Goldman Sachs: Bitcoin’s Rising Popularity Not an ‘Existential Threat’ to Gold’s Last Resort Status
Amidst the wild bull rally of 2020, several mainstream firms have commented on Bitcoin’s ability to outdo gold in the long term. In its recent report, JPMorgan also said that if Bitcoin continues to see the institutional adoption it is seeing, which has just “begun,” gold can “suffer” over the coming years.
However, according to Goldman Sachs Group, Bitcoin and gold can coexist despite the largest digital currency pinching some demand from the traditional safe haven asset. The bank said in a note,
“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.”
While the banking giant noted that there’d 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,” it added.
As we reported, Bitcoin flows have been increasing massively thanks to the cryptocurrency’s more than 210% rally this year. Meanwhile, the world's largest gold ETF recorded the most significant outflow last month has not recorded any inflows. Goldman said,
“We do not see evidence that Bitcoin’s rally is cannibalizing gold’s bull market and believe the two can coexist.”
Dan Tapiero, co-founder-10T Holdings, a supporter of both Bitcoin and gold, agrees with Goldman Sachs and that there are not enough stores of value available for investors. He said,
“Non-financial market people do not understand that we have an overall SHORTAGE of stores of value available in the markets.”
“GOLD not losing its SOV premium any time soon, unlikely in my LIFETIME.”
According to Goldman, wealthy and institutional investors avoid digital assets due to “transparency issues,” and “speculative retail investment causes Bitcoin to act as an excessively risky asset.”
According to Jeff Currie, head of commodities research at Goldman Sachs, “Bitcoin is the retail inflation hedge.”
In an interview with Bloomberg, Currie said it is the copper chart that looks “similar” to Bitcoin, and what they have in common is they both are “risk-on growth proxies.”
He further added that gold remains a “defensive asset” and “there's really no evidence” that Bitcoin hasn’t stolen demand from the precious metal.