Bitcoin’s recent surge has prompted concerns from State Street Global Advisors, with its chief gold strategist, George Milling-Stanley, cautioning investors against equating Bitcoin’s rapid rise with stability.
While gold has long been regarded as a reliable store of value, Milling-Stanley argues that Bitcoin’s allure is primarily driven by speculative returns rather than its reliability as a safe-haven asset.
Gold’s resilience versus Bitcoin’s volatility
Milling-Stanley emphasized the enduring appeal of gold, pointing to its historical track record and consistent performance. During the 20th anniversary of the SPDR Gold Shares ETF (GLD), the world’s largest physically backed gold ETF, he highlighted gold’s impressive growth over the past two decades. “Gold was priced at $450 an ounce 20 years ago and has since quintupled. If this trend continues, gold could potentially surpass $100,000 in the next twenty years,” he stated.
Despite gold futures reaching $2,712.20 on Friday—just shy of a record high—Bitcoin’s recent rally has overshadowed the precious metal. Bitcoin’s meteoric rise, fueled by increased adoption and political optimism, has captured market attention. However, Milling-Stanley dismissed Bitcoin as a “return play” and reiterated gold’s status as a time-tested hedge against uncertainty.
Diverging paths for Bitcoin and gold
The relationship between gold and Bitcoin is shifting. Once considered alternative safe-haven assets, the two move in opposite directions. Bitcoin gained momentum following the November 5 elections, while profit-taking began to slow gold’s strong performance this year.
Milling-Stanley criticized what he sees as crypto promoters’ deliberate attempts to align Bitcoin with gold, pointing to the use of “mining” terminology as an example. He argued that Bitcoin mining is merely a digital process and lacks the physical attributes of gold. Nonetheless, he expressed confidence in gold’s long-term value, admitting that predicting the next two decades will be “interesting.”
U.S. government’s Bitcoin ambitions
In the political arena, Republican Senator Cynthia Lummis has introduced an ambitious proposal to establish a strategic Bitcoin reserve. Her plan involves selling a portion of the Federal Reserve’s gold holdings to purchase one million Bitcoin, which would account for 5% of the cryptocurrency’s total supply at an estimated cost of $90 billion.
Lummis envisions holding this reserve for 20 years, banking on Bitcoin’s appreciation to help address the national debt. The U.S. government, which already possesses 200,000 Bitcoin from asset seizures, would significantly expand its holdings under this plan. However, the proposal has yet to secure co-sponsors and faces significant challenges in Congress. The prediction market Polymarket currently assigns the proposal a 31% chance of passing. Both gold and Bitcoin continue to play pivotal roles in the financial world, but their contrasting trajectories have reignited debates about their long-term viability as safe-haven assets.
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