Precious metals, cryptocurrency and real estate, oh my!
Alternative assets play by a different set of rules, providing investors the opportunity to diversify portfolios and the potential to leverage certain economic conditions to maximize gains. One of the key factors in securing a sound financial portfolio is continuing to look ahead. With this in mind, we’re sharing Noble’s predictions for where the alternative assets market is headed in 2018.
Three of the key alt assets investors often track are precious metals, real estate and, in recent years, cryptocurrencies. While these three assets all lend a hand to portfolio diversification, you likely will not find Wall Street handing out ‘buy’ recommendations.
Precious Metals Prediction
We’ll begin our predictions for 2018 with the oldest known alternative investment – precious metals. Based on the current equities markets conditions and the exceptionally long cycle they have had without the traditional corrections, we see a dual force moving in favor of precious metals. If you’ve read our eBook on inflation you might already see the second prong of this dual force. To give a conservative number, gold prices could easily fall in the range of $1,470 to $1,500 by year end of 2018. Government debt, an inflated stock market, and the irrational inflation market make this price range comfortable. Silver prices look to be in the $35 to $40 range, with an added force of solar power and electric vehicles amplifying upward pressure.
Real Estate Prediction
On the other hand, real estate is somewhat more difficult alternative investment to predict as it involves varying regions and classifications, such as single-family, multi-family, commercial and so on. Typically, real estate is weaker in states and areas where loans are larger than the median values of the U.S. Areas demonstrating this are New York, California and Texas. Why? The loss of the write-off, due to the new tax plan, makes home values in these areas less appealing. Investors considering purchasing assets in real estate should perform a tax due diligence analysis before jumping into the investment pool.
The newest and likely most queried alternative asset today is cryptocurrencies. The crypto market is relatively undiscovered for investors. In fact, most people are still sitting on the sidelines wondering if they should get involved. The fast-paced news cycle consisting of wavering sound bites has made Bitcoin, Ethereum and Litecoin household names, but has done little to inform people of what these currencies really are or how they function. The biggest attraction to cryptocurrencies is the absence of a central bank, meaning governments cannot manipulate the currency.
With any new marketplace it’s difficult to establish a defined road forward, but at Noble we see the potential for Bitcoin to hit the $35,000 to $40,000 mark. Ethereum has the potential to reach between $1,700 to $2,000 and Litecoin in the $650 to $800 range. With emerging markets it is critical to understand that there will be volatility. This is normal as awareness of the investment vehicle grows and we see the influence of high-frequency trading, futures trading and eventually Wall Street trading.
Alternative assets are poised to experience exciting movement in 2018. The question remains: how will investors leverage each for their investment goals? If you’re an investor keen on utilizing alternative assets to help reach your financial objectives, be sure to conduct in-depth research or consult with a financial professional, as investing in the markets always comes with the potential for risk and reward.