Cryptocurrency is often touted as “digital gold,” but George Milling-Stanley, the chief gold strategist at State Street Global Advisors, disagrees. As the firm responsible for running the world’s largest gold exchange-traded fund (ETF), SPDR Gold Shares, with assets exceeding $57 billion, Milling-Stanley believes that cryptocurrency cannot replace real gold due to its vulnerability to significant losses and lack of historical track record. He points out that gold’s 6,000-year history as a monetary asset offers a substantial basis to understand the benefits of investing in the precious metal. Gold has traditionally acted as a hedge against inflation, equity market weakness, and fluctuations in the value of the dollar, enhancing the returns of a well-balanced portfolio over time.
Despite facing challenges to stay above the $2,000 an ounce mark this year, Milling-Stanley remains optimistic about gold’s prospects. He believes that the economic backdrop, regardless of a potential recession, favours gold as it tends to perform well during periods of slow growth. Additionally, the relaxation of Covid-19 restrictions in China is expected to increase demand for gold, as the country is the world’s second-largest consumer of gold jewellery after India. In conclusion, while cryptocurrencies may continue to gain popularity, Milling-Stanley asserts that gold’s unique historical properties and its role as a hedge make it an essential component of investors’ portfolios. Gold settled at $1,960.47 an ounce on Friday, with its value up over 7% so far this year.
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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.