Goldman Sachs: gold to beat Bitcoin in the long term
(Kitco News) Gold is a more “useful portfolio diversifier” and is expected to outperform Bitcoin over the long term, according to Goldman Sachs.
The precious metal, with its real demand drivers, is not as affected by tighter economic conditions as the world’s largest cryptocurrency, Goldman said in a note on Monday.
Gold is “a useful portfolio diversifier,” Goldman said, noting that the precious metal has clear non-speculative use cases while Bitcoin is still searching for one.
Traders treat Bitcoin as a “high-risk high-growth technology stock”, while gold is used as a hedge against dollar devaluation and inflation.
Bitcoin is still “a solution looking for a problem” and its potential comes from future use cases. And this makes it a much more volatile and speculative asset class than gold, Goldman explained.
Bitcoin adoption increased as investors became interested in decentralized currencies, but tighter economic conditions will not work in the cryptocurrency’s favor.
“Bitcoin’s volatility to the downside was also compounded by systemic concerns as several major players filed for bankruptcy,” including the FTX crypto exchange and Three Arrows Capital (3AC) hedge fund.
Year-over-year, spot gold is up 0.23%, while Bitcoin is down 63%. At the time of writing, spot gold was at $1,792.60 an ounce, and Bitcoin was at $17,171.
Looking ahead, gold will get a boost from further macro volatility. “Gold may benefit from structurally higher macro volatility and a need to diversify equity exposure,” the note added.
Moreover, “tighter liquidity should be less of a drag on gold, which is more exposed to real demand drivers,” Goldman wrote. These include physical demand, central bank purchases (which have been at a record pace this year), safe haven investment and industrial applications.
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