The huge rise in the price of Bitcoin has had no major effect on the demand for gold, according to Jeffrey Currie, the global head of commodities research at Goldman Sachs. His comments, made in a recent interview with the Financial Times, contradict an analysis last week from other financial experts.
In the interview Currie added that the demand for gold was not affected by Bitcoin’s price gains because the two assets have different investor pools.
Currie also stated that Bitcoin’s lack of regulation is hindering traditional investors moving into it. He asserted that Bitcoin and gold have different characteristics and that their recent price movements are due to the nature of demand for the assets, stating:
"In our view, Bitcoin is attracting more speculative inflows relative to gold."
The price of Bitcoin has posted phenomenal gains over the past month, which was highlighted by the Chicago Board Options Exchange (CBOE) launching its Bitcoin futures trading on Dec. 10. The price of gold, meanwhile, has experienced a slump during the period.
Other highlights of the interview
An additional claim made by Currie is that there is no clear evidence of a mass exodus from gold, as supposedly proven by the fact that the current gold exchange-traded fund (ETF) holdings are at their highest levels for over four years.
While Bitcoin’s lack of liquidity and high volatility might be a benefit to day traders, these same characteristics are scaring away the investors who prefer the diversification and hedging benefits of gold, Currie said.
Comments by other Goldman Sachs officials on Bitcoin
Aside from Currie, Goldman Sachs CEO Lloyd Blankfein also recently commented on Bitcoin. In early November, he announced that while his bank is not yet trading Bitcoin, it is still highly interested in the leading cryptocurrency:
“I read a lot of history, and I know that once upon a time, a coin was worth $5 if it had $5 worth of gold in it. Now we have paper that is just backed by fiat...Maybe in the new world, something gets backed by consensus,” Blankfein said back then.