Speculators, on the other hand, buy an asset with the purpose and intent of flicking it on at higher prices. They are not buying for income – cryptocurrency and gold have no income, so you can only speculate on price change. As such, they are simply waiting for (speculating on) someone to come along and pay a higher price.
People who buy and sell cryptocurrencies are clearly speculating. So too are people who buy things like gold, silver, art, jewellery, antiques, commodities and bare land. Because they have no income, they cannot be investments.
In fact, there are only four broad categories of assets that are investments: shares (which have profits or the prospect of profits), property (rent), fixed interest/bonds (interest) and cash (interest). Everything else that might be called an “investment” is, in reality, speculation.
Speculation is riskier – there is no return unless the asset’s value moves in the right direction. On the other hand, investment should give a return regardless of what happens to its price. This income that they earn from their investment allows them to wait. They are, after all, receiving their dividends, rent or interest.
I am very clear that I am an investor – and that cryptocurrency and gold are not things I can “invest” in. I am not, therefore, engaged in these kinds of speculation. I recognise some people have made a lot of money by speculating on cryptocurrency (there are also a lot who have lost), but I am not going to risk joining them.
Although we have markets that offer little comfort in any direction at the moment, I will not stumble off to look at fringe assets that I know little about to speculate on. Better instead to stick to investment and ride out this market slump, keeping funds intact to buy proper investments when the time is right.