Substituting cryptocurrency for gold exposure may be a costly mistake

Viewing cryptocurrency as “digital gold” could also be a mistake.

State Avenue International Advisors’ George Milling-Stanley, whose agency runs the world’s largest gold exchange-traded fund, believes cryptocurrency isn’t any substitute for the actual factor due its vulnerability to large losses.

“Volatility doesn’t again up any claims for crypto to be a long-term strategic asset as a competitor to gold,” the agency’s chief gold strategist instructed CNBC’s “ETF Edge” earlier this week.

Milling-Stanley’s agency is behind SPDR Gold Shares, the world’s largest bodily backed gold ETF. It has a complete asset worth of greater than $57 billion as of final week, in response to the corporate’s web site. The ETF is up 7% yr thus far as of Friday’s market shut.

Milling-Stanley believes gold’s 6,000-year historical past as a financial asset serves as a major pattern foundation to grasp the advantages of investing in gold.

“Gold is a hedge towards inflation. Gold’s a hedge towards potential weak point within the fairness market. Gold’s a hedge towards potential weak point within the greenback,” he famous. “To me, traditionally, the promise of gold for traders has … extra time [helped] to reinforce the returns of a correctly balanced portfolio.”

The valuable metallic is having hassle this yr staying above the $2,000 an oz. mark. However Milling-Stanley believes the financial backdrop bodes effectively for gold — recession or not.

“It is fairly clear that we’re liable to be in a interval of sluggish progress. … Traditionally, gold has all the time executed effectively during times of slower progress,” Milling-Stanley stated.

Milling-Stanley additionally believes the relief of Covid-19 restrictions in China ought to spark extra demand for gold. It is referred to as the world’s largest client of gold jewellery behind India, in response to the World Gold Council.

“It is not simply China and India. It is Vietnam, it is Indonesia, it is Thailand and Korea. It is an entire raft of Asian nations which might be actually the primary drivers of gold jewellery demand,” Milling-Stanley stated.

Gold settled at $1,960.47 an oz. Friday. The commodity is up greater than 7% thus far this yr.