Gold's traditional role as a store of wealth has been usurped by contemporary art and apartments in cities such as New York and London, said Laurence Fink, head of the world's biggest asset manager.
"Historically, gold was a great instrument for storing of wealth," the chairman of BlackRock Inc. said at a conference in Singapore on Tuesday. "Gold has lost its luster, and there's other mechanisms in which you can store wealth that are inflation-adjusted."
Over the centuries, bullion traditionally lured demand as a protection of wealth during crises, including conflicts and periods of inflation. Prices posted the first back-to-back annual drop last year since 2000 as investor holdings in exchange-traded products contracted, global equities rallied and the dollar climbed on prospects for higher U.S. interest rates. Since peaking in 2011, it's dropped about 38 percent.
"The two greatest stores of wealth internationally today is contemporary art ... and I don't mean that as a joke, I mean that as a serious asset class," Fink said. "And two, the other store of wealth today is apartments in Manhattan, apartments in Vancouver, in London."
Bullion has risen about 1.2 percent this year after losing 1.4 percent in 2014 and tumbling 28 percent in 2013.
Holdings in gold-backed ETFs totaled 1,621.7 metric tons as of April 20, 1.5 percent bigger this year after contracting 9.3 percent in 2014, according to data compiled by Bloomberg. The funds trade like shares, enabling investors to own bullion without taking physical delivery of it.
"The advent of ETFs for gold made it much easier to own gold, and it really democratizes gold," Fink said at the 2015 Credit Suisse Megatrends conference. "I don't believe people believe gold is a great store of wealth today."
The median sale price for existing condos in Manhattan jumped to a six-year high of $1.3 million in the first quarter, driven up by buyers seeking alternatives to out-of-reach new developments, according to Corcoran Group, a brokerage. In the U.K., asking prices for property climbed to a record in April as values in London rose 2.5 percent, Rightmove PLC said last week.
"It's become much more accessible for global families worldwide to store wealth outside their country," Fink said. "And they don't have to own gold."
Information for this article was contributed by Colin Keatinge of Bloomberg News.
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