PRECIOUS METALS

Cryptocurrencies not a 'viable substitute for gold'

World Gold Council report says cryptocurrencies have behaved like "risky assets"

Staff reporter

This article is 5 years old. Images might not display.

In a report released this week, the WGC said Bitcoin had fallen 55% while gold rallied 9.4% in the fourth quarter of 2018.

"While cryptocurrencies may have a role to play in the financial markets, their behaviour in an environment of market uncertainty underscored that they are not a viable substitute for gold as a safe-haven," the WGC said.

It said gold was less volatile, had a more liquid market, traded in an established regulatory framework, had a well-understood role in an investment portfolio and had little overlap with cryptocurrencies on many sources of demand and supply.

The WGC acknowledged cryptocurrencies' performance had been remarkable until recently, referring to bitcoin's "parabolic rise" - a 13-fold increase in 2017 - which had overshadowed gold's 13% increase that year.

However it said cryptocurrencies' purpose as an investment seemed quite different from gold and said they were yet to be tested in multiple markets.

It did note there were some similarities between growth profiles, citing Bitcoin's future diminishing growth rate and ultimate finite quantity, along with gold's scarcity and marginal annual growth.

Its report comes as the gold price has risen above US$1311 an ounce on the spot market, its highest level since mid-May last year amid uncertainties including Brexit, US-China trade relations and a lowered global economic outlook.

A growing series of reports, each focused on a key discussion point for the mining sector, brought to you by the Mining News Intelligence team.

A growing series of reports, each focused on a key discussion point for the mining sector, brought to you by the Mining News Intelligence team.

editions

Mining Company ESG Index: Benchmarking the Future of Sustainable Mining

The Mining Company ESG Index report provides an in-depth evaluation of ESG performance of 61 of the world's largest mining companies. Using a robust framework, it assesses each company across 9 meticulously weighted indicators within 6 essential pillars.

editions

Mining Journal Intelligence Global Leadership Report 2024: Net Zero

Gain insights into decarbonisation trends and strategies from interviews with 20+ top mining executives and experts plus an industrywide survey.

editions

Mining Journal Intelligence Project Pipeline Handbook 2024

View our 50 top mining projects, handpicked using a unique, objective selection process from a database of 450+ global assets.

editions

MiningNews.net Research Report 2024

Access a multi-pronged tool to identify critical risks and opportunities in Australia’s mining industry.