Bitcoin no match for gold: Barrick Gold CEO

Jonathan Hoenig on markets and economics in 2021

Bitcoin and other cryptocurrencies are nothing more than bubbles and will never replace gold, according to Mark Bristow, CEO of Barrick Gold.

Digital currencies saw massive gains during the pandemic, leading many investors to speculate that they could replace gold as a hedge against inflation.

“They look like bubbles, they act like bubbles, they smell like bubbles,” Bristow told FOX Business on cryptocurrencies.

Speculators have pushed prices to record highs this year, most recently when Congress spent billions of dollars on economic reviews and the Federal Reserve cut interest rates to near zero and committed to buying an unlimited amount of assets to fuel the U.S. economy through the COVID. 19-induced downturn, the sharpest of the post-war period.

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The belief that all the money sloshing around the system will lead to inflation has led investors to raise the price of Bitcoin, the largest cryptocurrency by market cap, by up to 116% this year to a high of $ 63,500 per coin. Other digital tokens, including Ethereum and Dogecoin, have risen 276% and 7,045% respectively this year. With crypto prices soaring, the total value of all cryptocurrencies rose to $ 2.2 trillion earlier this year.

The explosion in the price of cryptocurrencies and other assets prompted Federal Reserve Chairman Jerome Powell to warn at his news conference on Wednesday that these markets were expanding and that monetary policy was partly to blame.

For Bristow, his biggest problem with Bitcoin is that the main reason people use the cryptocurrency is to “circumvent US dollar transaction regulations.” He noted that central banks and global economies have no reason to allow the use of unregulated cryptocurrencies.

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Bitcoin enthusiasts, meanwhile, argue that cryptocurrencies should have a decentralized network that avoids detection by the government.

Bitcoin and other cryptocurrencies have gained somewhat wider acceptance among American companies in recent months. Mastercard Inc. and Visa Inc. have unveiled plans to bring cryptocurrencies into their own networks, though they will be converted to US dollars and other fiat currencies upon receipt.

Tesla Inc. is one of the few exceptions to announce in February that customers can buy electric vehicles with Bitcoin, which will then be shown on the company’s balance sheet.

At Tesla’s quarterly earnings call on Wednesday, CFO Zachary Kirkhorn said the company believed in the value of Bitcoin over the long term.

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When Bristow and other Bitcoin skeptics talk like this, they are reminding investors of the value of gold.

Anyone who invests in bitcoins “better have a pot of gold to hedge the risk,” said Bristow.

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