Bitcoin shows gold the path higher as investors look for inflation hedges - Sprott CEO Peter Grosskopf
(Kitco News) - Although Bitcoin remains an attractive momentum play with pricestrading just off last week's all-time highs, gold investors shouldn't see the digitalcurrency as competition, according to one precious metals fund manager.
Instead of the rivalry, bitcoin should be seen as an inspirationfor gold's untapped potential in the growing digital marketplace, said PeterGrosskopf, CEO of Sprott Inc.
Bitcoin has seen unprecedented growth as investors and consumershave sought new assets to protect their wealth and purchasing power. Last weekthe digital currency pushed to a new record high above $66,000 a token. Bitcoin is currently trading just be $62,000 a token.
"There is a reason why bitcoin has hit record highs and thatis because there is a counter bet going on against fiat currencies,' saidGrosskopf. "People are starting to question the Federal Reserve andstarting to question the inflation picture. They are figuring out that theyneed to hedge U.S. dollar risk."
Meanwhile, the gold market has struggled to attract investordemand as prices remain trapped below $1,800 an ounce.
"Bitcoin's been winning the battle for flows. No question.And that has hurt gold in the short-term, but in the long-term, they're bothgoing to the same place," said Grosskopf.
Although bitcoin is taking some momentum away from gold,Grosskopf said he is excited that the digital currency's market value has risento $2 trillion and is competing with gold. He added that this is a signinvestors are searching for alternative currencies.
"When I look at bitcoin, I see investors who have pulled $2trillion dollars out of fiat currencies, and I love that. This just shows whatkind of potential gold has," he said.
Grosskopf said that if gold wants to compete with the digitalmarketplace, it has to go digital itself. He added that the gold market isprobably about two years away from having a digital presence with enoughcritical mass to sustain itself.
"I think a lot of the technology needed to take gold digitalhas been proven," he said. "I expect that gold will eventually godigital and that is going to create a lot of new users and investors.
Similar to how gold-backed exchange-traded products opened up themarket for smaller retail investors in the early 2000s, Grosskopf said that adigital market would create new opportunities among average consumers.
Sprott, a global leader in the precious metals market with assetsunder management of more than $18 billion, hasn't been quietly sitting on thesidelines of this new digital revolution. The firm has invested in variousdigital projects, including Glint Pay, a credit card that lets users hold theirbalance in gold. The firm was also an early backer of Tradewind Markets, whichcreated the first digital gold exchange and allowed investors to buy fractionalounces of gold.
Sprott said that the technology is out available, and nowcommercial bullion banks need to get involved in creating the critical massrequired for these digital markets.
By Neils ChristensenFor Kitco News
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