Goldman Sachs, one of the largest investment banks in the world has recently released a report in which it has stated that Bitcoin’s latest surge will not hurt Gold. Rather, the two can eventually learn to co-exist and even benefit from each other. This report was basically damage control from Goldman Sachs to its big investors, many of whom are wary of Bitcoin’s recent bull move and believe its rise is cannibalizing the Gold bull run and bullion market in general.
Bitcoin could Steal Some Demand from Gold in the Short-term
The Goldman Sachs report however admits that the latest Bitcoin bull run can steal some demand from bullion circles. It states:
Gold’s recent underperformance versus real rates and the dollar has left some investors concerned that Bitcoin is replacing gold as the inflation hedge of choice. […] While there is some substitution occurring, we do not see Bitcoin’s rising popularity as an existential threat to gold’s status as the currency of last resort.”
Bitcoin’s Relentless Rise
Bitcoin overcame its previous historic high of $20k two days ago and has since gone on to post a new record of around $23.8k. The cryptocurrency ferver is at its peak and even Gold, the $14 trillion fail-safe currency is being threatened by its meteoric rise. Now many crypto analysts have found correlation between Bitcoin and Gold. They believe that when Gold’s price increases, Bitcoin’s also increases in the process. This association is now under heavy scrutiny as Bitcoin has more than doubled in the last couple of months while Gold has remained either stagnant or trending largely downwards.
Is the Goldman Sachs Assurance Convincing?
Goldman Sachs, just like other investment banks has a lot of portfolio in Gold valuing billions of dollars. So, in the event of Bitcoin overwhelming the bullion market, investors will probably liquidate their holdings with the bank and try and buy crypto instead. This hasn’t happened yet but the investors are pretty worried that’s for sure. The assurance from Goldman Sachs is feeble to say the least because it admits short-term losses all the while advocating for a symbiont relationship in the future. The threat of Bitcoin towards Gold as an existential threat to its status as the go-to safe store of value may be challenged further as Bitcoin gains further ground. There is already considerable institutional investment in the sector and will only continue to grow.
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