As Bitcoin once broke through $100,000, its substitution effect on gold has sparked heated discussions among industry insiders. They believe that Bitcoin's diversionary effect on gold is quite limited and may not necessarily be suitable for ordinary people to invest in. With global central banks cutting interest rates and restarting gold purchases, gold is expected to regain upward momentum.
On December 5, Federal Reserve Chairman Powell publicly stated that Bitcoin's competitor is gold, and Bitcoin is like gold, except it is virtual. People do not regard Bitcoin as a tool for payment or storing value; its volatility is too great, so Bitcoin is not a competitor to the dollar but is competing with gold.
Regarding the comparison between gold and Bitcoin and the future trend of gold, industry insiders also discussed this during the '2024 Xueqiu Carnival' held in Shenzhen on December 7.
Shi Jianghui, General Manager and Investment Director of Guoyuan Xinda, stated that Bitcoin indeed has a diversionary effect on gold, but its impact is limited. In the long term, Bitcoin cannot replace gold, as gold is inherently currency. The attributes of currency are ease of preservation, standardization, and relative stability. Bitcoin's constant volatility makes it difficult to become a currency; it can only be an asset, and it does not resist declines.
"I often say Bitcoin is fake gold," said Xu Zhiyan, Assistant General Manager of Huaxin Fund and Senior Director of the Index and Quantitative Investment Department. He stated that Bitcoin's decentralization and limited supply properties lead to significant price fluctuations, making it unsuitable for the vast majority of investors, families for asset allocation, or institutions.
When mentioning the central bank reopening gold purchases after six months, Xu Zhiyan stated that the central bank's gold purchases first occurred in 2022. Before 2021, global central banks purchased little gold, but after 2022, it has accelerated, largely due to global geopolitical conflict factors.
Regarding mid- to long-term gold prices, Xu Zhiyan said, 'We still have very firm confidence.' The Federal Reserve is currently in a rate-cutting cycle, and Trump's presidency will interfere with the next chairman's rate-cutting rhythm, but it cannot change the trend because the U.S. macro economy is a cyclical issue, absolutely not a short-term fluctuation. Historically, since 1976, gold has continuously iterated; it is one of the better assets for hedging risks and can also diversify risks in asset allocation while still being a yield-generating asset.
Shi Jianghui believes that regarding gold prices, the soon-to-be President Trump has two proposals that will affect gold prices: the first is to resolve the Russia-Ukraine conflict, and the second is to reduce government spending. After the Russia-Ukraine conflict, gold has two allocation values: safety and inflation resistance. If future safety factors weaken and government spending is reduced, the dollar will not have so much excessive issuance, and the factors for currency depreciation will weaken. This is the reason for the recent decline in gold prices. However, the probability of a rate cut next year is still relatively high, and it is expected that gold prices will still perform well next year.
Regarding gold consumption, Shi Jianghui stated that this year's consumption of gold jewelry has decreased significantly, mainly due to people's fear of high prices and its strong correlation with the decline in marriage numbers. In 2011 and 2012, there was also a personal gold buying frenzy, which was at the peak of gold prices. From this perspective, the core still lies in expectations; people are still lingering in previous expectations of gold prices. If expectations reverse, buying may actually increase, suggesting that gold prices may not have peaked yet.
