Gold Beats Bitcoin As The Preferred Asset In 2018: ETF Securities
(Kitco News)- Unlike for gold, it has not been a good start to the yearfor crypto currencies, especially for bitcoin, which lost significant traction asprices trade around $11,000 an ounce.
Tuesday has been a particularly disappointing day forbitcoin investors, as the digital currency has dropped almost 20% during thetrading session. Kitco.com’saggregated markets show bitcoin last traded at $11,400 a token. Bitcoin isdown 42% from its record highs of above $19,000 seen just one month ago.
By comparison, the gold market is one of the bestperforming assets at the start of the new year, holding near a four-month high. February gold futures settled Tuesday’s session at $1,337.10 an ounce, up 8% since its lows seen lastmonth.
Maxwell Gold, director of investment strategy at ETFSecurities, said in a recent research note that he continues to prefer goldover cryptocurrencies. He noted that bitcoin’s volatility is one of the keyreasons why it will won’t usurps gold’s role as a safe-haven asset andlong-term store of value.
“Since 2010, bitcoin’s annualized daily volatility hasbeen 15 times more volatile than the US dollar, 7 times more volatile than theprice of gold, and 3 times more volatile than the price of oil, one of the mostvolatile commodities,” he said.
Gold added that he also prefers the precious metal overbitcoin because the latter has been driven by risky speculative behavior. He notedthat bitcoin’s gains have been driven by sentiment, which in the long-run isproving to be unsustainable.
While sentiment is also a critical component in the goldmarket, he pointed out that the market is still more diverse than that of digitalcurrencies.
“Assume the world decided overnight that gold has nointrinsic monetary value. The next day there would still exist a demand for thephysical metal for adornment as well as industrial and scientific endeavors.This would not be the case, however, for bitcoin whose only utility stems fromthe acceptance and use in transactions - a role still unachieved as of today,”he said in the report.
Ultimately, despite bitcoin’s allure, Gold said thatinvestors will continue to favor precious metals as a diversification tool inan environment of overstretched equity markets.
“Goldprovides diversification through its historically low correlations with mostasset classes, particularly equities. In this capacity, gold has exhibited anaverage return of +7% compared to a -21% average return in the S&P 500during market drawdowns of 10% or more since 1987,” he said.
By Neils ChristensenFor Kitco News
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nchristensen@kitco.comwww.kitco.com Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.