One major Canadian gold producer said that while investors are flocking to bitcoin in record numbers, “digital gold” will never replace the precious metal itself.
Agnico Eagle Mines Ltd. Chief Executive Officer Sean Boyd said in an interview Friday that while his company is certainly aware of the competition posed by cryptocurrencies at a board level, he doesn’t see it pose an immediate threat.
“I think you have to have those conversations, but you look at the liquidity in bitcoin. It’s a small market,” Boyd said. “Sure, you may get other cryptocurrencies, but there still are issues around cryptocurrencies as far as security goes. So, we don’t see bitcoin dislodging gold and gold’s importance.”
Boyd’s comments come as bitcoin prices spike to all-time highs, powered in no small part by retail investors. Bitcoin came hit a new peak of US$48,930.85 earlier on Friday.
But the surge in investor interest has been met with fresh warnings over a potential bubble.
Bank of Canada Deputy Governor Timothy Lane called bitcoin’s recent run a “speculative mania” during a speech on Wednesday. Lane said in his remarks that bitcoin’s rise comes amid “an atmosphere in which one high-profile tweet is enough to trigger a sudden jump in price.”
Bay Street veteran David Rosenberg also raised a red flag over whether it’s possible to discern what bitcoin is actually worth.
“Valuing it is next to impossible,” Rosenberg, chief economist and strategist at Rosenberg Research & Associates Inc., said in a Wednesday interview. “So all you really have to do is look at the price, and look at the chart, and you can see it’s a massive price bubble. The chart itself is telling you that.”
Boyd said that bitcoin should be linked more to paper currency than to the precious metal.
“I think the area where there should be concern is paper currencies, and central banks and paper currencies. I think that’s the competition for bitcoin and digital currencies,” he said.
He added that he thinks gold, which is currently valued at more than US$1,800 per ounce amid fresh record highs in the markets, will always be a necessary part of portfolio diversity.
“It still plays a major role in people’s portfolios,” Boyd said. “That’s not going to disappear just because there’s another option in terms of digital currencies.”