Gold versus crypto: Mark Bouris says only one is a store of wealth

Finance entrepreneur Mark Bouris says gold has a place in portfolios, is a better store of value than crypto, and is easy to invest in.

Gold investments are standing strong this year in the face of those upstart cryptocurrencies that some say are likely to replace it.

Bitcoin and other cryptos have been described by investors as “digital gold”, but when cryptocurrencies crashed and lost half their value between April and July, the gold price improved – continuing its long-term climb of more than 500 per cent in the past two decades.

There are many ways to invest in the precious metal. You can buy gold bars or coins and stash them under the bed at home, or more sensibly have them securely stored at a depository, or you can access gold through exchange traded funds such as Perth Mint Gold.

Financial services group Yellow Brick Road’s chairman, Mark Bouris, says gold is not talked about in the same way as other investments such as shares and property “and that can lead people to think that it’s some exotic investment where you need to use a broker to trade”.

“But like everything these days, investing in gold is as easy as buying anything else on your phone,” he says.

Yellow Brick Road’s Mark Bouris says gold has a pedigree as a store of value.

Bouris says the gold price has shown a consistent trajectory over the past few decades, and as a physical asset it tends to hold its value.

He says it’s not right to describe cryptocurrencies as digital gold, because of their “extreme deviations” and their lack of pedigree as a store of value.

“Blockchain technology is pretty cool and could have interesting and widespread applications in the future, but quite simply, it’s volatile.”

Bitcoin’s extreme volatility was highlighted this week when it crashed 10 per cent just as the Central American nation of El Salavador introduced it as legal tender.

Perth Mint manager of listed products and investment research Jordan Eliseo says crypto is “the diametric opposite to gold from a risk perspective”.

“Gold is seen as the ultimate safe haven, with a multi-millennia track record of preserving wealth,” he says

“Despite the hype, cryptocurrencies remain a market characterised by enormous volatility, and have so far failed to act as safe haven asset in the traditional sense over the last 10 years.”

Eliseo says gold has historically been criticised for not paying an income but this is seen as less of a problem in today’s low interest rate environment. And it has still generated an average 8 per cent investment return over the last 50 years, he says.

“A key question worth thinking about is what percentage of your portfolio should be allocated to gold,” Eliseo says.

“There is no one-size-fits-all approach in this regard, though we’d note there is a lot of research that highlights the potential benefit one can get with allocations of up to 10 per cent of a portfolio in gold.”

Originally published as Gold versus crypto: Mark Bouris says only one is a store of wealth