Goldman Sachs Energy Research Chief Says “Gold is becoming poor man’s cryptocurrency”
“Just like we say that silver is the poor man’s gold, gold is perhaps becoming the poor man’s cryptocurrency,” Damian Courvalin, the Head of Energy Research at Goldman Sachs, said in an interview with Bloomberg, as he examined the situation of the metals market in general. Courvalin was replying to a query on whether investors are using assets other than gold, such as cryptocurrencies and Bitcoin, to protect themselves against the threat of inflation. “I think it’s genuinely getting started… We’ve stated in the past that cryptocurrency and gold are not need to compete with one another.”
“The value of cryptocurrency is derived from its network, just as the worth of oil is derived from the truth that it is utilized. Gold, unlike diamonds and art, does not possess this property. According to Courvalin, “it is just a pure defensive investment that has the potential to outperform over a long length of time.”
There has, nevertheless, been a change in the lineup. For example, China began banning cryptocurrencies in late September, and there have been indicators of increased gold demand in the country, he explained. As a result, Courvalin believes that there may be enough money available to distribute between gold and bitcoin at this moment, particularly given the rising threat of inflation, which he believes is becoming more important.
Furthermore, according to a report by Markets Insider, the global investment bank JPMorgan stated in an October note that institutional investors seem to be reverting back to bitcoin, possibly because it is a more effective inflation hedge against gold. The report also stated that the previous trend of money flowing out of gold and into bitcoin has re-emerged in recent times.
According to the bank, more than $10 billion has been pulled out of gold ETFs since the beginning of the year, while more than $20 billion has been poured into bitcoin funds, according to the study. This has assisted in increasing bitcoin’s market share in the cryptocurrency sector to about 45 percent, up from 41 percent in mid-September.
According to CoinShares, the first week of November saw inflows of $174 million into digital asset investment products, marking the 12th consecutive week of inflows. As a result, inflows into digital assets reached $8.9 billion in the first half of the year, compared to $6.7 billion in the same period in 2020.