A gold fund is investing in bitcoin
A precious metals fund is investing in bitcoin to reinvest profits from the digital currency in gold assets.
Ned Naylor-Leyland, manager of the Old Mutual Gold and Silver Fund, said it started buying bitcoin in April, and that the virtual currency serves as a better allocation than a heavy weighting toward mining stocks.
He said that both bitcoin and gold complemented each other as assets, as the cryptocurrency was designed to be “digital gold.”
“Bitcoin’s frictionless and immediate blockchain payment system resolves the criticism of gold as lacking divisibility and having problems with ease of transmission,” Naylor-Leyland said in an emailed statement.
“I believe this recognition of a differentiated form of payment will bring the ownership of disciplined money into the modern world, paving the way for the return of gold as a global currency.”
Bitcoin has surged more than 700 percent since the start of the year, and surpassed $8,000 earlier this week.
Billionaire investor Mike Novogratz said earlier this week that the digital currency would reach $10,000 by the end of 2017.
But a number of bank bosses have voiced concern over the rapid growth and volatility of the cryptocurrency.
Credit Suisse CEO Tidjane Thiam described bitcoin as “the very definition of a bubble,” while JPMorgan CEO Jamie Dimon has called it a “fraud” that will eventually “blow up.”
Some regulators have also taken a tough stance on cryptocurrencies. China’s government, for instance, said it planned to shut down domestic bitcoin exchanges in September, following its ban on the sale of new digital coins, a practice known as initial coin offerings (ICOs).