World Gold Council Answers Back To Grayscale Investment’s #DropGold Campaign
A few weeks ago, Grayscale Investments launched a campaign in which it promoted digital currencies against gold. The campaign is known as #DropGold and it was filmed in the streets of Buenos Aires. Now, the World Gold Council (WGC) answered back to prevent major switches from the precious metal o the most popular digital asset Bitcoin (BTC).
Bitcoin Or Gold?
The WGC has answered back to the #DropGold campaign started by Grayscale Investments a few days ago. The DropGold website explains that Bitcoin has no weight and that, compared to gold, it can be bought, sold and transferred as a text message.
Adam Perlaky, Manager of Investment Research at the World Gould Council, explained that virtual currencies are not going to be a substitute for gold. Moreover, he said that they are not a safe-haven.
“Although cryptocurrencies and blockchain technology look promising as a whole, they clearly do not represent a substitute for gold either in theory or in practice.”
As he explained, gold is less volatile, has a more liquid market compared to Bitcoin and it trades in an already established regulatory framework. At the same time, gold has a well-understood role in an investment portfolio, it has little overlap with virtual currencies and is a safe-haven investment.
In general, gold and precious metals tend to have a large influence from central banks and other large financial institutions that purchase or sell these metals in large amounts. At the same time, these institutions use high-frequency trading (HFT) and derivatives to tamp down prices.
In this article, Mr. Perlaky explains that gold has a very liquid and transparent market in which investors trade $150 billion in gold per day, almost 100 times the trading volume of Bitcoin. At the same time, gold has consistent prices across different exchanges compared to Bitcoin, that can have different prices depending on the exchange. Just a few hours ago, CoinMarketCap, one of the most popular websites for handling data about digital currencies and crypto exchanges, decided to stop using Bitfinex’s Bitcoin price due to the fact that it had a difference of $400 with other platforms.
At the moment, Bitcoin is being traded around $5,715 and it has a market capitalization of $101 billion. Meanwhile, an ounce of gold can be bought for almost $1,285.