The chief economist and strategist at Rosenberg Research, David Rosenberg, is revealing that Bitcoin is eating into gold’s market share as mainstream investors divert funds away from the precious metal and into the leading crypto asset.
Rosenberg tells Fox Business that instead of allocating funds to gold, traditional investors are opting for the flagship crypto asset.
“The Bitcoin craze does seem to have detracted from funds that would ordinarily have gone to the gold market.”
Rosenberg Research’s chief economist adds that Bitcoin has shaved off about 10% from gold’s current value of around $1,800 per ounce. According to Rosenberg, gold would be worth at least $200 more per ounce if traditional investors hadn’t flocked to Bitcoin.
CME Group’s managing director and chief economist Blu Putnam recently expressed similar sentiments.
In a Bloomberg Markets and Finance video, Putnam warns that the yellow metal’s demand-driven output places it at a disadvantage against the flagship crypto asset.
“Gold appears to have an emerging competitor in Bitcoin. Given the current price range for gold, it is likely that increased production will be a feature of 2021. By contrast, Bitcoin has a tightly controlled supply based on the rules of mining Bitcoin.”
Putnam adds that gold is becoming more closely correlated to stocks, making it less attractive to those fleeing risk.
“We’ve also noticed that gold may be losing its appeal as a hedge against global political risk. In the 2017 to 2020 period, the mostly ups and occasional downs of the gold price appeared to be directly tied to Fed policy shifts more than anything else. Since equities were responding to the same driving force, the gold-equity relationship tended to become a little more closely associated, weakening gold’s safe-haven appeal.”
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