The explosive spike in the price of bitcoin has put the leading cryptocurrency front and centre in the minds of alternative asset investors.
It’s led to some commentators concluding that the digital asset is replacing gold as a hedge against inflation and as insurance in the event of disaster.
While opinions expressed about the future of bitcoin and rival cryptocurrencies remain mixed, some key leaders in the finance industry believe cryptocurrencies are expanding the market rather than pinching demand away from gold.
Reported in the Financial Times and Dow Jones’ MarketWatch, Goldman Sachs’ analysts Jeffrey Currie and Michael Hunds have advised clients that there is “no evidence” investors are exiting the gold market in favour of bitcoin.
“In our view bitcoin is attracting more speculative inflows relative to gold,” they conclude.
It’s a view reflected by Reserve Bank of Australia governor Philip Lowe who yesterday said the fascination with cryptocurrencies felt more like a “speculative mania”.
With bitcoin now trading at over AUD23,000, it is hardly surprising that extreme risk-takers have been prepared to take a punt.
There will always be new investment vehicles and ways of investing, but many feel bitcoin the biggest speculative bubble since the infamous tulip mania of the 17th century.
As many others have pointed out, however, the bitcoin market is unregulated and it has the potential to crash as spectacularly as it has spiked.
Judging by demand for The Perth Mint’s Depository and exchange traded products, informed investors aware of the risk involved with cryptocurrencies are continuing to put their faith in the tried and trusted track record of gold.
While bullion coin sales are down in line with figures from other world mints, investors are taking advantage of the lower gold price to acquire precious metals via our expanding Depository Online and PMGold offerings.
Year-on-year, Perth Mint sales of bullion remain extremely strong, suggesting clients have not been distracted by the hype around bitcoin.
