• As gold falls to a one-week low, fund managers are looking to Bitcoin as a preferred asset

  • The revival of covid has contributed to the risk-averse sentiment seen in the gold market, which is currently trading just over $1,840 in an attempt to recover from an eight-day low of $1,839.

    Fears of another European lockdown due to a coronavirus outbreak dampen investors’ spirits as winter approaches. On Friday, the price of gold fell by about 0.7 percent, from a high of $1,865.83 to a low of $1843.09.

    Meanwhile, the US dollar strengthened after Austria announced that it would be the first Western European country to reimpose a complete shutdown, and Germany hinted that it would do the same, driving the euro lower.

    The cost of gold

    Gold prices fell on Friday after Federal Reserve Board Governor Christopher Waller stated his support for a faster tapering of quantitative easing asset purchases. Waller expressed concern that price increases would become a permanent component of earnings by supporting the US central bank’s party line on inflation.

    However, additional potential is limited due to a generally stronger US currency and rising Treasury rates. Despite the recovery, gold is still in the red for the third session in a row, having been rejected at the critical $1,870 level last week. This week, a potential rise in interest rates could have a significant impact on non-interest-bearing gold.

    Analyst forecast

    Recently, there have been conflicting views on gold, with prices surging to a five-month high amid rising inflation. According to Gary Wagner, a well-known technical analyst, the dollar’s relationship with gold has an impact on the metal’s value. He claimed that the dollar is inextricably linked to gold, and that when the currency falls, so does the metal.

    Similarly, E.B. Tucker, director of precious metals exposure company Metalla Royalty, stated that investors should not be discouraged by short-term price fluctuations and should continue to accumulate gold. He pointed to gold’s more than 550 percent gain since 2000 as proof that the precious metal is a good long-term investment.

    He stressed that his gold position is not speculative, but rather based on variables that may cause new price movement. Gold prices have also risen in tandem with rising inflation, lending credence to the notion that the precious metal can be used as a hedge against inflation.

    Bitcoin is now preferred by fund managers over gold.

    In recent years, an increasing number of fund managers and institutional investors have preferred Bitcoin (BTC) over gold as a means of preserving capital, believing cryptocurrencies to be a superior store of wealth and inflation hedge.

    On his company’s third-quarter earnings call last week, Galaxy Digital Holdings CEO Mike Novogratz stated that Bitcoin is a better store of value than gold. Despite the fact that he stated that “gold was probably an okay asset to own in this environment,” he went on to say that “it’s just been crushed by Bitcoin.”

    In addition, Novogratz stated:

    “Bitcoin is simply a better version of a store of value, and it is gaining acceptance at an increasing rate.” The Bitcoin ecosystem now has over 200 million participants worldwide, and it is still growing.”

    Bitcoin is expected to outperform gold in the future.

    Similarly, Skybridge Capital founder Anthony Scaramucci believes that Bitcoin will outperform gold in the future. Scaramucci previously stated, “Anyone who does their homework… ends up investing in it.”

    In recent remarks, he stated that Bitcoin is still in its early stages and predicted that the cryptocurrency’s price would easily reach $500,000. He advises investors to buy Bitcoin right away. During a discussion about market capitalization, Scaramucci stated the following:

    “I believe it will be ten times better than gold over a long period of time.” I wouldn’t be surprised if bitcoin grows at an exponential rate while gold grows at a linear rate.”

    Paul Tudor Jones is another well-known fund manager who has recently stated his preference for bitcoin over gold. He stated at the end of last month that Bitcoin is his preferred method of protecting against inflation in the current economic environment, noting that:

    “Clearly, crypto has a place.” It is clearly winning the race against gold at the moment. At the moment, it would be my preferred option over gold.”

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