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Time for gold to show its mettle against risky bitcoin

Nz Herald
Wednesday, January 31, 2018

ALL eyes are on Davos this week, and it would seem the political elite have the knives out for bitcoin.

UK Prime Minister Theresa May and Chancellor of the Exchequer Philip Hammond suggested that the currency's links to criminal networks need serious scrutiny, with the Prime Minister saying that the UK will look "very seriously" at Bitcoin.

Meanwhile, investors and those keenly watching from the sidelines are likely to see further price fluctuations in the cryptocurrency, which rose 1300 per cent in 2017. Bitcoin's wild ride has been the talk of the town. But for those of us who like a somewhat harder asset, the traditional safe haven of gold still has much allure.

As assets, gold and gold-mining equities were very competitive in 2017.

While hardly in the same league as Bitcoin, investors enjoyed a bumper year, with the precious metal enjoying its best annual run since 2010, ending the year up more than 13 per cent.

Reflecting this recovery, gold equities, as measured by the S&P Commodity Producers Gold Index, gained almost 11 per cent.

All of this despite some poor individual corporate performances in the mining sector, with a backdrop of rampant gains for large caps in general and not to mention the market's sudden, highly risky love affair with cryptocurrencies in recent months.

The gold price remains within touching distance of £1,000/oz ($F2804.52). The metal broke through this historic benchmark for two months last spring and one month in late summer. So is the yellow metal poised to "do a bitcoin" this year? On an inflation-adjusted basis, gold has only properly broken the £1000/oz barrier on three previous occasions — five years ago, the early Eighties, and at the end of the 15th century.








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Code Inward TTs Outward TTs
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JPY 54.077951.0779
GBP 0.35650.3485
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from

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