Banking giant Goldman Sachs released a report saying that gold is not an optimal store of value against inflation or deflation. Let’s examine Goldman Sachs’ gold predictions and detections series together…
Goldman Sachs published a report on the gold market
In the report, Sharmin Mossavar-Rahmani and his team pointed out that the rise of the cryptocurrency industry cannot be ignored. The team noted that the number of cryptocurrencies rose from about 2,000 at the end of 2017 with a market cap of over $200 billion to over 8,000 with a market cap of about $1.6 trillion. In context, the global stock dollar series has a market cap of approximately $110 trillion, the S&P 500 stock dollar series is $35 trillion, and the U.S. Treasuries’ $22 trillion.
They also increased the volume-related numbers, “In cryptocurrencies, the trading volume represented by the two largest cryptocurrencies by market cap has increased sixfold, from $6.8 billion per day in late 2017 to 48.6 billion per day in May 2021. rose to dollars. ”
Striking insights and comparisons from banking giant Goldman Sachs
The research team went on the offensive against the gold market. Below is an excerpt from the report:
The second review, published in January 2010, focused on commodities, particularly oil and gold. In the wake of the global financial crisis (GFC), gold was touted as a much needed asset to hedge against the inflationary effect of loose monetary and fiscal policy and thus the possible depreciation of the dollar. The post-GFC gold argument was the same as the cryptocurrency argument (which some cleverly advertised as “digital gold”) as a result of the pandemic. We recommended that you do not allocate gold, oil or commodities in bulk, demonstrating that it is not a hedge against inflation and that gold is not a store of value. The S&P 500 has outperformed gold by 327 percentage points, or 10.7 percentage points year-on-year, over the past 11.5 years. Additionally, many point to the ownership of cryptocurrencies as an alternative to storing gold.
The document acknowledges that Bitcoin isn’t perfect either. They also talked about the flip side of crypto in the report, saying, “As discussed in the next section of the report, we do not believe that Bitcoin is a long-term store of value or an investable asset class for a variety of diversified portfolios. Do not believe that gold is an investable asset class as a store of value. Therefore, claims that Bitcoin is digital gold do not add any value to Bitcoin. ‘ they said.
Gold is a disappointing long-term store of value for these reasons
“The frequency and magnitude of Bitcoin price drops are too high to provide the peace of mind that a store of value should provide,” Goldman continued. The Investment Strategy Group highlighted gold as a disappointing long-term store of value for the following reasons:
Since the release of price data, gold has posted 1% real annual returns and barely outstripped inflation. When storage and insurance costs are adjusted for the dollar series, the estimated excess return falls to zero. Second, the only asset class that consistently and reliably maintains inflation is US equities. They stated that the US stocks series outperformed inflation by 100% in any 19-year window. Gold outstrips only 50% of inflation in the 19-year window. Therefore, owning US stocks is the best way to hedge inflation in the long run. Finally, in the short run, as shown, US stocks outperformed gold during the most favorable inflationary periods. Even when inflation was more significant than 6%, gold outperformed only between January 1970 and June 1970 and again between August 1973 and July 1982.
Cryptocoin. com, as we previously reported, for more gold predictions “Gold Forecast: Drops To These Levels Are In Kardollarsar!” You can review our article.
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