In its latest forecast on safe-haven assets, Goldman Sachs predicts a long descent for Gold to the tune of “In Gold we trust!”, and for the lending institution the precious metal will outperform Bitcoin in the long run.
Omen nomen, the Latin expression fits perfectly as far as Goldman Sachs‘ latest forecast is concerned.
The US investment bank has gone so far as to go into statements that have caused a stir on the subject of Gold and Bitcoin.
Bitcoin Magazine, which reported the news in a tweet, soon had the publication go viral, generating an echo that opened up debate among industry insiders.
In the long run, the American financial giant expects that the value of Gold will surpass that of Bitcoin.
To understand the basis of this externalization and the likelihood of its occurrence, it is necessary to go to the roots of the issue and the genesis of the digital currency.
Goldman Sachs: gold (XAU) will outperform Bitcoin
As we know, for almost all of human history, both during the time of barter and later when Gold was given the status of the benchmark value for trade, the precious metal was the object of everyone’s desires because of its recognized function and some other characteristics.
The ore was not functional for building weapons but had other characteristics that make it unique, first and foremost it is a scarce commodity, there is a certain amount of Gold in the world, it is very rare and requires time and energy to be found or mined.
In addition to being rare it is easily exchangeable and malleable, it can be made into coins or ingots and traded, plus it is a durable commodity although difficult to transport in large quantities.
In the very long run, the value of Gold tends to appreciate precisely because of the characteristics described above, and this allows making a comparison with the digital currency.
Bitcoin was born precisely as a surrogate for Gold and as an instrument of freedom to replace fiat currencies that are centralized in nature and therefore subject to the will of the Central Banks.
When creating the currency, Satoshi gave Bitcoin the same characteristics as Gold by fixing those things for which it was underperforming, such as the ease of being moved in large quantities.
Moving gold reserves in times of war was often a problem for the powerful and involved well-thought-out plans and all-important logistics whereas for Bitcoin all it would take is a Wallet on a flash drive and that’s it.
In addition to this divergence, compared to Gold today but also to how it was conceived in the Gold standard, Bitcoin is totally decentralized and exempt from any kind of manipulation.
The finite amount of total Bitcoin (21 million) is the final feature that makes the cryptocurrency the logical evolution despite the fact that the scarcity feature is also present in Gold.
But what led such a prominent and internationally recognized investment bank to believe that in the long and very long term Gold will outperform crypto?
Goldman Sachs analysts’ reasons
The real reason for this prediction is the concreteness of Gold, Gold is a physical commodity that needs very high temperatures to be processed and melted down, and in a time of winds of war the bank believes that its value can rise over time incrementally.
Gold is seen as an anchor by Goldman Sachs that could save humanity in the event of a nuclear holocaust.
The grim hypothesis finds confirmation in the nuclear threat repeatedly dreaded by Russian leader Vladimir Putin but also by others before him such as Kim Jong Sun and Iran just to name a few.
However, the nuclear threat is not the only hypothesis, as many believe that central banks will outlive Gold and will be tempted to return to a sort of Gold Standard with CBDCs.
In the meantime, Bitcoin is back at $16305.99 as I am writing and Gold is at $1781.88, a long way from the cryptocurrency’s value.
Goldman Sachs’ statement comes across as absurd and also causes a stir because of the difference in current value but in a world increasingly lashed by the winds of war and pandemics the situation remains uncertain and the scenario the bank is betting on is precisely one in which Gold comes out on top.