In the past three months, investors have grown increasingly concerned about the negative potential impact of elevated inflation levels and rising interest rates in 2022. But while stock prices and cryptocurrency prices have lagged, gold has outshined them both.
In the past three months, the SPDR S&P 500 ETF Trust is up just 1.1 percent, while the price of Bitcoin is down 32.6 percent. Meanwhile, the SPDR Gold Trust has quietly grinded higher by 3.9 percent during that three-month stretch as investors seek refuge from inflation.
“Despite the rise in rates and real yields, gold has held up relatively well YTD,” John Lynch, Chief Investment Officer for Comerica Wealth Management, said this week. “Miners [are] gathering momentum and ETF flows have been weak, so this merits watching if prices can test resistance around $1875.”
But despite gold’s relative strength as of late, many investors still see Bitcoin as the better longer-term inflation hedge. In fact, deVere Group’s Nigel Green recently said there are several reasons Bitcoin makes a better inflation hedge than gold.
“Unlike gold, [Bitcoin] is a fixed unit of account and easily divisible and transportable. Gold is not easily immediately divisible, and there are potential issues with purity and verification. Whereas Bitcoin is easily traced on blockchain technology and this is going to be a considerable advantage, especially in cross-border transactions,” Green wrote.
The biggest pro of Bitcoin as an inflation hedge is its long-term performance, gaining more than 1,000 percent in the past three years alone. However, for investors looking for a safe haven from market volatility in the near term, an investment in gold may be far less stressful than buying the extremely volatile Bitcoin.
By Wayne Duggan
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