Months ago, Goldman Sachs made headlines across the Bitcoin community for saying cryptocurrencies are “not an asset class.” Now, the same Goldman exec that led the firm to that conclusion is also claiming that gold has “no role” in the portfolio of the wealthy.
How does the investment chief’s criticisms of the precious metal stack up against crypto assets, and how could someone in such a position get things this wrong?
Goldman Sachs: Precious Metals Have No Place in The Portfolio of The Wealthy
At the start of the week, the expected influx of stimulus money being pumped into markets caused gold prices to surge, and Bitcoin soon followed. The precious metal has the entire investment world talking, as the asset set a new record for its all-time high traded price.
Gold has been used throughout history as a safe haven asset and a store of wealth. Bitcoin and cryptocurrencies are said to share similar attributes that will eventually cause the assets to behave the same way. But for now, the asset classes’ notorious volatility gets in the way.
RELATED READING | HOW “PICTURE PERFECT” MACRO UNCERTAINTY WILL KEEP GOLD, BITCOIN TRENDING
But now that the spotlight is shining on gold once again, some analysts are calling for a peak and a pullback. Others, such as Goldman Sachs chief investment officer Sharmin Mossavar-Rahmani, claim the asset has no place in a portfolio at all.
The Goldman chief investment office says that investing in gold is only “appropriate” if you subscribe to the theory that the dollar is on its way out as the global reserve currency. This Goldman Sachs exec, does not, even though an Asian market counterpart does.
“All this excitement and brouhaha about gold is not something that we buy into,” Mossavar-Rahmani said.
BTCUSD Versus XAUUSD Comparison Chart | Source: TradingView
Attacks On Gold Are Reminiscent of Bitcoin Being Considered Not An Asset Class
She also adds that gold is overpriced, isn’t a great deflation hedge, doesn’t generate any income, and isn’t tied to economic growth and corporate earnings. Sound familiar?
Mossavar-Rahmani also led a recent report about cryptocurrencies, where Goldman Sachs unequivocally decided that Bitcoin and its altcoin cousins are “not an asset class.”
Goldman Sachs cited similar reasons such as corporate earnings and the lack of reliable income generation. They also demonize the signature volatility in cryptocurrencies as a reason for them to have no place as an investment asset.
Other major investment firms share a different opinion. For example, Fidelity’s digital assets arm recently released their Bitcoin investment thesis, pointing to the asset as an aspirational store of wealth.
Gold has been used as such for as long as history has been recorded. In the new post-pandemic digital age, Bitcoin and the rest of the crypto industry may become even more valuable due to its unrivaled durability, portability, digital scarcity, and more.
Featured image from Deposit Photos.