Safe harbours and sinking ships…

Oil and other commodity prices are struck by sharp declines. Although it may seem like good news in terms of production costs, such drastic falls are mostly caused by global demand concerns. Oil prices fell as low as $50 a barrel from $70 a barrel within a year. As for the natural gas prices, they dropped from $2.83 to $1.83. These types of declines are mostly unique to the times of crisis.

The recent rise in fuel and natural gas prices in Turkey despite the harsh drop in global energy prices shows us that something went wrong somewhere. The State collects even more taxes whenever the Energy Market Regulatory Authority of Turkey allows an oil and energy price increase, let alone the fact that the energy companies cannot take advantage of the decline in oil and natural gas prices because ever-growing costs.

Interestingly, Palladium too, which is more valuable than Gold, has hit by this sharp decline since it’s not possible at all for palladium to rise when the automotive industry faces tough times. But nor to worry because the price of palladium hasn’t drastically declined and hopefully this will pass soon and the palladium will become a top metal again.

Meanwhile, cotton, the most common and most used fabric in textile industry, is too hit by a visible decline. Cocoa and Coffee markets are surrounded by coronavirus-led concerns as well. The gold price, on the other hand, is something entirely different.

As the rise in gold prices continues, the investors in Turkey are enjoying big profits with USD/TRY pair’s ascent. While gold prices in global markets are rocketing towards $1,700 an Ounce, gold prices per gram in Turkey are up about TRY 325. A magnificent profit indeed with regard to national denomination of the currency…

In the meantime, people are starting to seek digital solutions due to the fact that paper money is a potential vector of viruses. Amidst all this chaos, BITCOIN prices are soaring again, making every effort to exceed $10.000 over the past week. But, the journey of BTC/TRY pair is even more fun as it rose from TRY 20.000 to TRY 60.000 in just a year, which means investors have gained threefold profit from Bitcoin. Similarly the BTC/USD pair broke the $3,800 support level and is now surging as high as $9,900.

I received some criticism recently for not evaluating Gold and Bitcoin based on their release dates. In fact, this little piece of criticism has no meaning whatsoever in term of economics and it also has a high risk of making a researcher move away from the main subject. Here’s what I’m analysing here: “Which of these two financial instruments is the most profitable to invest or trade?”

Bitcoin stands out as the most profitable instrument for trading right now with its approved buying and selling methods. However, most people still consider the traditional financial instruments as “safe harbour” vis-à-vis coronavirus and other risks.

According to recent news, China is making efforts to develop a vaccine to curb the spread of the virus. Well, I hope this is true. Otherwise, sharp decline in commodity prices will not protect anyone from the virus.