Crypto as 'Digital Gold'? State Street's Milling-Stanley Disagrees

In the crypto space, cryptocurrencies (especially Bitcoin) are often hailed as the “digital gold” of the 21st century. However, George Milling-Stanley, Chief Gold Strategist at State Street Global Advisors, urges caution. His firm operates the world’s largest gold exchange-traded fund (ETF), and he’s skeptical about the idea of cryptocurrencies replacing the time-tested value of gold.

In a recent conversation with CNBC’s “ETF Edge,” he expressed his concerns about the volatility of cryptocurrencies. He argued that their susceptibility to dramatic price swings undermines their credibility as a long-term strategic asset that could go toe-to-toe with gold.

State Street Global Advisors is the powerhouse behind SPDR Gold Shares, the world’s largest physically backed gold ETF. As of last week, the ETF boasted a total asset value north of $57 billion, according to the company’s website. The ETF has seen a 7% uptick year-to-date as of Friday’s market close.

Milling-Stanley pointed to gold’s 6,000-year track record as a monetary asset, arguing that it provides a robust historical context for understanding the benefits of investing in the precious metal. He noted that gold serves as a hedge against various economic uncertainties, including inflation, potential equity market downturns, and potential dollar weakness. Over time, he argued, gold has proven its worth by enhancing the returns of a well-diversified portfolio.

Despite gold’s current struggle to maintain a price above the $2,000 an ounce mark this year, Milling-Stanley remains bullish about its prospects. He believes that the current economic climate, recession or not, is favorable for gold. He explained that gold has historically thrived during periods of slow growth, a scenario we are likely to witness.

CNBC’s report also mentioned that Milling-Stanley anticipates a surge in demand for gold as Covid-19 restrictions ease in China, the world’s largest consumer of gold jewelry after India, according to the World Gold Council. He emphasized that the demand for gold jewelry extends beyond China and India to other Asian countries, including Vietnam, Indonesia, Thailand, and Korea.

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