Top mining executive has suggested that given the huge volatility swings in Cryptocurrencies, holders may want to consider owning some gold as a hedge.
In an interview with Bloomberg, Newcrest Mining Ltd. Chief Executive Officer, Sandeep Biswas said:
“If you’re into cryptos, you want to consider having some gold,”
He also added that gold:
“may act as a bit of a hedge against the volatility of cryptos,”
Bitcoin made more major moves over the last couple of weeks, and particularly after it was reported that Elon Musk’s Tesla had bought $1.5 billion of the asset.
Some analysts are commenting that the sharp rise in cryptocurrencies is leading to an erosion of the gold market cap, and that investors are starting to move out of the age-old haven in favour of the new, and perceived greater gains of Bitcoin.
Biswas argues that whilst both gold and Bitcoin are distinct from each other, the stability provided by gold would be of benefit to Bitcoin holders in order to hedge the volatility that this asset brings.
“Gold is a different class of investment,” Biswas said. “It’s a tangible asset: you can see it, you can touch it, you can feel it, you can mold it, you can make it into jewelry, whatever you want.”
Goldman Sachs has also stated that the surge in popularity of Bitcoin won’t harm gold. The bank said back in December that it believed the 2 assets can “coexist”. It recognised that Bitcoin is soaking up some of the demand that would traditionally go to gold but also remarked that gold will endure.
“Gold’s recent underperformance versus real rates and the dollar has left some investors concerned that Bitcoin is replacing gold as the inflation hedge of choice,” the bank said in a note. While there’s been some substitution, “we do not see Bitcoin’s rising popularity as an existential threat to gold’s status as the currency of last resort.”
The bank also added that institutions and high wealth individuals were avoiding cryptocurrencies given their “transparency issues”.
It could well be argued that cryptocurrencies run on Blockchain, and that transparency is one of the fundamental features of this technology. Janet Yellen recently came out with statements asserting similar claims.
What can’t be argued is that gold certainly will endure as a store of value, just as it has over the centuries. Bitcoin and cryptocurrencies are infants in comparison, and it remains to be seen if this particular asset class will stand the test of time.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.