BlackRock executive Russ Koesterich says gold is failing as an equity hedge amid massive outflows from bullion ETFs into assets like Bitcoin.

With the price of gold down more than 11% over the last six months, some investment managers are questioning its status as a hedge asset.

According to Bloomberg, Russ Koesterich, portfolio manager at BlackRock’s Global Allocation Fund, gold is currently failing to prove its effectiveness as a viable hedge against inflation.

Indeed, Koesterich countered the popular hedge asset narrative for gold, stating, “Gold’s ability to hedge against inflation has been somewhat exaggerated. While it is a reasonable store of value over the very long-term — think centuries — it is less reliable across most investment horizons.”

The current investment horizon appears to be one dominated by the fallout of the coronavirus pandemic and the various responses by governments by way of economic stimulus packages.

Inflation fears are currently palpable amid massive stimulus spending to trigger economic recovery.

Since setting a new all-time high of $2,100 per ounce back in the summer of 2020, gold has been on the decline and is currently trading above $1,700 as of the time of writing.

Gold’s price decline has also seen significant outflows from gold ETFs with some market analysts stating that investors are pivoting to Bitcoin (BTC). In November 2020, Chinese banks began suspending the creation of new precious metal trading accounts due to rising price volatility for the likes of gold.

In contrast to gold’s spot price performance, Bitcoin is up almost 90% year-to-date as the largest crypto by market capitalization continues on its positive price run since October 2020. As previously reported by Cointelegraph, senior Bloomberg strategist Mike McGlone has said BTC is "pushing aside" gold as a store of value asset.

Koesterich’s warnings about holding gold as a hedge in the current investment horizon come on the heels of somewhat positive comments by BlackRock about Bitcoin.

The world’s largest asset management company previously identified Bitcoin derivatives as a possible investment foray in filings with the United States Securities and Exchange Commission at the start of the year.

Back in November 2020, Rick Rieder, chief investment officer at BlackRock Financial Management stated that Bitcoin could displace gold to a large extent.


Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Recommended content


Recommended Content

Editors’ Picks

Polygon joins forces with WSPN to expand stablecoin adoption

Polygon joins forces with WSPN to expand stablecoin adoption

WSPN, a stablecoin infrastructure company based in Singapore, has teamed up with Polygon Labs to make its stablecoin, WUSD, more useful in payment and decentralized finance.

More Cryptocurrencies News
Coinbase envisages listing of more meme coins amid regulatory optimism

Coinbase envisages listing of more meme coins amid regulatory optimism

Donald Trump's expected return to the White House creates excitement in the cryptocurrency sector, especially at Coinbase, the largest US-based crypto exchange. The platform is optimistic that the new administration will focus on regulatory clarity, which could lead to more token listings, including popular meme coins.

More Crypto News
Cardano's ADA leaps to 2.5-year high of 90 cents as whale holdings exceed $12B

Cardano's ADA leaps to 2.5-year high of 90 cents as whale holdings exceed $12B

As Bitcoin (BTC) gets closer to the $100,000 mark for the first time — it crossed $99,000 earlier Friday — capital is rotating into alternative cryptocurrencies, creating a buzz in the broader crypto market.

More Bitcoin News
Shiba Inu holders withdraw 1.67 trillion SHIB tokens from exchange

Shiba Inu holders withdraw 1.67 trillion SHIB tokens from exchange

Shiba Inu trades slightly higher, around $0.000024, on Thursday after declining more than 5% the previous week. SHIB’s on-chain metrics project a bullish outlook as holders accumulate recent dips, and dormant wallets are on the move, all pointing to a recovery in the cards.

More Shiba Inu News
Bitcoin: Rally expected to continue as BTC nears $100K

Bitcoin: Rally expected to continue as BTC nears $100K

Bitcoin (BTC) reached a new all-time high of $99,419, just inches away from the $100K milestone and has rallied over 9% so far this week. This bullish momentum was supported by the rising Bitcoin spot Exchange Traded Funds (ETF), which accounted for over $2.8 billion inflow until Thursday. BlackRock and Grayscale’s recent launch of the Bitcoin ETF options also fueled the rally this week. 

Read full analysis
Best Forex Brokers with Low Spreads

Best Forex Brokers with Low Spreads

VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.

Read More

BTC

ETH

XRP