Cryptocurrency Can't Beat Gold As Insurance Against Inflation
The world's second largest gold miner is confident that prices will remain stable this year, if not higher, as investors use metal rather than cryptocurrencies to hedge against inflation and demand for jewelry is growing.
“The risk is on the positive side,” said the CEO of Barrick Gold Corp. Mark Bristow in an interview in Riyadh, Saudi Arabia. “I don’t think there is much risk in case of failure.”
According to him, the most likely scenario is that gold will be trading in the range of 1,750 to just above $ 1,800 per ounce. Spot bullion rose 0.4% to $ 1809 by 8:45 am in London, cutting this year's losses to 1.1%.
Bristow, the geologist who has led Barrick since early 2019, is more optimistic than analysts, many of whom are forecasting a drop in gold prices as the US Federal Reserve raises interest rates this year. It will average $ 1,683 an ounce in the fourth quarter, according to a Bloomberg survey of analysts and economists.
Gold's status as a store of value amid accelerating inflation hit hard after the outbreak of the coronavirus pandemic. The metal fell 3.6% in 2021, despite inflation in developed economies surging sharply as governments and central banks tightened fiscal and monetary policies to stimulate their economies.
Bullion faces increasing competition from bitcoin and other cryptocurrencies, which are increasingly being presented to investors as modern gold and an effective inflation hedge. Goldman Sachs Group Inc. argued that bitcoin is taking market share away from gold as an investment in a store of value.
“Look at gold and its precious nature - you can neither print nor manufacture it,” Bristow said. “You can make cryptocurrencies, and there are many. When you are in a dynamic phase, as it is now, and the world is unstable, it is always good for gold. ”
Bristow is in Riyadh to attend Saudi Arabia's first major mining conference. The Toronto-based company is mining copper in the kingdom's west in a joint venture with the state-owned mining company Maaden.