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Metals & Mining: Looking for a Safe-Haven Asset?

Companies and Markets

By Banu Nadarajah  |  July 9, 2025

Gold and Bitcoin have emerged as two of the most debated alternative assets in financial markets, each offering unique attributes that appeal to investors. Gold, with its longstanding reputation as a stable store of value, is backed by its physical scarcity and widespread acceptance among central banks and institutional investors. Bitcoin, often likened to gold due to its algorithmic scarcity and decentralized governance, is rapidly gaining traction as a speculative digital asset. As Bitcoin's adoption grows and macroeconomic conditions evolve, can these assets coexist as alternative investments?

This report aims to provide insight by examining gold and Bitcoin as potential safe-haven assets, prompted by the current economic climate marked by volatile geopolitical uncertainty. We will explore their performance during key periods of instability, assessing their effectiveness as stores of value. 

Gold: Historically, A Trusted Anchor

Throughout recorded history, monetary systems have fluctuated between sound, gold-backed currency and periods of debasement marked by excessive debt, often causing inflation, instability, and the eventual decline of empires. In the Roman Empire, precious metals formed the backbone of the monetary system with the gold 'Aureus' and silver 'Denarius.' However, escalating military and welfare expenditures led to a drastic dilution of the actual silver content in newly issued coinage. This triggered rampant inflation, eroded public trust, and forced regions to revert to barter systems, highlighting early monetary system failures due to unsustainable fiscal practices.

The Byzantine Empire maintained gold usage through the 'Solidus'. As trade flourished between the Western and the Islamic world, gold coinage saw a widespread reintroduction. Moving forward through history, empires like the Dutch and British used gold-backed currencies during their times of global dominance, driving the rise of the gold standard. No empire to date has been able to escape the cycles of excessive debt and currency devaluation.

Gold has been a trusted anchor when turbulence causes trust in fiat currency to wane, and the 1970s are a perfect example of this as US fiscal policies at the time created uncertainty among central banks globally regarding the ability for US treasuries to remain a stable reserve asset.

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Gold’s ability to provide portfolio diversification and tail-risk protection, coupled with its relatively high-liquidity make it a strong tool for risk management. In addition, investors look to gold as a tool for capital preservation to hedge against extreme inflation/deflation scenarios.

Bitcoin: “Digital Gold”

Bitcoin, by contrast, has exhibited extreme price volatility, often swinging by double-digit percentages within short time frames. Its long-term appreciation has vastly outpaced that of gold since its inception. It has demonstrated relatively low correlation with gold since its creation, averaging 0.14 since institutional adoption was catalyzed when futures trading launched on several exchanges at the end of 2017.

Since its inception, Bitcoin has largely been viewed as a speculative asset and a proxy for the development of cryptocurrency technologies. Despite similarities in both assets, the volatility inherent in Bitcoin contrasts sharply with the stability of gold. Touted as a modern digital alternative to gold, its decentralized nature and limited supply make it attractive to investors looking for an uncorrelated asset with the market which offers high growth potential.

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What is a Safe-Haven Asset?

Safe-haven assets are investments expected to maintain or increase value during market upheaval, providing protection against volatility. Characteristics such as low correlations with the broader market, limited supply with high liquidity, and stability define safe-haven assets. Their effectiveness varies depending on the nature of market turbulence, requiring a flexible approach to portfolio construction to enhance diversification and reduce overall volatility.    

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A shelter for value during turbulent times, gold is what investors tend to seek for safety and stability to preserve capital in a less volatile asset. Gold has demonstrated resilience during recessions, particularly when inflation was rampant, as evidenced in the 1970s, a decade marked by stagflation where gold reached unprecedented highs by 1980 (see Figure 1). In environments where inflation has been controlled, gold tends to follow a steadier positive trajectory, as seen during the Global Financial Crisis and the early stages of the COVID-19 pandemic. 

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Bitcoin's historical performance during recessionary conditions presents a contrasting picture compared to gold. During the onset of the COVID-19 pandemic in early 2020, bitcoin fell sharply, declining by 40% in a single day. This reaction mirrored the broader market sell-off as investors shunned risk assets.

Economic recessions are not the only type of turbulence that markets need to endure. Using the Caldara and Iacoviello Geopolitical Risk (GPR) Index, we are able identify historical periods of elevated war-related geopolitical risk. The index figure is directly related to the number of war-related articles across a range of publications. Interestingly, during specific instances of geopolitical tension, Bitcoin has shown a tendency to decouple from traditional risk assets, hinting at a potential role as a haven asset.

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Supply and Liquidity

Bitcoin’s supply is fundamentally limited to 21 million coins, a scarcity mechanism that is further reinforced by halving events that periodically reduce the rate at which new coins can be mined. Its supply is perfectly inelastic as miners may come and go based on profitability, but the total supply rate remains constant as long as the network functions.

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This contrasts with gold, whose supply is relatively elastic, as miners are incentivized to produce with improving economics. Given the lag between the ability for a company to raise capital and start production, this supply elasticity is more prominent in the medium to long-term when investors are more confident in structural shifts within the market.

