The rise in bitcoin prices did not prevent investors from buying gold, given the “lack of evidence of mass withdrawal” from the precious metal amid a decline in prices in recent years, Goldman Sachs analysts wrote in their report.
Jeffrey Curry of Goldman noted that groups of investors who want to invest in these two assets are significantly different from each other, thus protecting the demand for gold.
In a number of commodity markets, there were fears that demand for gold could fall amidst the sharp jumps of bitcoin, given that both investors prefer investors with similar views – investors who usually do not trust more traditional assets.
Over the past few days, gold has fallen to its lowest level in the past six months, some analysts have blamed bitcoin for this sharp increase. Larry MacDonald of ACG Analytics noted that, in his opinion, the growing demand for bitcoin affects the decline in the price of precious metals.
“Given the situation with CBOE futures this week, many investors are wondering whether bitcoin influences the demand for gold, we believe that there is not,” said Curry.
Along with the various pools of investors, Curry notes that “there was no noticeable outflow of gold from the ETF.” “The total gold reserves of ETF have recently peaked since mid-2013, which is somewhat related to the first point, as mutual funds are the largest holders of ETF gold reserves, but even with this, there is no evidence of a massive outflow of gold,” he said.
According to Curry, the dynamics and characteristics of the two assets are also very different: “Bitcoin mathematically has a certain supply limit, and gold has a finite (but less definite) volume in the bowels of the earth, and even a cursory analysis shows very different dynamics of the market. the situation around the demand for bitcoin and gold is a key difference in terms of price policy. ”
It is worth noting that earlier Curry in an interview with BloombergTV said:
“Bitcoin is raw material.” If you look at securities, then by definition they have obligations.If you take a currency, for example the dollar, it is a commitment of the US government .The raw assets do not have such obligations, it’s literally just “bare” assets. bitcoin in this light, then, in my opinion, it is slightly different from gold, and it is not entirely clear why such bitterness arose from all sides. “The main serious factor that speaks against bitcoin is its low liquidity. figures – yes and with quotations of $ 10,000-11,000 for bitcoin, its total capitalization is about $ 168 billion. The total liquidity of the gold market is $ 8.3 trillion, which is the lack of liquidity that leads to volatility, which many worry about bitcoin, The key factor in bitcoin is blockade technology. The real innovation is in the data registry. “