Thinking of cryptocurrencies as “digital gold” could be a mistake.
George Milling-Stanley of State Street Global Advisors, whose firm manages the world’s largest gold exchange-traded fund, believes that cryptocurrencies are not a substitute for real currency due to their vulnerability to large losses.
“The volatility does not support the claim that crypto is a long-term strategic asset to compete with gold,” the firm’s chief gold strategist told CNBC’s ETF Edge earlier this week.
Milling-Stanley’s company is behind schedule SPDR Gold Stocks, the world’s largest physically backed gold ETF. It had a total asset value of more than $57 billion last week, according to the company’s website. The ETF is up 7% year-to-date since Friday’s close.
Milling-Stanley believes gold’s 6,000-year history as a monetary asset serves as an important sampling frame for understanding the benefits of investing in gold.
“Gold is a hedge against inflation. Gold is a hedge against possible stock market weakness. Gold is a hedge against potential dollar weakness,” he noted. “For me, historically, the promise of gold to investors has… been working overtime.” [helped] to increase the return of a properly balanced portfolio.”
The precious metal is struggling to stay above $2,000 an ounce this year. But Milling-Stanley believes the economic backdrop bodes well for gold recession or not.
“It’s pretty clear that we’re probably in a period of slow growth. …Gold has historically performed well during periods of slower growth,” Milling-Stanley said.
Milling-Stanley also believes China’s easing of Covid-19 restrictions should boost demand for gold. According to the World Gold Council, the country behind India is the world’s largest gold jewelry consumer.
“It’s not just China and India. They are Vietnam, Indonesia, Thailand and Korea. It’s a whole bunch of Asian countries that are really the main drivers of demand for gold jewelry,” said Milling-Stanley.
gold The price closed at $1,960.47 an ounce on Friday. The commodity is up more than 7% so far this year.