As I write one of the last articles in our forum for this year 2020, I find it hard to tell myself what was the most significant event of the year: the Covid-19 and its economic repercussions without previous? The price of Bitcoin (BTC), which pierces its ATH and goes straight to the moon? Our favorite precious metal’s breakthrough in gold last August? In any case, it must be said that when it comes time to take stock of a year unlike any other, investors have had much to grind, as these events could not be foreseen. If the imminent arrival of vaccines to fight against Covid-19 should help boost the economy in 2021 and thus boost certain shares of listed companies, the turbulence of the past year will forever mark the spirits, and probably the end of a traditional system. Now all the spotlight seems to be on the queen of cryptocurrencies and of course alternative investments, foremost among which is gold and silver, but also green finance and many more … Focus on alternative investments not to be missed to get 2021 off to a good start!
Warning : This article is brought to you by the company Veracash. Crypto investments are risky by nature, do your own research and invest only within the limits of your financial capacity. This article does not constitute an investment invitation.
Looking back on the year of all records
The year 2020 has proven to be a year of challenges, losses and opportunities for investors and society in general.. A year like no other, in many ways.
One of the key discussions during the pandemic focused on the need to diversify holdings and spread risks and rewards over a wider range of asset classes. The debate on alternative investments should not be limited to 2020, however, as political and public health risk factors prevail, which will facilitate continued uncertainty in the medium term, we are told by key analysts.
If at this end of the year, the ounce of gold failed to regain its August 2020 highs (€ 1,743), however it peaked at € 1,530 as I speak to you.
From this year of all records, We also note the direct relationship between negative interest rates and the price of gold. The trend has never been truer than in recent months: it will have escaped no notice that negative real interest rates over time are a boon to the yellow metal and the reverse is also true.
“Gold continues to do what it has done for decades: follow real interest rates in reverse. “
Lyn Alden, American analyst
As Ronnie Stoeferle has pointed out, Yellen’s appointment as Joe Biden’s US government secretary of the treasury is very good news for gold. To see when the central banks decide to stop their “helicopter money” and printing money, but we still have some leeway in front of us. Gold still promises good times in 2021.
2020 will also have been the year of Bitcoin, in many ways, and famous bank Goldman Sachs recently spoke out saying that the two best safe havens in modern history can coexist.
The reason ?
“Gold’s recent underperformance against real rates and the dollar has raised concerns among some investors that Bitcoin is replacing gold as the preferred inflation hedge. “. While there has been some substitution, we do not see the growing popularity of Bitcoin as an existential threat to gold’s status as a currency of last resort.. ”
A vision opposed to that of JP Morgan, for example, who saw digital gold dethroning the old relic among the best alternative investments. It must be said that after crossing the symbolic mark of $ 24,000, we have enough to look at the moon to imagine the future highs of cryptocurrency. Even as gold touched close to $ 2,000 this summer, the bullion appears to be pale at the Bitcoin rise, but it has not said its last word.
Finally, the year 2020 will of course remain a year marked by a global pandemic, and the onset of an unprecedented economic and financial crisis, promptly pushing many investors to seek refuge in the yellow metal in particular, but also many other alternative media. We told you in a previous article, even precious metals have adapted to the crisis and many companies have offered services to buy gold or silver from a distance. Among the leaders are VeraCash, for example, and its parent company Aucoffre.com, which have already dematerialized the purchase of gold and silver for many years.
In 2021, the trend should continue to intensify the use of alternative investments, especially in view of the crisis which continues to hit the entire globe. In these circumstances, let’s take a closer look at the advantages of using this type of support and the investments to favor to make your year a golden opportunity.
Alternative investments, why is it a good idea?
An alternative investment is a financial asset other than traditional listed assets (stocks, bonds, cash). The most common are precious metals, real estate, collectibles, commodities or even private equity funds. But others are starting to make a name for themselves, such as green finance, which has been particularly popular in recent years.
Alternative investments offer portfolio diversification and a counterweight to equities, but they are often illiquid, unregulated and their price is not clearly established.
As noted, the pandemic has caused investors to diversify in two ways, which can be categorized into two broad categories.
- Firstly, existing and deeply committed veterans have branched out into new areas to spread their risk in the future and hedge against potential losses suffered during the crisis ;
- On the other hand, we have the neophytes, who are investing in emerging industries looking to expand during the recovery.
Another important feature of the growth of alternative investments has been the rapid arrival of newcomers, providing innovative technologies and services. While some companies have simply supplemented existing industries, others are creating new ways of doing business, for example with the fintech phenomenon, which is causing a re-conceptualization of the way we manage our money.
While many of these burgeoning companies are doomed to success, the regulatory response has been hesitant on how to implement a framework of rules on this new way of doing business. This early regulation could make it more difficult for new entrants to settle in, but it will ultimately improve the position and public confidence in existing fintech offerings.
