(Kitco News) – Larry Fink has turned heads over the past two years by going all-in on Bitcoin, with the BlackRock CEO spearheading his company’s launch of the most successful spot Bitcoin ETF to date. Now, he appears to have turned his back on gold.
In his annual letter to shareholders published Tuesday, while singing the praises of capital markets as a mechanism for wealth creation, Fink shared his views on the original store of value.
“More and more countries recognize the power of American capital markets and want to build their own,” he wrote. “Of course, many countries do have capital markets already. There are something like 80 stock exchanges around the world, everywhere from Kuala Lumpur to Johannesburg. But most of these are rather small, with little investment.”
Fink said that countries like Japan and India “want to give people new places to put their savings,” but he thinks the money is being directed to the wrong places. “Today, in Japan, it’s mostly the bank. In India, it’s often in gold.”
Fink then shared his experience of India’s gold investment market, which has deep historical and cultural roots.
“When I visited India in November, I met policymakers who lamented their fellow citizens’ fondness for gold,” he wrote. “The commodity has underperformed the Indian stock market, proving a subpar investment for individual investors. Nor has investing in gold helped the country’s economy.”
He compared gold investment with purchasing a new house. “When you buy a home, that creates an economic multiplier effect because you need to furnish and repair the house,” Fink said. “Maybe you have a family and fill the house with children. All that generates economic activity. Even when someone puts their money in a bank, there’s a multiplier effect because the bank can use that money to fund a mortgage.”
“But gold? It just sits in a safe,” he said. “It can be a good store of value, but gold doesn’t generate economic growth.”
Fink called this “a small illustration — but a good one — of what countries want to accomplish with robust capital markets. (Or rather, of what they can’t accomplish without them.)”
At the time of writing, it remains unclear whether or not spot Bitcoin ETFs can be filled with children. Perhaps BlackRock’s anticipated Ether ETF will be more family-friendly?
