There is a renewed debate between gold and Bitcoin as market sentiment toward investment assets shifts.
As Kitco News reported yesterday, with the SEC approving 11 spot Bitcoin-backed exchange-traded products on January 10, spot Bitcoin ETFs have attracted over $4 million in inflows. Meanwhile, global gold ETFs saw outflows exceeding $3 billion since early January, primarily in the world’s largest gold-backed ETF, SPRD Gold Shares.
However, some commodity analysts, according to Kitco News, warn against assuming a causal relationship between these trends. They cite gold’s sell-off predating the SEC’s spot Bitcoin ETF approvals, with outflows expected through February for a nine-month streak. Data from the World Gold Council supports observations of gold’s struggles throughout the last year.
Kitco highlights analyses suggesting little correlation between fund flows of gold and spot Bitcoin ETFs. Instead, analysts at TD Securities see Bitcoin ETFs impacting speculative tech more directly than gold. Macroeconomic incentives likely drive significant gold ETF outflows, coinciding with under-positioning ahead of a Fed cutting cycle.
George Milling-Stanley, Chief Gold Strategist at State Street Global Advisors, told Kitco News that a limited correlation exists between Bitcoin and gold. He believes the new spot Bitcoin ETF demand reflects investors moving assets within Bitcoin products rather than fresh capital entering the market.
Despite subdued investment demand, Kitco notes gold has maintained solid gains above $2,000 an ounce, leading many analysts to forecast record highs this year. Milling-Stanley contends that a genuine Bitcoin threat would have gold prices significantly below $2,000 by now. He cites rising geopolitical uncertainty and Bitcoin’s continued volatility as core reasons for this distinct investor interest.
Michele Schneider, MarketGauge’s Director of Trading Education and Research, told Kitco News that Bitcoin holds an advantage as a more reactive hedge against fiat currency debasement. However, sentiment supporting gold above $2,000 signals economic doubts amidst market rallies. She sees ongoing technological shifts making cryptocurrency, with its diverse functions, increasingly attractive as a faith-in-government hedge.
While crypto optimism exists, Kitco News underlines how gold maintains long-term stability, particularly if heightened geopolitical tensions propel prices past $2,100 per ounce. Continued strong central bank demand for gold sets it apart from Bitcoin, particularly with record purchases globally from institutions and Asian consumers.
As CryptoGlobe reported on February 18, in a recently released analysis on SchiffGold’s YouTube channel, financial expert Peter Schiff examines the complexities of U.S. inflation, its effects on the gold market, and the dynamics surrounding the shift between gold ETFs and spot Bitcoin ETFs.
Schiff expresses deep concern about U.S. inflation rates surpassing earlier estimates. Unlike predictions of inflation moving back towards the Federal Reserve’s 2% goal, Schiff believes current economic patterns point towards an intensification of inflationary pressures. He notes the Federal Reserve’s rate hikes have thus far failed to cause noticeable shifts in government or consumer spending habits, indicating their limited effect on addressing current inflation levels. Schiff finds expectations of inflation falling to 2% unrealistic within the present economic policy environment.
Schiff presents a strongly positive view of gold’s future. He characterizes recent price dips below $2,000 per ounce as temporary fluctuations, foreseeing greater market demand down the road. Schiff stresses gold’s value as an asset that can provide protection against inflation. In his perspective, persistent inflation and a weakening U.S. dollar position gold for potential gains. He suggests an upsurge in gold investment is likely as awareness grows of the limited tools the Federal Reserve has for effectively combating inflation.
Schiff notes the growth of spot Bitcoin ETFs, implying this could stem from some investors seeking alternatives during uncertain economic times. However, he maintains reservations about framing Bitcoin as a dependable inflation hedge, drawing contrasts with gold. His analysis emphasizes Bitcoin’s unpredictable value and its speculative nature.
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