Be careful, however, not to fall into the trap of scams which have been on the rise lately and whose AMF warns against illegal practices. Indeed, do not throw yourself on the first proposals that sell you the merits and the best investment returns in (for example) bottles of wine, a piece of forest, diamonds, photovoltaic panels, or even therapeutic cannabis. It is true that with the low returns on investments offered by banks today, it can seem enticing to say yes to the first call that comes up with bogus investments. The AMF indicates that in 10 years, this year has been the most intense in terms of fraud and scams, each more insidious than the next. The (false) atypical investment proposals are therefore on the rise and it is to avoid this kind of disappointment that the AMF, in a recent press release, added 78 addresses to its blacklist for 2020.
“At the start of the year, the most common fraud involving atypical products mainly concerned wine, whiskey and champagne. Containers are now popular, but we are also seeing multi-product frauds, that is to say sites that offer you a bit of everything and that we call here “the scam supermarkets”. Fraudulent offers of investments in livestock, numerous in 2019, are now less frequent “
Claire Castanet, director of relations with savers and their protection at the AMF
Top 5 alternative investments for 2021
If 2020 heralded the colors in terms of alternative investments, the 2021 vintage should give good prospects. There is no need to revisit the current context which is pushing more and more investors out of the caudine forks of the traditional financial system to turn to alternatives such as precious metals, wood, new technologies or cryptocurrencies. One has only to look at the monstrous investments made by the firm MicroStrategy in the space of a few weeks in Bitcoin to understand that the time has come to bypass a traditional financial system in distress. Adoption and investment in start-ups developing technologies and solutions is also on the rise, but let’s first look at the “must have” of alternative investments.
Despite some unfavorable developments such as rising unemployment or rising public debt, alternative investments are back in the spotlight and are expected to be in the spotlight in 2021. Zoom on the 5 alternative investments on which to bet in the coming months.
Precious metals often win the battle of international economic and financial crises. And for good reason, faced with negative interest rates, gold and silver in particular are benefiting from pleasant situations. There might even be a remake of the 1940s that particularly benefited the yellow metal. At the time, the Fed put pressure on interest rates, while letting inflation blow, thus benefiting the old barbaric relic.
As for silver, also called “poor man’s gold”, it should benefit from the rise in the price of gold, but also from demand from the industrial sector in particular to gain a place of choice among investors wishing to diversify their assets.
Gold is therefore still in a bullish cycle and its yield has fluctuated around 7% per year on average since the 1970s.
VeraCash has understood this well and continues to break into the precious metals and dematerialization market by clearly displaying its ambitions for 2021: to be the neobank of reference to survive this hostile world by allowing you to back your bank account, your savings and your bank card to precious metals (gold, silver, diamonds). A strategic positioning developed since 2014 and which is bearing fruit, all the more so today where the traditional financial system is completely called into question.
By raising significant funds in early 2021, VeraCash intends to continue to develop its positioning and establish itself as a leader in an alternative world which would tend to take precedence over the “classic” world.
VeraCash, however, does not wish to become a banking agent since the very philosophy of the company consists of de-banking, but they wish to establish their status as an atypical neobank mainly for 3 reasons:
- maintain their independence linked to their precious metals management activity,
- maintain their flexibility by working with one or more strategic partners
- develop the means of payment but avoid credit which contributes to creating “an infinite economy in a finite world”.
Jean-François Faure’s company, which now has 30,000 users and keeps more than 2 tons of gold and 19 tons of metal in safes for its customers, has therefore not finished surprising us and could well benefit from the yellow wave or metal which will fall on the whole world.
The demand for wood benefits from two structural factors: the rise of the middle classes in emerging countries and the boom in e-commerce, but also, across the Atlantic, a growing demand for wooden constructions. In addition, listed companies in the timber industry represent serious potential for investors. Forest land investment, less well known than other investments, however, has serious advantages, in terms of profitability but above all from a tax point of view.
There are now several ways in France to invest in forest land and thus to positively impact your income tax or wealth tax by having undeniable tax advantages:
- Acquisition of forests, land in kind of wood, or land to be afforested (-18% tax from a certain threshold)
- Invest in a forest land group (GFF), a forest savings company (SEF) or a Forest Economic and Environmental Interest Group (GIEEF) in order to acquire, sell and manage forests (-18% tax from a certain threshold)
In the field of forestry investment, Ecotree, a young start-up is making a tempting proposition: make you invest in forests to save them and take advantage of them to be profitable, to the tune of about 2% per year. The offer seems interesting and maintains an eco-friendly angle.
