Bitcoin & “Psycho Currencies” Will Boost Demand for Gold: Says, Veteran Investor

  • Buy gold at any level, says Mark Mobius with “lower rates in China and elsewhere” expected
  • Bitcoin up 175% vs gold’s 17% YTD
  • With new currencies coming in play, bullion consumption to rise
  • But Weiss Crypto Ratings says, first-time investors in crypto either invest in crypto or not at all

During his blanket endorsement to buy gold as central banks loosen their monetary policy, veteran investor Mark Mobius said that the rise of cryptocurrencies will only further drive the demand for hard assets like gold.

The yellow metal hit a six-year high this month on the prospect of rate cuts by the Federal Reserve and other central banks to support growth that is slowing down.

“I think we are going to see lower rates in China and elsewhere,” Mobius said.

The growth was further affected by the prolonged trade war between the US and China.

“With the efforts by the central banks to lower interest rates, they’re going to be printing like crazy,” said Mobius in an interview with Bloombererg on Tuesday. He recommends allocating 10% of a portfolio in physical gold.

With the US Treasury market signaling that a recession might be on its way, investors are flocking to gold-backed exchange-traded funds (ETF).

“Gold’s long-term prospect is up, up and up, and the reason why I say that is money supply is up, up and up,” Mobius said.

“I think you have to be buying at any level, frankly,” he added.

Spot gold, that hit its highest level since 2013 at $1,535.11 an ounce on August 13 is up 17% this year.

Can cryptocurrencies boost the price of gold?

During these times of turbulence, we have seen Bitcoin, the digital gold, emerging as a safe haven asset.

In comparison to gold’s 17% YTD returns, Bitcoin outpaced with a 175% rise in its price in 2019 till date.

Bitcoin's growth as a safe haven asset has the industry experts calling for bitcoin being better than gold. Grayscale Investments, the digital currency investing and cryptocurrency asset management company even launched the campaign “drop gold” in March.

According to Mobius, the increasing role of digital currencies will rather boost demand for bullion.

“You have all these currencies, new currencies coming into play,” he said. “I call them ‘psycho currencies,’ because it’s a matter of faith whether you believe in Bitcoin or any of the other cyber-currencies. I think with the rise of that, there’s going to be a demand for real, hard assets, and that includes gold.”

However, Weiss Crypto ratings, an independent stocks, mutual funds, cryptocurrencies, and ETFs’ ratings provider argue, this isn’t the case.

“Only if you think of them as risky assets that will hurt the investors and drive the demand back to gold,” wrote Weiss Crypto Ratings on Twitter.

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