Gold holds firm as crypto gains ground

New Straits Times

3 days ago

KUALA LUMPUR: As inflationary pressures, rising living costs, and a weaker ringgit weigh on households, more Malaysians are diversifying their portfolios with gold and cryptocurrencies, signalling a gradual shift in investor behaviour toward alternative assets
Economists say the shift reflects both structural and demographic factors. Gold continues to be the more established and trusted option, especially among retirees and conservative investors. While millennials - armed with digital literacy and a higher risk appetite - are more inclined toward cryptocurrencies, it is the middle- and upper-income groups, with their larger savings pools, that are ultimately driving overall investment flows.
They agree that while alternative assets may help diversify portfolios, gold remains a safer haven than volatile cryptocurrencies. For Malaysians balancing inflation worries with wealth preservation, the choice of hedge often depends as much on risk appetite as on market cycles.
Gold has long been viewed as a hedge, not only against inflation but also broader uncertainties, including geopolitical tensions, de-dollarisation, climate change and trade wars, said Sunway University economics professor Dr Yeah Kim Leng.
"Cryptocurrencies such as Bitcoin and, more recently, stablecoins that are promoted by governments such as the US are fast emerging as alternative assets. Although highly speculative and characterised by volatile prices, these digital financial assets are also seen by savvy investors as a shield against government abuse of fiat money through uncontrolled money and debt creation," he said.
However, Dr Yeah cautioned that cryptocurrencies carry significant risks. Unregulated markets are vulnerable to fraud, manipulation and cyberattacks. Even under regulation, crypto assets remain prone to speculative bubbles and crashes, rendering these assets inherently more volatile than traditional assets such as precious metals.
If the market size grows large, a collapse could destroy wealth on a scale that threatens financial stability, he told Business Times.
Macroeconomic conditions remain a key driver. According to Dr Yeah, factors such as a softening ringgit, rising interest rate volatility, and geopolitical shocks amplify the push toward asset diversification. "The greater the macro risks, the stronger the drive towards diversification into alternative assets, either to enhance capital preservation or achieve the expected returns in line with the risk level while protecting the performance of the investment portfolio in the event that any of the risks materialises," he noted.
Beyond financial returns, some investors are weighing environmental and ethical considerations. "Astute and well-informed investors will consider the likelihood the specific ESG, ethical or environmental risks of crypto mining versus gold mining will crystallise and impact their prices and valuation. They will have to draw upon the environmental impact assessment by experts and weigh the likelihood of occurrence and severity of the impact to make an informed decision," he said.
Regulatory authorities, meanwhile, have taken a light-touch approach. Apart from promoting financial literacy and ensuring sound markets, Bank Negara Malaysia and other agencies generally refrain from intervening in asset preference shifts. "The shift toward gold and digital assets is driven by investors' preference and the emergence of new asset classes in the rapidly changing economic, financial and investment landscape," Dr Yeah said.
Echoing the view, Dr Oh Ei Sun, Senior Fellow at the Singapore Institute of International Affairs, said anecdotal evidence suggests crypto investors often see themselves as trendsetters or more forward-looking, while traditionalists still favour gold.
"Conversely, some of the old-fashioned ones would invest in gold. I think more are speculating in the stock markets, with some, as mentioned above, investing in crypto or precious metals. Those investing in crypto are typically more speculative or even gambling-minded. Many knowingly go into crypto-themed money games thinking that they would get lucky while the downlines would suffer," he said.
Dr Oh added that interest in both gold savings accounts and crypto trading platforms tends to spike during bull runs.
"If they spot one, the uptake for such investments would typically increase," he said.
Investors often chase momentum rather than fundamentals, he said, noting that political moves abroad, such as the US administration's tilt toward crypto, can also fuel demand.
On whether the government or Bank Negara Malaysia are taking action or issuing guidance on the growing shift toward gold and digital assets, he said the monetary authorities appear to be cautiously encouraging legitimate investments in cryptocurrencies and digital currencies."
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said Malaysian investors are increasingly turning to gold and cryptocurrencies as alternative asset classes, lured by attractive returns and growing accessibility.
"From my general observation, the demographics are wide-ranging, as people have become more accustomed to technology, where information such as gold and crypto prices is widely available on various platforms. So investors can actually make an informed decision despite the volatility," he said.
With fixed deposit (FD) rates still relatively low, Dr Afzanizam believes digital assets and precious metals are becoming the "go-to" options for those seeking capital preservation.
"I think the risk appetite for Malaysian investors has gone up. Traditional investments such as stocks, bonds and real estate will remain but now people will have more options," he said.
When asked whether investors view both assets as safe havens, he stressed their differing fundamentals.
"Gold and crypto have different characteristics. One is a precious metal that has intrinsic value and at one point it was used as a means to back the value of the US dollar during Bretton Woods in the 1940s until such an arrangement was dismantled in the early 1970s. The other is digital assets, whose sources of return are based on volatility," he explained.
Dr Afzanizam also underscored the need for regulation. "Gold investment is being regulated by the authority, such as Bank Negara, as the products are being offered by the financial institutions. I'm not too sure about crypto."
He added that demand is visible on the ground, with banks and fintech players reporting rising interest in both gold savings accounts and cryptocurrency trading.
"We have been receiving a lot of queries and gold investment is one of the key products that are highly demanded by the customers," he said.
Olive Tree Property Consultants executive director Tan Wee Tiam said the rising popularity of gold and cryptocurrencies in recent years is being driven by high inflation, easier access to digital trading platforms, and the growing need for portfolio diversification.
He noted that sentiment continues to clearly separate the two asset classes. Gold, with centuries of history as a store of value, is still viewed as the ultimate safe haven – particularly in times of economic or geopolitical turmoil. Cryptocurrencies, while increasingly mainstream, are largely seen as speculative instruments whose returns hinge on volatility," Tan said.
This distinction, he added, is reinforced by regulation. Gold investments in Malaysia are well established and tightly regulated, typically offered through banks and financial institutions. Cryptocurrencies, however, remain in a regulatory grey zone – an uncertainty that adds to investor caution.
Although hard data is limited, Tan said anecdotal evidence points to rising demand. Local banks and fintech platforms have reported increased interest in gold savings accounts and crypto trading services, with a noticeable surge in investor queries and inflows since early 2025.
"Cryptocurrency is typically associated with higher risk and is often appealing to investors or entities looking for greater autonomy or less traceability. Regulatory ambiguity only adds to this risk. In contrast, gold is a time-tested asset with well-established regulations, giving investors greater confidence, especially in times of geopolitical or economic instability."
Tan also pointed to macroeconomic headwinds as catalysts for the shift. "While the relationships are complex, elements such as a weakening ringgit, global uncertainties, and shifting interest rates are certainly influencing investors to explore beyond traditional asset classes," he said.