The concept of digital gold does not fit the first cryptocurrency, which is more akin to copper, said Jeff Currie, Goldman Sachs’ head of commodities research, in an interview with CNBC.
«Digital currencies are not substitutes for gold. If anything, they would be a substitute for copper, they are pro-risk, risk-on assets. They are substitue for risk on inflation hedges not risk off inflation hedges» #crypto $BTC
Jeff Currie, Head of Commods at Goldman Sachs pic.twitter.com/Qc1yXnDfvo
— Joumanna Bercetche 🇱🇧 (@CNBCJou) June 1, 2021
In his view, crypto-related risks imply that their value diverges from safe-haven assets such as gold, even as they hedge against inflation.
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“Digital currencies do not replace gold. They are an analogue of copper, and I say this because they protect against inflation,” Currie said.
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The expert emphasised that Bitcoin correlates with the business cycle, since it is linked to its own payments system.
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He believes that Bitcoin, like oil and copper, is the best hedge against “good inflation” that arises from increased demand. By contrast, gold hedges against “bad inflation” caused by rising supply.
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As JPMorgan analysts noted, the first cryptocurrency has become a cyclical commodity and cannot serve as an alternative to a precious metal as a hedge.
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In one of the world’s largest investment firms, BlackRock noted that the status of gold as an inflation hedge is exaggerated.
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