Gold Fund Sets Sights on Bitcoin

November 25, 2017

London (Nov 25)  The Old Mutual Gold & Silver Fund, which has $220 million worth of precious metal equities under management, is looking to partake in the success of Bitcoin.

Claiming Bitcoin was “explicitly designed to be digital gold”, fund manager Ned Naylor-Leyland said:

“… 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 about bringing the ownership of disciplined money into the modern world. Bitcoin is paving the way for the reintroduction of gold as global money.”

The fund started investing in Bitcoin in April this year, with the goal to dedicate 5% to cryptocurrencies. Ultimately, the aim is to obtain profits from Bitcoin, and then reinvest these in gold and silver assets.

Compared to gold, Bitcoin is prone to volatility and its sudden and drastic price fluctuations have put many an investor on the backfoot. Currently trading at above $8,000, Bitcoin has risen almost eightfold in price since the start of 2017.

Gold, by comparison, is steadier in its price movements, and has remained in more or less the same range throughout the year, except for a brief upward spike in September when uncertainties caused by tensions between the United States and North Korea led to increased investment.

Earlier this year, a report by Goldman Sachs concluded that gold was far superior to Bitcoin as it was more durable, had greater intrinsic value, and was a better store of value than Bitcoin, with a less volatile market. The only factor in which Bitcoin was deemed better than gold was its portability as compared to bullion.

While the cryptocurrency may have its detractors, Bitcoin’s steadily increasing price suggests investor confidence remains high. Earlier this week, billionaire Mike Novogratz gave the digital currency his vote of confidence, predicting that Bitcoin would reach $10,000 before the end of 2017.

Highlighting the positive aspects of Bitcoin and blockchain tech, Naylor-Leyland observed that Bitcoin is the answer to the problems of divisibility, ownership, and transmission speed which are associated with gold.

“We’re going to revert to sound money,” Naylor-Leyland said. “If you imagine sound money and blockchain together, there’s quite an exciting potential outcome.”



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