Cryptocurrency Can’t Beat Gold As An Inflation Hedge, Says Barrick Boss

The liquidity crisis in Cyprus has sparked renewed demand for the metal among investors wary of holding fiat currencies, and the virtual gold rush appears to be boosting spot prices for bullion — even amid a slowdown in China’s economy.

That has some analysts betting that gold will retain its safe-haven status as the world’s de facto reserve currency as central banks everywhere prepare for more market shocks.

So Just How Much Is Gold Up Since The Cyprus Crisis Began?

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It depends on who you ask, and what time frame you’re looking at. Year-to-date, gold futures contracts were down 1.3% through Friday’s close at $1,609.40 per ounce on the Comex division of the New York Mercantile Exchange (Comex), but they’re up almost 4% since March 1, when fears first began to mount about a bank run in Cyprus.

A Hedge Against Inflation?

Cryptocurrency Can’t Beat Gold As An Inflation Hedge, Says Barrick Boss

While gold now appears to be catching the eye of panicked investors like Cyprus’ savers, some observers say it also can be viewed as a hedge against inflation.

“In the longer term, gold’s outlook depends on whether inflation expectations rise,” David Semple, managing director of precious metals at Standard Bank in London told CNBC. “If they do — and if central banks attempt to raise interest rates significantly from their current low levels, to counteract its impact — gold could rise more significantly.”

“We believe that gold will act as an inflation hedge in the coming years, with real interest rates very low or negative across most of the developed world,” Merrill Lynch analysts wrote in a recent note. “While we also see downside risk to oil prices and headline inflation, a negative growth shock to the economy may also trigger some form of official QE,” or money printing, “which would be supportive of gold.”


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