CME chief says bitcoin is replacing gold as safe haven as precious metal increasingly loses status
Bluford Putnam, chief economist and managing director of CME Group, considers Bitcoin (BTC) an „emerging competitor“ to gold.
In an explainer video presented by the CME and posted by Bloomberg on Wednesday, Putnam said the yellow metal’s ongoing production, which is likely to rise through 2021, contrasts with Bitcoin’s fixed supply.
Bitcoin and its fixed supply scores against gold
The World Gold Council estimates that some 217,790 tonnes of gold have been mined throughout history, with a further 2,500-3,000 tonnes added to the stockpile each year.
In contrast, the number of Bitcoins is set at a fixed supply of 21 million BTC. To date, 18.62 million BTC have already been mined. According to our fact check, 4.85 million BTC of these have already been considered lost forever for some time. It can be assumed that the actual amount of Bitcoins still accessible is Bitcoin Evolution Software currently well below 14 million BTC.
Putnam warned, however, that a fixed supply does not necessarily equate to less volatility. In fact, the opposite is more likely to be the case, as supply is inelastic.
If the demand pattern shifts this can have very large and abrupt effects on prices, Bitcoin has illustrated this point.
Gold is gradually losing its safe haven status
Putnam also noted that his firm has begun to notice gold’s waning appeal as a hedge against global political risk.
In the 2017-2020 period, most of the ups and occasional downs in the gold price seemed to be directly tied to [Federal Reserve] policy changes more than anything else.
The chief economist additionally suggested that equities were responding to the same driving force in markets around the world and the relationship between gold and equities seemed to be trending tighter. This would also weaken gold’s attractiveness as a safe haven.