Investment in Bitcoin may create a “false sense of security” among investors, according to a leading strategist in the precious metals industry. Milling-Stanley, whose firm manages the world’s largest physically-backed gold exchange-traded fund (ETF), the SPDR Gold Shares ETF (GLD), argues that Bitcoin, despite its rising popularity, does not provide the same level of stability as gold. He stresses that Bitcoin is primarily a yield investment, and while it has garnered significant attention, its volatility can be misleading for investors seeking long-term safety.

Milling-Stanley’s caution comes as the SPDR Gold Shares ETF marks its 20th anniversary, celebrating a year of exceptional performance. Gold prices are expected to rise over 30% by 2024, with gold futures recently trading at $2,712.20 per ounce, just a few percent below an all-time high reached in late October 2024. The price of gold has seen a dramatic increase over the last two decades, rising from $450 per ounce in 2004 to five times that price today. This growth mirrors the long-term success of the SPDR Gold Shares ETF, which has become a prominent investment vehicle for gold, reflecting the enduring appeal of the precious metal in uncertain times.

Despite gold’s strong performance, Bitcoin captured investors’ attention when it reached new all-time highs recently, contributing to what many analysts are calling its “stellar year.” Following the US elections on November 5, Bitcoin’s value surged, raising questions about its potential as a store of value comparable to gold. However, Milling-Stanley remains skeptical about such claims, suggesting that the crypto industry is intentionally drawing parallels between Bitcoin and gold to bolster its image. He points out that while Bitcoin is referred to as “mined,” this terminology is misleading, as it is based on computer processing rather than physical extraction from the earth. The industry’s use of the term “mining” seeks to draw an unfair comparison to gold’s physical origins, which Milling-Stanley believes is a deliberate attempt to give Bitcoin an aura of legitimacy similar to gold’s historical role as a safe haven asset.

Milling-Stanley’s broader outlook on gold remains positive, highlighting its impressive track record over the last two decades. He speculates that if gold can appreciate fivefold in the next 20 years, its value could surpass $100,000 per ounce by the 2040s, though he refrains from making exact predictions. While such projections are speculative, they reflect a broader sentiment that gold’s role as a reliable store of value is likely to continue in the long term. Gold’s stability, its physical nature, and its long-established reputation as a safe haven during times of economic uncertainty make it an attractive option for investors looking to protect their wealth.

In contrast, Bitcoin’s volatility raises concerns for those seeking a safer, more predictable investment. While Bitcoin has seen substantial gains in 2024, its future is far less certain. Bitcoin’s value can fluctuate wildly based on market sentiment, government regulation, and technological developments, making it a risky asset for investors who prioritize long-term stability. Furthermore, its relative novelty compared to centuries-old assets like gold adds another layer of uncertainty. Investors seeking a safer investment vehicle may be wise to reconsider cryptocurrencies if their primary goal is wealth preservation rather than speculation.

Milling-Stanley advises investors who value the safety of gold to reconsider allocating their funds to cryptocurrencies, at least until the market stabilizes or Bitcoin demonstrates a longer-term track record of stability. He acknowledges that predicting the future of financial markets is inherently difficult, especially over two decades, but he believes that the journey ahead will likely be tumultuous for speculative assets like Bitcoin.

Ultimately, Milling-Stanley’s perspective offers a cautionary note for investors in an increasingly volatile market. While Bitcoin and other cryptocurrencies have generated significant interest, they lack the history and stability of assets like gold, which has stood the test of time as a reliable store of value. Investors should carefully weigh the risks of speculative assets and consider the enduring value that gold continues to offer in times of economic and geopolitical uncertainty.

Note: This content is not investment advice, and investors should conduct thorough research and consider their own risk tolerance before making investment decisions.