World Gold Council: Gold Stands Apart from Cryptocurrencies

SEATTLE (Scrap Monster): The World Gold Council (WGC) said that gold stands apart from cryptocurrencies, despite both possessing certain apparent similarities. The gold’s role in a portfolio is entirely different from that of cryptos. Of late, cryptocurrencies like bitcoins have gained huge popularity among investors, leading to unprecedented surge in its prices, compared to other asset classes.

According to the gold trade body, several qualities differentiate gold from cryptos. Firstly, it is a tangible asset, used both as an investment and as a consumer good. It is highly liquid and less volatile. Gold is a proven long-term strategic investment that is powerful enough to even mitigate the risks that cryptos could bring to one’s portfolio.

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The similarity between gold and cryptocurrencies stem from perceptions of their limited supply and their role as alternatives to fiat currencies. The WGC argues that cryptocurrencies could not be considered as a substitute for gold. In fact, they differ a lot in performance and market dynamics.

The sources of demand for gold are widely diverse. It is owned by institutional and individual investors as well as central banks. On the contrary, the supply and ownership of cryptocurrencies are more concentrated. Although cryptos have delivered portfolio returns due to its massive rally, it offers risks of volatility. The evolving regulatory frameworks are likely to change the value proposition of cryptocurrencies, WGC noted.