Considering cryptocurrency as a form of “digital gold” may be a mistake. George Milling-Stanley, the chief gold strategist at State Street Global Advisors, which operates the world’s largest gold exchange-traded fund, believes that cryptocurrency cannot serve as a substitute for physical gold due to its susceptibility to substantial losses. In an interview with CNBC’s “ETF Edge,” Milling-Stanley stated that the volatility of cryptocurrency does not support its claims to be a long-term strategic asset rivaling gold.
The firm led by Milling-Stanley manages SPDR Gold Shares, the largest physically backed gold ETF globally. As of last week, it holds assets with a total value exceeding $57 billion. The ETF has yielded a 7% return year-to-date, as of the latest market close.
Milling-Stanley bases his perspective on gold’s 6,000-year history as a monetary asset, indicating that gold serves as a hedge against inflation, potential equity market weakness, and potential dollar weakness. He asserts that gold has historically enhanced the returns of a well-balanced portfolio.
Although gold has struggled to stay above $2,000 per ounce this year, Milling-Stanley remains optimistic about its prospects, regardless of a recession. He highlights that gold has consistently performed well during periods of slower economic growth. Additionally, he predicts that the relaxation of COVID-19 restrictions in China will lead to increased demand for gold, as China is a significant consumer of gold jewelry along with India.
Gold settled at $1,960.47 per ounce on Friday and has appreciated by over 7% since the beginning of the year.
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