In France, the number of transactions increased in 2019 (+ 6.3%), and prices fell slightly. Today, according to Forestière.com, the total area sold in 2019 reached 139,400 ha, up 7.1% (an additional 9,300 ha). The market value reached a record 1.68 billion euros (+ 4.9%); unbuilt forests represent a third of the total market (553 million euros). And if you were not yet convinced, a tax incentive scheme for forestry investment (Défi-Forêt) is being renewed in France in 2021, then do not hesitate!
Green energies / green finance
The theme is more than topical and we had already had the opportunity to talk about it in a previous article, responsible investment is surfing on a booming news. Several choices are available to you:
- Financing crowdfunding operations in the field of green energies
- Financing energy transition or green finance projects
- Contribute to energy efficiency by financing projects and benefit from energy savings: This is the crazy bet that Steve Wozniak is making with his new start-up Efforce, which combines cryptocurrencies and green deals. 45 years after the launch of Apple, our engineer is setting the scene again and embarking on a new entrepreneurial adventure, we told you about it in this article
- Facilitate energy transactions between individuals, automatically finance the maintenance of wind turbines or how to contribute to the energy transition by investing in a Green Token made possible in particular by WPO que we had the opportunity to meet at Thecointribune. This is the crazy bet of this young growth already well known in the industry who takes the best of both worlds:
Beyond these superb initiatives, several alternative investment funds (AIF) make it possible to invest while taking into account environmental, social and governance (ESG) criteria, and therefore propose to combine financial and ethical strategy.
“Clean energies are more and more competitive. Prices for solar panels and batteries are dropping. Demand for energy is supported by the AI boom, which translates into increased electricity consumption. Values linked to the theme of energy efficiency should also have the wind in their sails”
Frédéric Rollin, investment strategy advisor
Individuals would hold 25% of the amount of responsible investments, i.e. $ 30.7 trillion, according to the European Responsible Investment Forum Eurosif. Many banks and insurance companies are interested, so maybe it’s time to take a look!
No one will have missed the phenomenon, and it is not on Thecointribune that you will be told the opposite: cryptocurrency is without a doubt one of the hottest investments of the decade, both for individuals but also and especially for institutional investors.
According to Coinmarketcap the market capitalization of cryptocurrencies worldwide was over 500 billion euros as of November 2020. Despite high volatility and several successive bubbles, Bitcoin, king of crypto-currencies, has been igniting marketplaces for a few weeks. Based on technology that is revolutionary in many ways, cryptocurrencies, long considered speculative objects are gradually taking the place of real assets on which to bet in the future: It is not for nothing if large firms are investing heavily in it, if the tokenization phenomenon is on the rise, and if the states themselves start to want to create the digital twin thanks to the phenomenon of the CBDCs.
Today, If we take a step back on the phenomenon, if Bitcoin were a CAC 40 value it would exceed LVMH with its 332 billion euros in capitalization, all in … 12 years. I agree, it’s spinning. If you are wondering how to invest in cryptocurrencies, which one to choose, how to secure your wallets, and many other subtleties, you are in the best medium to find what you are looking for, then indulge yourself there will be something for everyone!
Copper, iron, aluminum, zinc, so many industrial materials necessary for the construction of many consumer goods today such as vehicles for example or new technologies. Having undergone a shutdown during the first phase of the COVID-19 crisis, they have started to rise again, especially since the restart of the Chinese market.
Last November, copper, the real barometer of the market, was trading at less than $ 6,800, nickel had fallen back below $ 16,000, aluminum peaked at $ 1,800 a tonne. As for the iron market, it was trading at $ 110 per tonne, slightly below its usual pattern. However, alone China’s recovery has fueled investment, and it must be said that the Middle Empire is dizzy. Steel production alone reached an all-time high last September, producing 3.09 million tonnes per day, an all-time high!
Among the projections for 2021, zinc should continue to benefit investors, especially given the five-year plan presented by the Chinese Communist Party. In addition, the Middle Kingdom, which is very fond of industrial metals, should continue to boost production, both in major infrastructure projects but also in view of the objective of decarbonizing its economy: with the ambition of net zero (carbon neutrality) by 2060, as we announced to you last week in our article dedicated to the energy transition, the metals which are at the heart of electrification such as copper have bright days ahead of them.
However, the reality of the market in all parts of the world is very different from that observed in China, and investors should therefore stay tuned.
In short, the year 2021 promises to be full of twists and turns and should bring good luck to many investors in a still economically unstable situation that is in fact beneficial to alternative investments. First of all, be well informed and invest only knowingly because you know that investing is risky by nature. Take a walk every week in the platform for alternative investments to sharpen your critical thinking and your strategies. For my part, I will see you next year!
Karen is passionate about new technologies in general, and blockchain in particular! Finding out about trendy news, the latest market developments and the treasures of the ecosystem, she is happy to help you discover this universe in all its colors.