general rule, the higher the return on an investment, the higher the risk. Conversely, if we want a very safe investment, we will have a low return.

Precious metals, especially gold, break this rule somewhat, with very high returns in times of economic crisis, given their status as safe-haven assets, and relatively stable prices when there is less demand in times of economic growth. But they always maintain a long-term upward trend, which is also accompanied by high liquidity thanks to their intrinsic value.

On the other hand, the risk-return trade-off is evident when it comes to government bonds. Fixed income securities issued by governments are considered risk-free as long as we are talking about developed countries with solvent economies, and with a practically non-existent probability of defaulting on payments to creditors. Even so, they are always accompanied by relatively low or even negative yields in the case of Germany.

This low yield can be affected by inflation, if we take into account that the coupons paid on fixed income are nominal over time. Therefore, when inflation rises, their real value falls and the return on these bonds is also lower. This is a scenario in which the purchase of gold offers better inflation protection, thanks to a higher yield, while maintaining high security and liquidity.

If you want to discover the best option to protect your savings, enter Preciosos 11Onze. We will help you buy at the best price the safe-haven asset par excellence: physical gold.

Digital currencies are becoming more common, but it is still quite unknown what they are and how they work. Let’s try to clarify, in a simple way and in five points, their fundamental characteristics.

A little history of cryptocurrencies

We have to go back to the early eighties of the last century to find the first steps in the idea of a virtual currency protected by cryptography by the hands of David Chaum: the creation of eCash. The final push came in 2008, when the document that developed Bitcoin was published by the mysterious Satoshi Nakamoto.

With Bitcoin, the first units of which were put into circulation on January 3, 2009, it is considered that cryptocurrencies were definitely born. Its creators described it as “a peer-to-peer cash system”, with no regulation or control by governments or institutions.

How do cryptocurrencies work?

Encryption, for security reasons, is based on blockchain technology, a data storage structure following algorithms, almost impossible to counterfeit, open to all users, that works like an electronic register book of Bitcoin and other cryptocurrencies.

In this way a digital currency is created without physical form, but the ownership, the integrity of the transactions, and the control of the creation of new units can be assured. This gives cryptocurrencies the guarantee to be used as money for everyone: to trade, to buy, or to save them.

Legal tender money is under the guarantee of the states, their governments, and the financial institutions, which create and regulate it. This is the basis of the trust that makes citizens use them, as well as making them essential. Cryptocurrencies, on the other hand, do not depend on or are regulated by any administration. In this way, their value is born of the trust placed in them by their users, of the law of supply and demand.

However, cryptocurrencies seek to achieve this necessary trust with the user, for example, by replicating the essential characteristics of money: being fungible or exchangeable; being divisible into units; being storable and transportable; and having a controlled and limited flow of creation or supply.

The market that is being created by their users, then, is what marks their acceptance and, in return, their value. What we have known so far is that, from the beginning, when only a few experts or technology enthusiasts acquired them, the interest in having cryptocurrencies has experienced a very high growth, to the point of exchanging a Bitcoin for €40,000.

What are cryptocurrencies for?

As you have deduced, investment has become one of the great motivations for owning cryptocurrencies. Specialised exchanges that work 24 hours a day, 365 days a year, buying and selling them non-stop, have even been created. Investors are attracted to these markets by the expectation of profits. But you have to be careful and be willing to accept the risk of high volatility of cryptocurrencies: their price rises and falls by thousands of euros very easily.

Cryptocurrencies can also be used to make purchases, as long as the seller accepts this means of payment. It is not yet possible to say that it is a widespread option, but more and more companies are allowing it and opening gateways to be paid for services or products in cryptocurrencies. Fast payments, in fact, are another of the uses and benefits of digital currencies, as transfers around the world are immediate.

Buying and saving cryptocurrencies

We have already said that investing in cryptocurrencies is currently highly speculative and risky. The most profitable ones, such as Bitcoin or Ethereum, are also considered the highest risk. However, anyone can have them if they buy them, accept them for a fee, or even create or decrypt new ones.

The most common is that the latter option, creation or decryption, is left in the hands of large IT teams dedicated to it, often controlled by economic groups, in what is known as mining cryptocurrencies: generating them by deciphering the algorithm or mathematical problem under which they hide.

Individuals can access them more easily through purchase platforms or financial intermediaries, as well as from ATMs that have been created exclusively to offer and exchange cryptocurrencies, and that are already present in commercial areas, for example. There are also digital applications such as Coinbase or Binance.

Once purchased, they are assigned a unique and personal password, which should be kept in a safe place and not lost, because it is all the guarantee you have of the possession of the cryptocurrencies. This is why there are digital wallets, a software or application where it is possible to store cryptocurrencies.

The regulation of cryptocurrencies

In 2015, the European Union (EU) established the same validity of the Euro for Bitcoin and other similar cryptocurrencies as a means of payment, in response to the increase of its presence and related investments. 

However, let’s remember that cryptocurrencies are born free from the regulation and control of administrations and that, consequently, they see them with some reluctance and consider them as a very speculative and unsuitable asset, if not for the expert investor. When you decide to buy cryptocurrencies, you must know that there are no traditional regulation and supervision services that guarantee their custody.

Finally, remember that the Spanish State obliges to include in the income tax return any expenses or income derived from transactions of purchase and sale with cryptocurrencies. In addition, in October 2020 the Draft Law on Measures to Prevent and Fight Tax Fraud was published, introducing the obligation to provide information on the balances and holders of cryptocurrencies and purchase transactions, collections, payments, and transfers, among other transactions.

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