Goldman Sachs’ head of commodity research calls bitcoin the “retail inflation hedge” and like the cryptocurrency to copper. He says that gold and bitcoin can co-exist and that he “does not see the growing popularity of bitcoin as an existential threat to gold’s status as a currency of last resort.”
Goldman Sachs on Bitcoin, Gold, Copper, and Inflation Hedge
Jeff Currie, head of global commodity research at Goldman Sachs, revealed his prospects for bitcoin, gold, and copper on Thursday. Commenting on the recent surge in the price of bitcoin, he said on Bloomberg Markets that when looking at its price chart, bitcoin looks “very similar” to copper. “What do they have in common?” he continued:
They are both risk-averse growth proxies, and I would argue that bitcoin is the retail inflation hedge.
Currie-led Goldman Sach strategists also wrote in a note on Thursday that “Gold’s recent underperformance against real rates and the dollar has left some investors worried that bitcoin is replacing gold as the inflation hedge of choice.”
The strategists largely attributed the recent decline in the price of gold to a vaccine-driven investment strategy that led investors to buy riskier assets, rather than abandon gold at its discounted value.
Currie stressed that gold is a defensive asset and “there is really no evidence” that BTC “brought the demand for gold.” Goldman Sachs analysts wrote:
We do not see the growing popularity of bitcoin as an existential threat to gold’s status as a currency of last resort … We do not see evidence that a bitcoin rally is cannibalizing a gold bull market and believes that both can coexist.
However, some analysts, including those at JPMorgan Chase, disagree with Goldman Sachs. They believe investors are moving money out of gold investments into bitcoin. Some companies have also reduced their gold exposure to buying bitcoin to hedge it against fiat currency devaluation, including British asset manager Ruffer.
Do you agree with Goldman Sachs about bitcoin and gold? Let us know in the comments section below.
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