Store Of Value And Times Of Financial Uncertainty

During economic uncertainty, investors seek out reliable and relatively stable assets. These are assets that can retain or limit the loss of their value amidst an economic downturn.

To my understanding, a store of value is any asset that can be saved, stored, and exchanged in the future without considerable loss in its value.

Given the purpose that they serve, it is understandable why they're mostly sort after during these times. But I believe their purpose of preserving wealth is relevant across time and economic conditions.

The current economic uncertainty is a combination of multiple factors. There's recession, inflation, geopolitical instability and everything in between.

No wonder traditional investments and currencies have experienced a significant depreciation of value. Hence why having a good store of value is crucial in preserving one's wealth.

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A Jump Back In History

The Great Depression during 1930s was a time of major economic uncertainty. Investors went from being optimistic to pessimistic like day to night when 'Black Tuesday' happened.

Black Tuesday was the day the New York Stock Exchange experience a sudden and massive decline in stock prices. Which led to a collapse in investor confidence and widespread panic selling. The day is often associated as the beginning of the Great Depression as everything stumbled down after that like a house of cards.

There were quite a number of asset classes back then. Most investors flock towards gold and silver as a store of value. Other commodities like oil also showed resilience in maintaining their value. Cash and other traditional investments on the other hand, eroded in value. Investors lost complete trust in them.

The great lesson many learned during that event is the value of diversification. Putting all your investment eggs in one basket can be financially fatal.

Coming closer to the modern era was the Great Financial Crisis of 2008 in which real estate as a store of value was tested. The collapse of the housing market led to a decline in real estate values, challenging its perception as a reliable store of value.

Many investors suffered significant losses in this asset class.

Gold and precious metals again proved to be a good store of value. They provided a hedge against inflation and financial market volatility. It was shortly after that time that a new asset class joined the store of value arena; cryptocurrency.

What's the lesson from the 2008 financial crisis in regards to store of value? Well, we should upgrade our perception about store of value and start welcoming the idea that they're not bulletproof from the fires of economic downturns when they start raining heavily.

Like most things in the modern age, store of value is becoming dynamic.

The Present

Historically, gold has proven to be one of the best store of values when it comes to investments. It has stood its ground most of the time. But it's physical limitations are making it a bit counter-attractive as a store of value in this digital era we live in.

Bitcoin is dubbed the digital gold and I think it has the capabilities of becoming what gold-as-a-store of value is in the digital era. But the main argument against that is the volatility aspect. We can say that we're not living in traditional times anymore but I know that's not good enough.

Stablecoins like HBD are meant to solve the volatility problem. In and of itself, stablecoins are a great store of value in the digital age. But they seem to miss one criterion of a traditional store of value which is also appreciating in value over time.

Apart from cryptocurrencies, art and collectibles have also emerged as store of value recently. It was reported that while major markets were taking a nose dive, the art market was going upwards.

Nowadays, there are many store of value solutions to use during times of economic uncertainty. Each has its unique benefits and drawbacks. It's like store of value as a system has been digitised, fragmented and enhanced upon. Which in essence is why it has become dynamic.


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