Bitcoin and Gold Can Coexist, Says Goldman Sachs Analyst

Goldman Sachs analyst Jeff Currie says that both Gold and Bitcoin can coexist, as they belong to different categories.

During an interview on Bloomberg, Goldman Sachs‘ head of commodities research, Jeff Currie, said that Bitcoin and gold can coexist.

He also compared cryptomoney to copper, explaining that the functions it performs in relation to gold are totally different, so to say that one can override the other is incorrect.

Among other things, the analyst said that Bitcoin is an indicator of growth risk. In that sense, its behavior is remarkably similar to that of copper. In an approach, he explained, by superimposing their price tables, one can see that they act in the same way.

Currie’s statements are somewhat different from those of analysts at Deutsche Bank. According to the vision of the latter, the prospects for recovery in 2021, are already exercising a weight on this metal. They explain that very soon gold will experience a prolonged downward cycle.

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Bitcoin and Gold: are they antagonistic or can they coexist?

For Goldman Sachs‘ Currie, gold and Bitcoin can coexist, since they’re active with a different orientation. He explains that Bitcoin has a risk on, while gold has a risk off.

With this categorization, the analyst explains that Risk on assets are those that investors consider attractive in a low-risk environment. On the other hand, when we talk about Risk off, we are talking about these assets that are highly demanded in a high risk situation.

In simple terms, the claim that Bitcoin and gold can exist in parallel is based on the fact that there is „Bitcoin on“ on the one hand, and „gold off“ on the other. Consequently, Currie offers as a conclusion that in the Risk on asset category, both pioneer cryptomoney and copper are found.

The growth of Bitcoin and copper, he stresses, is part of a cycle to which gold does not belong. In other words, the case in which Bitcoin displaces gold is, in his opinion, meaningless.

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The abandonment of reserve assets

The prospect of a possible recovery from the news of advanced vaccine development has caused great movement in the markets. Investors, faced with the possibility of a return to normality, began to migrate their capital from reserve assets to risk assets.

According to this position, gold, as the main reserve asset, began to experience some decline at the end of the year. This fact, in the opinion of Michael Hsueh, strategist for raw materials and currencies at Deutsche Bank, will lead to a fall of approximately 12% in the value of gold. „We see that it is extremely difficult for gold to return to an upward trend,“ he said.

In contrast to the historical peaks that the metal reached at the end of June, the downward trend is now approaching. In line with this view, ANZ analysts explain that this downward cycle for gold could continue for several years. „We will see very soon how the value of gold will touch the floor,“ they point out.

The claim that gold and Bitcoin can coexist remains to be seen. For now, visions are often divided into opposing camps.

Facts to keep in mind

A cycle is approaching in which low risk assets (Risk on) such as Bitcoin or copper will be the protagonists.
Gold, on the other hand, being considered a high risk asset (Risk off), has different characteristics from the former.
Thus, explains Jeff Currie of Goldman Sachs, there is no sense in claims that one can displace the other. On the contrary, he assures, both can coexist.
On the other hand, Michael Hsueh, of Deutsche Bank, affirms that the value of gold will fall by 12%. Likewise, he assures that the downward cycle of the metal could last several years.