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We compare Gold, Brick and Bitcoin - Reporte Inmobiliario
Source:
Comparamos Oro, Ladrillo y Bitcoin, noticias sobre INVERSIONES en Reporte Inmobiliario
Cerrando 2023 mejoró la performance del Bitcoin pero sigue demostrando muchísima volatilidad a diferencia del ladrillo y el oro. El Real Estate ganó de nuevo.
www.reporteinmobiliario.com
February 9, 2024
Closing 2023 the performance of Bitcoin improved but it continues to demonstrate a lot of volatility unlike brick and gold. Real Estate won again.
When we refer to gold we assume that it is a very low risk investment , which is why historically it has been one of the options to be taken into account by those adverse to financial options. Something similar could be said about Real Estate. The same is definitely not the case with Bitcoin due to its high volatility.
The series analyzed in this case by Real Estate Report begins with a price of about 140 dollars per ounce of gold in 1977, and 320 dollars per m2 of apartment (56% difference) to stand today at 2,078 dollars per ounce against 2,165 dollars the square meter of apartment used in the North Zone of CABA (4% difference). The gap that existed in recent years between both assets was gradually narrowed due to a revaluation or support of gold, and in the case of Buenos Aires with a depreciation of the square meter value due to the last crisis that caused the values to be currently 27.5% below the 2018 peak.
To the traditional comparison* that we have made years ago at RI, we added to the analysis anecdotally the investment that was a “star” among young people, Bitcoin.
Despite the strong volatility of the virtual currency, in a few years it became the winner by far, taking its price from US$0.03 in 2010 to trading at the end of 2021 in the range of $60,000. ; and then fall apart throughout 2022. Although as of December 2023, (exactly the month in which this comparison is made) bitcoin doubled its price, leaving (momentarily?) the currency in a very good position with respect to gold and brick.
Despite the similarities in the oscillations of gold VS brick, gold shows us a more stable behavior in the series until 2012, and then had retractions in the period 2012-2017 and began to recover ground, while properties continued rising in that period in Buenos Aires, declining in the last 4 years, due to the well-known economic crisis, multiple devaluations and the Pandemic. This last year the m2 in Buenos Aires already shows signs of recovery:
Comparing the three series we could say that investors in urban residential real estate were not so affected despite the drop in values in recent years. Gold has maintained a sustained rise in these years and bitcoin shows us that its volatility can be very attractive in some periods but to run away in others.
It must be taken into account that whoever acquired the gold in 1977 almost certainly resorted to keeping it in a safe deposit box and did not generate any income at all . On the contrary, the maintenance costs of the safe deposit box should be proportionally deducted, while that the property would have generated additional income from rentals since 1977.
Surely if the rental income from the 46 years of the apartment had been saved, another apartment similar to the one that was rented could be purchased at the very least. The m2 generates an “additional” income from rentals, while the rest does not.
Two years ago we began to compare Bitcoin, which at that time demonstrated incredible performance compared to gold and brick. But we asked ourselves several questions:
1: at what value would an owner take a bitcoin when making a property sale transaction;
2: if the bitcoin holder slept peacefully with the multiple keys and users to access their virtual investment and
3: if the volatility of this option would show the same behavior in the long term. Only 12 months later we were able to confirm that this was not the case, although now he has recovered incredibly again.
This year, Bitcoin improved its performance, but without a doubt, just like we said last year: “The Brick won again.”
* The entire historical comparison results in nominal terms, without the effect that inflation would cause in the different investments analyzed.
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