Bitcoin? ‘It’s God’s way of telling us there’s too much money’

Although 2020 may have been the year of the Bitcoin, some experts still believe gold remains the overwhelming ‘safe haven’ of choice among most savers.

They also forecast that its price will rise this year as interest rates remain at rock bottom and governments continue to print money to avert a painful global recession.

Low interest rates negate the fact that gold does not pay an income – thereby increasing its attractiveness – while monetary stimulus means more money pouring into assets such as shares and gold. 

Gold finished last year at £1,382 a troy ounce, 19 per cent higher than it started 2020. Although it fell back from its record high in August (£1,570), gold specialists believe the price could reach a new high of £1,600 in the coming months.

Ian Williams, chairman of boutique asset manager Charteris Treasury Portfolio Managers, says: ‘The major driver of this advance in the gold price will be the printing of money on an unprecedented scale by the US and to a lesser extent other central banks. Investors will respond by putting more money into precious metals in order to preserve the value of their assets.’

As well as the gold price advancing, he believes that the silver price should move upwards – from £19 a troy ounce to around £26.

Adrian Ash is director of research at online precious metals trading platform BullionVault. He is alarmed that Bitcoin has been badged ‘digital gold’ because like the precious metal it is of limited supply and does not pay investors an income.

He says: ‘Bitcoin is simply God’s way of telling us that there’s too much money about, much of it desperate to chase a fast buck. No doubt some of the excess cash sloshing around will be destroyed by Bitcoin’s current price spike, just as it was sucked in and destroyed by Bitcoin’s previous three price bubbles.’

He adds: ‘Cryptocurrencies such as Bitcoin couldn’t be more different from gold. Physical gold cannot be stolen by a hacker nor destroyed or lost forever simply by forgetting your password. Global bullion trading today represents a deeper, more liquid market than anything except US equities and government bonds.’

Research conducted late last year by BullionVault among its customers paints a positive picture for gold. 

Nearly 60 per cent say they will continue to buy gold this year despite signs that the coronavirus pandemic could soon be thwarted by mass vaccinations, leading to a more stable economic backdrop – gold thrives on the back of uncertainty. 

Purchases will be driven in part by concerns over inflation and the precious metal’s increasing use as a portfolio diversifier.

Like Williams, Ash believes that investors would be mistaken thinking gold is ‘finished’ because the virus might soon come under control. 

He adds: ‘The upswing in the price of gold began 18 months before Covid, and its prime mover remains the slow but relentless devaluation of cash savings, with central banks committed to holding interest rates below inflation.’

Exposure to gold can be obtained in various ways. It can be bought via an online trader such as BullionVault. Alternatively, investors can buy into an investment fund that either tracks the price of gold or holds shares in companies involved in gold mining. 

Funds include BlackRock Gold & General, Charteris Gold & Precious Metals and tracker iShares Physical Gold.