Why substituting cryptocurrency for gold exposure may be a costly mistake
Viewing cryptocurrency as «digital gold» may be a mistake.
State Street Global Advisors' George Milling-Stanley, whose firm runs the world's largest gold exchange-traded fund, believes cryptocurrency is no substitute for the real thing due its vulnerability to big losses.
«Volatility does not back up any claims for crypto to be a long-term strategic asset as a competitor to gold,» the firm's chief gold strategist told CNBC's "ETF Edge" earlier this week.
Milling-Stanley's firm is behind SPDR Gold Shares, the world's largest physically backed gold ETF. It has a total asset value of more than $57 billion as of last week, according to the company's website. The ETF is up 7% year to date as of Friday's market close.
Milling-Stanley believes gold's 6,000-year history as a monetary asset serves as a significant sample basis to understand the benefits of investing in gold.
«Gold is a hedge against inflation. Gold's a hedge against potential weakness in the equity market. Gold's a hedge against potential weakness in the dollar,» he noted. «To me, historically, the promise of gold for investors has … overtime [helped] to enhance the returns of a properly balanced portfolio.»
The precious metal is having trouble this year staying above the $2,000 an ounce mark. But Milling-Stanley believes the economic backdrop bodes well for gold — recession or not.
«It's pretty clear that we're liable to be in a period of slow growth. … Historically, gold has always done well during periods of slower growth,» Milling-Stanley said.
Milling-Stanley also believes the relaxation of Covid-19 restrictions in China should spark more demand for gold. It's known as the world's largest consumer of gold jewelry behind India, according to the World Gold
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