Gold and bitcoin ETFs to climb amid geo-uncertainty

Two fund management firms have separately issued buoyant outlooks for gold that partly argue geopolitical uncertainty will increase demand for the metal despite the record highs seen in the gold price this year.

ETF issuer WisdomTree found demand for gold – and also for bitcoin – among professional investors, while Schroders argued that gold’s recent correction was a natural event in a multi-year bull market.

According to WisdomTree, professional investors across Europe are increasingly “leaning” on gold’s role as a safehaven owing to geopolitical instability and cybersecurity attacks.

WisdomTree-commissioned research found 92% expected further shocks in the next 12 months and just over half (54%) believed markets had not fully reflected the risks in asset prices.

Further, investors are also increasingly turning to bitcoin as an emerging alternative investment.

Censuswide carried out the research for WisdomTree among 802 professional investors across Europe who collectively manage around €4.3 trillion in assets.

The risks investors believe are most overlooked by markets include cybersecurity and digital infrastructure attacks (25%) – including attacks on financial systems, which could represent systemic risks. Alongside this, the escalation of geopolitical conflicts (23%) includes in the Middle East and risks associated with rising tensions over Taiwan.

In the next 12 months, 43% of investors plan to increase allocations to bitcoin, while 39% plan to increase gold holdings.

Gold and crypto record highs

Gold and bitcoin have reached record highs in 2025, WisdomTree points out. Central bank demand supported gold prices, while bitcoin’s “resilience reflected structural inflows from both retail and institutional investors”.

Looking further ahead, WisdomTree’s base case forecasts suggest bitcoin could rise to $275,000 by 2030, while gold could breach $5,000 per ounce as early as next year and remain above that level over the medium-term.

Nitesh Shah, head of commodities and macroeconomic research, Europe, at WisdomTree, said bitcoin is increasingly seen as a complementary hedge to bond and equity markets, alongside gold, while Pierre Debru, head of research, Europe, at the firm said professional investors are treating gold and bitcoin as complementary assets that are moving from a niche status to become more central to portfolio construction.

“Their contrasting characteristics – gold as a proven stabiliser and bitcoin as a non-sovereign alternative with fixed supply – mean that together they can add resilience without diluting long-term return objectives,” said Debru.

The research found that 28% of the investors had already bought gold, 24% had bought defence or cybersecurity stocks, and 21% had allocated to bitcoin or other cryptocurrencies to hedge against the potential for geopolitical and cybersecurity shocks.

This places gold and crypto at the top of the safe-haven hierarchy, WisdomTree said.

However, fund manager Schroders notes there has been a sharp downturn in the price of bullion and gold equities. On October 21, the gold price fell 5.5%, which was among the biggest single day falls for gold. Gold equities fell around 9%.

 “No valid comparison”

James Luke, senior portfolio manager, gold and commodities at Schroders, said commentators were quick to call the top of the market for gold and suggest a similarity with 2011, where gold peaked in September and began a long decline of over 40%.

“We do not see a valid comparison between now and 2011,” said Luke.

He argued that gold’s “fierce” 30% price increase since late August was part of the reason for the correction. The gold market had been “frothy”, he said, but it does not exhibit signs of a secular drop.

Another factor that affected precious metals in general was a squeeze in the silver price – which is now easing – owing to a lack of availability, and on top of this a lack of US economic data resulting from the US government shutdown beginning October 1 fed uncertainty.

Yet another factor was a temporary pause in gold demand among Indian people who who recently celebrated Diwali.

Schroders said this added up to a natural correction within a multi-year bull market.

Mount Everest of bold bull markets

Luke wrote in a gold market analysis: “We continue to view this bull market as incomparable with prior bull markets in terms of the breadth and depth of potential monetary demand. If, as we see it, this is the ‘Mount Everest’ of gold bull markets, while we are well into the foothills, there is a long climb yet to reach the peak.”

He said that geopolitical trends – including a shift to “multi-polarity” in the order of global powers – and a drift towards fiscal dominance as debts build up in large economies, are unresolved and self-reinforcing megatrends with implications for hedging demand.

Additionally, central banks and investors had not exhausted their capital pools to buy gold as a hedge against risk. As an example, he said official data showed that the People’s Bank of China reserves stand at 7%. “We doubt Chinese official demand is fully spent for various long-term strategic reasons.”

Further, feedback from bullion banks has noted Indian clients paying premiums at levels not seen since the sharp pullback in gold prices during 2013, as well as sharp increase in large bar demand from Japan. In the current market, broad large bar demand has been strong, despite pricing at or near all-time highs.

Luke adds that many investors hold zero allocations to gold. A rapid move to allocations such as 60/20/20 (equities, bonds, gold) or 60/20/10/10 (equities, bonds, alternatives and gold) as proposed by some large institutions would not be feasible in the short run without much higher prices.

“Our conclusion is that without significant change on the geopolitical or fiscal fronts, gold holdings within portfolios … will reach higher levels.”

Access likely through ETFs

Luke further notes that ETF holdings in the West remain below 2020 highs in ounce terms, “even if the nominal value of those has risen rapidly since 2020”.

According to WisdomTree’s survey, cryptocurrencies (29%) and gold (26%) are the two most likely assets to be accessed by professional investors via the ETF/ETP wrapper.

WisdomTree said professional investors are more likely to access gold and crypto via physically backed ETPs because, unlike equities or bonds, direct ownership is complex, and ETPs offer a secure, low cost, transparent, and easily integrated way to hold them in portfolios.