It is possible that seeing cryptocurrencies as “digital gold” is a mistake.
George Milling-Stanley of State Street Global Advisors, whose business manages the world’s largest gold exchange-traded fund, feels Bitcoin is no replacement for the real thing owing to its sensitivity to massive losses.
“Volatility does not back up any claims for cryptocurrency to be a long-term strategic asset as a competitor to gold,” the firm’s senior gold strategist told CNBC’s “ETF Edge” earlier this week.
SPDR Gold Shares, the world’s biggest physically backed gold ETF, is managed by Milling-Stanley’s business. According to the company’s website, it has a total asset worth more than $57 billion as of last week. As of Friday’s market closing, the ETF was up 7% year to date.
Milling-Stanley argues that gold’s 6,000-year history as a monetary asset provides a large sample size for understanding the benefits of investing in gold.
“Gold is an inflation hedge.” Gold is a hedge against probable equities market downturn. “Gold is a hedge against potential dollar weakness,” he said. “Historically, the promise of gold for investors has… helped to enhance the returns of a properly balanced portfolio, in my opinion.”
This year, the precious gold is struggling to keep over $2,000 per ounce. However, Milling-Stanley feels that the economic background is favorable for gold, recession, or no recession.
“It’s clear that we’re going to be in a period of slow growth.” “Gold has always performed well during periods of slower growth,” Milling-Stanley added.
Milling-Stanley also believes that China’s easing of Covid-19 limits will increase demand for gold. According to the World Gold Council, it is the world’s second-largest purchaser of gold jewelry after India.
“Not just China and India are involved. Vietnam, Indonesia, Thailand, and Korea are among them. “The main drivers of gold jewelry demand are a slew of Asian countries,” Milling-Stanley explained.
Friday’s gold price was $1,960.47 per ounce. This year, the commodity has gained more than 7%.