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Cross-Asset Correlations

Gold has historically maintained a negative correlation with risk assets, making it an attractive hedge during market downturns. That correlation has been turning positive as of late. Bitcoin, while initially exhibiting low correlation, has shown increased correlation with equities in recent years, especially during liquidity-driven bull and bear markets.

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Demand Dynamics & Institutional Adoption

Gold continues to play a pivotal role in global financial markets, primarily driven by its acceptance as a key component of monetary reserves by central banks. According to the World Gold Council, central bank additions and investment demand significantly contributed to gold's demand in 2024, with investment demand alone surging by 25% year-over-year due to strong ETF inflows. Central Bank gold additions were reported by the WGC at over 1000t for the third year in a row by the WGC. We note that this data is significantly higher than the 293t addition reported by the IMF, as WGC data is comprised estimated unreported gold buying by central banks.

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Bitcoin’s demand dynamics are being shaped by the increasing acceptance of Bitcoin by individuals, corporates, and some governments. This adoption is influenced by the regulatory environment across different jurisdictions, with positive clarity often boosting investor confidence while restrictive measures pose potential risk to price stability.

Institutional interest in Bitcoin is evident, with institutions holding approximately 21% of the total mined Bitcoin. Notably, ETFs and public companies are the largest institutional holders, underscoring the asset's integration into mainstream financial markets. Year-to-date inflows into the top three Bitcoin ETFs (IBIT, FBTC, GBTC) have reached $12.5 billion, indicating strong institutional appetite. Contrary to concerns about Bitcoin's impact on gold demand, the top three gold-backed ETFs (GLD, IAU, GLDM) have collectively attracted $16.6 billion in inflows, demonstrating sustained interest in both assets.

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MicroStrategy stands out among public companies as the predominant holder of Bitcoin, with a substantial balance of 580,250 BTC at the end of May. This year, the company successfully secured $18.9 billion in capital and launched two new at-the-market (ATM) equity programs, each valued at $21 billion. MicroStrategy, evidently, has market approval to sustain its strategy of raising equity for further Bitcoin acquisition, as its market cap trades at over a 50% premium to its Bitcoin holdings' fair market value, and the firm is lacking significant business operations outside of cryptocurrency.

FactSet Ownership data highlights pension and sovereign asset managers are collectively increasing their positions in MicroStrategy, adding leveraged Bitcoin exposure to their portfolios. Notably, when examining the ownership data for the top three Bitcoin ETFs by AUM (IBIT, FBTC, GBTC), public and sovereign asset managers are not present. This absence may stem from the fact that digital assets have yet to be explicitly incorporated into the investment policy statements of these institutions. Since, legally, MicroStrategy is a publicly traded software company, it is more likely to align with traditional investment policy statements.

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While signs continue to point positively for Bitcoin’s adoption and implied overall value, ultimately being a proxy for blockchain technology presents a dual-edged sword. Internal protocol improvements that bolster scalability and expand functionality act as positive catalysts for its perceived network value. Simultaneously, external technological leaps, particularly the maturation of quantum computing capable of cracking its encryption, represent a significant but distant obsolescence risk. This highlights the speculative nature of this frontier technology that will remain present even as adoption grows. 

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To follow the space more closely, review FactSet’s Weekly Cryptocurrency Tracker, published within the workstation.

Conclusion

While Bitcoin's performance during crises and growing institutional adoption hint at an evolving digital safe-haven status, its primary value currently appears to lie more in its disruptive growth capacity rather than as a direct substitute for gold's traditional protective qualities.

In conclusion, integrating both gold and bitcoin can potentially enhance portfolio diversification due to their low correlations with traditional assets, though they serve distinct roles: Gold offers established stability, and Bitcoin provides exposure to technological innovation and high growth potential.

The Databook supporting the figures presented here can be found in the FactSet Workstation under the contributor “FactSet Deep Sector Insights.”

 

This blog post is for informational purposes only. The information contained in this blog post is not legal, tax, or investment advice. FactSet does not endorse or recommend any investments and assumes no liability for any consequence relating directly or indirectly to any action or inaction taken based on the information contained in this article.

Banu Nadarajah

Research Analyst and Product Manager, Deep Sector Mining & Metals

Mr. Banu Nadarajah is a Research Analyst and Product Manager for FactSet’s Deep Sector Mining & Metals team, based out of Toronto, Canada. He focuses on enhancing the Deep Sector data offerings for Metals & Mining and publishes thematic research reports relevant to the sector. Before joining FactSet in 2024, Mr. Nadarajah was nominated as a TopGun analyst within the Metals & Mining sector whilst working as a sell-side equity research associate at a major Canadian bank. He has over a decade of experience across various finance roles in the mining industry, including sell-side equity research, corporate finance at a publicly listed mining company, and performing audits for publicly listed mining companies with a Big 4 accounting firm. Mr. Nadarajah is a Chartered Professional Accountant and holds a Bachelor of Commerce from York University.

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The information contained in this article is not investment advice. FactSet does not endorse or recommend any investments and assumes no liability for any consequence relating directly or indirectly to any action or inaction taken based on the information contained in this article.