Gold vs. Bitcoin: Experts explain the inflation hedge war. Is bitcoin the new gold, as some claim?
Not according to two of the world’s most respected gold specialists. But the emergence of cryptocurrencies is a phenomenon that they can’t ignore.
Compared to gold, bitcoin has outperformed the precious metal by a wide margin this year. With the digital coin up over 133 percent and the yellow metal down about 4 percent.
Gold vs. Bitcoin inflation. But the strategist behind the world’s largest gold-backed exchange-traded fund. It is of the opinion that they are not.
In an interview with CNBC’s “ETF Edge” on Monday, George Milling-Stanley, chief gold analyst. At State Street’s SPDR ETFs, said that the two assets may coexist fairly peacefully. In the market because they provide fundamentally distinct functions.
On November 18, the SPDR Gold Trust (GLD), the world’s largest exchange-traded fund (ETF) that is backed. By actual gold, will celebrate its 17th year in the public markets. It is down around 4.5 percent in 2021 and has increased by approximately 281 percent. It is since its inception in 2004.
According to Milling-Stanley, the historical promise of gold to investors has always been twofold. First, that gold can boost returns over the long term long term — and I repeat this, over the long term. And, second, that gold can help to reduce volatility.
While gold has a track record of improving risk-adjusted returns over longer time periods. “The holy grail of any asset allocator,” according to the strategist. Digital coins carry more risk. Increasing volatility and making returns subject to their often-drastic short-term swings, he added. “The holy grail of any asset allocator.”
Gold preserves purchasing power during situations of rising inflation
Inflation rates of over 5 percent per year for several months are considered to be sustained high inflation. “Gold is a very good preserver of buying power during these periods.” He explained that during periods of persistent capital appreciation, such as those experienced in the 1970s. Gold provided annual capital appreciation equivalent to approximately 16 percent a yea. Or a real return of approximately 11 percent.
We’ve had inflation around 5 percent for maybe three or four months now. With everyone telling us that it’s temporary and that it’ll pass. So I’m not surprised that gold hasn’t reacted to these inflation rates just yet,” says the author.
GraniteShares founder and CEO Will Rhind noted in the same interview. That bitcoin and other digital assets may be taking some capital away from gold. But that it is too soon to tell whether this is because. They are a successful inflation hedge.
According to ETF Database, the GraniteShares Gold Trust (BAR) is the fifth-largest gold exchange-traded fund (ETF). On the market Gold vs. in terms of assets under management. And it has lost almost 4% of its value this year.
“With the market capitalization of bitcoin and other cryptocurrencies, it is undeniable. That they are drawing capital,” Rhind explained. In terms of diverting cash away from the gold market. “I’m not sure what they’re accomplishing.”
People are buying bitcoin and other cryptocurrencies. At the moment for speculative reasons, according to the author. “It’s a total and utter risk-on situation,” he explained. “It comes across as less defensive in my perspective. People are purchasing gold. For a variety of reasons, the majority of which are defensive in nature. It revolves around the topic of inflation. It is concerned with the preservation of capital or purchasing power over the long term.”