From the Durham hotel in North Carolina, Max and Stacy discuss the gold fund joining the bitcoin frenzy now that gold bugs understand “bitcoin is paving the way for the reintroduction of gold as global money.” In the second half, Max interviews Jameson Lopp about the latest with bitcoin markets.
Gold Fund: Bitcoin Will Make Gold ‘Global Money’ Again
The manager of Old Mutual Gold & Silver Fund, a precious metals fund with over $220 mln under control has said Bitcoin is “paving the way” for a global gold comeback.
Speaking to Bloomberg in an interview published today, Ned Naylor-Leyland said that the marriage of Bitcoin and gold was essentially a logical one given the characteristics and remit of both.
“Bitcoin was explicitly designed to be digital gold,” he said.
“So if you’re going to have a small proportion of a fund in Bitcoin, it should be in a gold fund because that’s exactly the point.”
The fund, which began in April this year, is aiming to allocate up to five percent to cryptocurrency, creaming off profits from price upticks to reinvest back into gold and silver.
Naylor-Leyland is highly bullish on the concept going forward, echoing CME Group’s Chairman Emeritus Leo Melamed in his desire to bring discipline to the scene for investors.
“It’s about bringing the ownership of disciplined money into the modern world,” he continued. “Bitcoin is paving the way for the reintroduction of gold as global money.”
Not everyone in the wider gold industry is as happy with the status quo, however. Discussing a drop in profits, BullionVault Research Director Adrian Ash said earlier this month that Bitcoin “noise” was “distracting” some investors and leading to gold being sidelined.
Bitcoin Paving Way for Reintroduction of Gold as Global Money
Bitcoin is paving the way for the reintroduction of gold as global money,” Mr. Naylor-Leyland surmised. Rather than viewing bitcoin as a threat to the precious metal, he instead views it as a way to educate investors. “Bitcoin was explicitly designed to be digital gold. So if you’re going to have a small proportion of a fund in bitcoin, it should be in a gold fund, because that’s exactly the point.” It’s a curious end-run toward a broader goal, but no one would blame the fund. Bitcoin is up hundreds of percent this year. And since the fund’s reported buying spree in April, the digital currency has risen from just over 1,000 USD to the current floor of above 8,000 USD. The historic metal has thudded along comparatively during the same interval, up $40 as of this writing. Bitcoin a Way to Sound Money “Bitcoin and blockchain resolve” divisibility problems, Ms. Pakiam writes of the fund manager’s thoughts, “[problems of] ownership and speed of transmission.” “We’re going to revert to sound money,” Mr. Naylor-Leyland is quoted. “If you imagine sound money and blockchain together, there’s quite an exciting potential outcome.”
It’s a novel approach to bitcoin, for sure. Crypto maximalists suggest it’s simply a matter of time before the digital currency overtakes gold’s position. And as well as bitcoin has done in less than a decade, the precious metal has a four millennia headstart. Something on the order of over 5 billion ounces presently exit, and with an ounce trading above 1,200 USD, that pegs it at a 7 trillion USD market cap, close to 100 fold better than present bitcoin valuations. Still, the better bet seems to be understanding a larger point: the metal’s limitations were the inspiration behind bitcoin’s creation in terms of scarcity, mining, and utility. They’re not mutually exclusive though: both are preferable to the whims of government fiat, sound money advocates urge.