Kristoffer Inton: With their meteoric price rises in 2017, cryptocurrencies garnered the attention of even the most unsophisticated investors.
Amid the growing hype, some even floated the idea that cryptocurrency could one day replace gold as one of the world's most widely accepted investment assets.
If cryptocurrency were to displace gold's investment case, the implications for gold prices would be devastating. 40% of gold demand relates to investment, so a shift in investment from gold to cryptocurrency would be a seismic shock.
In order to assess the threat, we've created a framework to grade any asset class's viability as a safe haven by focusing on liquidity, functional purpose, scarcity of supply, future demand certainty, and permanence. Through this framework, we conclude that cryptocurrency does not and will not challenge gold as a safe-haven asset class.
Accordingly, we see some value across our gold coverage, with Goldcorp standing out as a unique long opportunity. Trading nearly 40% below our fair value estimate, we think the market is underestimating Goldcorp's 20/20/20 growth plan. The plan aims to achieve a 20% gold production increase, a 20% gold reserves increase, and a 20% all-in sustaining cost decrease by 2021. Because the improvement plan mainly involves brownfield projects at existing mines rather than greenfield developments, we see the targets as achievable.