Gold Better than Bitcoin-Goldman Sachs
2022.12.12 14:09
Gold Better than Bitcoin-Goldman Sachs
Budrigannews.com – (NYSE) Goldman Sachs In a research note released on Monday, the bank predicted that gold, which has real demand drivers, would perform better over the long term than the highly volatile bitcoin.
Goldman said that because it has developed non-speculative use cases while bitcoin is still looking for one, gold is “a useful portfolio diversifier” because it is less likely to be affected by tighter financial conditions.
According to Goldman Sachs’ analysis, bitcoin resembles a “risk-on high-growth tech company stock” in comparison to gold, which traders use as a hedge against inflation and the depreciation of the dollar.
The bank described bitcoin as “a solution looking for a problem” because of the scope of its potential real-world applications, making it a more volatile and speculative asset than gold.
Although bitcoin adoption was helped by investors’ willingness to investigate the decentralized currency, the bank anticipates tighter financial conditions.
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It stated, citing the demise of the FTX exchange and the 3AC hedge fund, “Bitcoin’s volatility to the downside was also enhanced by systemic concerns as several large players filed for bankruptcy.”
The bank noted that, despite the sharp decline in net speculative positions in both assets over the past year, gold is slightly higher year-over-year than bitcoin, which is down 75%.
According to the report, “tighter liquidity should be a smaller drag on gold, which is more exposed to real demand drivers” such as consumer spending in Asia, monetary demand from central banks, safe-haven investments, and industrial applications.
“Moreover, structurally higher macro volatility and the need to diversify equity exposure may benefit gold,”
