Banking giant Goldman Sachs published a report and said that gold is not an optimal store of value against inflation or deflation. Let’s examine Goldman Sachs’ gold predictions and determinations 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 overlooked. The group noted that the number of cryptocurrencies rose from around 2,000 at the end of 2017 with a market cap of over $200 billion to over 8,000 with a market capitalization of about $1.6 trillion. In context, the market value of global equities is about $110 trillion, that of S&P 500 stocks is $35 trillion, and U.S. Treasuries are $22 trillion.
They also increased the volume-related numbers, “In cryptocurrencies, the process 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 policies and the possible depreciation of the dollar due to this. The post-GFC gold argument was tantamount to the cryptocurrency argument (which some plausibly advertised as “digital gold”) as a result of the pandemic. We have recommended that you do not allocate gold, oil or commodities in bulk, demonstrating that it is not a measure 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 paperwork acknowledges that Bitcoin is not complete either. They also talked about the other side of crypto in the report and said, “As discussed in the next part of the report, we do not believe that Bitcoin is a long-term store of value or an investable asset class for diversified portfolios. Do not believe that gold is an investable asset class as a store of value. Therefore, the arguments that Bitcoin is digital gold do not give Bitcoin a random price. ‘ 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 depository should provide,” Goldman continued. The Investment Strategy Cluster highlighted gold as a disappointing long-term depository for the following reasons:
Since the price information was released, gold has yielded real annual returns of 1% year-on-year and has barely outstripped inflation. When adjusted for storage and insurance costs, the estimated excess return falls to zero. Second, US equities are the only asset class that keeps inflation stable and solid. They noted that US equities outperformed inflation 100% in a random 19-year window. Gold outstrips only 50% of inflation in the 19-year window. Therefore, owning US stocks is the smoothest way to hedge inflation in the long run. Finally, in the short run, as shown, US equities outperformed gold in the most favorable inflation cycles. Even when inflation was more than 6%, gold performed better only in January 1970 through mid-June 1970, and again in mid-August 1973 and mid-July 1982.
As we previously reported as , for more gold claims “Gold Claim: Drops To These Levels Are In The Cards!” You can review our article.
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