The battle of opinions between gold and Bitcoin (BTC) is far from having reached a verdict with supporters on both sides constantly throwing spades at each other. While the safe-haven function of both assets is often mentioned, Bitcoin supporters believe that cryptography will eventually wipe gold off the radar. The opposite camp, represented this time by the head of raw materials research at Goldman Sachs, does not share this opinion. The latter notably qualified cryptomoney as a hedge against inflation and compares it to copper.
Bitcoin seems very similar to copper
Jeff Currie, Commodity Manager at Goldman Sachs, spoke on the battle between gold and Bitcoin. Looking at how the price of cryptomoney has evolved in recent months, he said that it is very similar to copper. Asked by Bloomberg Markets to provide an explanation for his comments he said: "They are both indicators of growth and risk, and I would say that Bitcoin is a hedge against inflation in the retail sector". While he can't deny Bitcoin's strong performance, he tried to explain the recent decline in the price of gold.
It is simply the consequences of an investment strategy based on the coronavirus vaccine, he said. This would have encouraged investors to buy riskier assets, rather than abandoning gold on the basis of its declining value. Goldman Sachs analysts went on to say that: "Gold's recent underperformance relative to real rates and the dollar has led some investors to fear that Bitcoin could replace gold as the inflation hedge of choice.
Gold is a defensive asset with nothing to fear
Nevertheless, Mr. Currie seems serene about a probable loss of momentum of gold to Bitcoin in the supply and demand market. He stated that there was no tangible evidence to date that Bitcoin would divert demand for gold from gold as a defensive asset. "We do not see the growing popularity of Bitcoin as an existential threat to the status of gold as a currency of last resort ... We see no evidence that the Bitcoin rally is cannibalizing the bull market for gold and we believe the two can coexist," he concluded.
Despite Mr. Currie's comments, the reality is quite different in the market with investors shifting their holdings from gold to Bitcoin. This is the case of the British asset manager Ruffer, who recently reduced its exposure to gold in favor of the mother of all cryptomoney.
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