Paul Tudor Jones is super bullish about Bitcoin right now and could give crypto the same 5% weight as gold, commodities and cash.
Two years ago this month, the billionaire hedge fund manager said: Gold was his favorite trade in the next 12 to 24 months due to geopolitical disruptions, among other things. The yellow metal “has it all,” he told Bloomberg.
It was a good call. Over the next 12 months, the price of gold rose from around $ 1,330 an ounce to $ 1,730, finally reaching its all-time high of $ 2,073 in August 2020 – a 55% increase since the day Jones announced its uptrends.
This week he made a similar phone call in response to soaring inflation saying he was going all in not just gold, but also crypto and commodities when the Federal Reserve refuses to intervene and curb rising consumer prices. (For the record, the Fed did just that and kept rates at all-time lows for now.)
“If [the Fed governors]say, ‘We are on the right track, things are good’, then I would just go into the inflation deals. I would probably buy commodities, buy crypto, buy gold, ”Jones told CNBC.
He added that he wanted “5% in gold, 5% in bitcoin, 5% in cash, 5% in commodities”.
Jones’ comments come just weeks after multi-billion dollar hedge fund guru Ray Dalio surprised investors by saying he would would rather own Bitcoin than government bonds. Investing in bonds has become “stupid” as the yields are currently below the inflation rate.
Like Jones, Dalio is traditionally a fan of gold, and on Bridgewater’s most recent filing, his fund had a $ 277 million position in SPDR Gold Shares (GLD) and a $ 143 million position in iShares Gold Trust (IAU). The fund also held relatively small positions in a number of companies involved in precious metals mining, including Barrick Gold, Newmont, Agnico-Eagle Mines and Wheaton Precious Metals.
With inflation soaring, investors may not be able to afford to avoid gold and bitcoin
I think both Paul Tudor Jones and Ray Dalio are right to allocate funds for gold as well as its digital cousin Bitcoin. Some investors try to make it an either-or debate, but in general I believe that there is enough room in most portfolios for both assets, let alone exposure to commodities.
I’ll show you why in a moment, but right now there shouldn’t be a question that inflation is here. temporarily or not. A basket of commodities, including gold, is close, beating its all-time high in 2011 as scarcity, labor shortages, and a growing backlog drive prices for everything from aluminum to wheat.
As a result, the prices of finished goods and services received from producers rose faster than ever in the last month. The final demand index rose 6.6% in May, the largest increase since 12-month data collection began in late 2010.
So looking for a haven makes a lot of sense to me at this time. Stocks have held off higher inflation so far, but it’s important to recognize that rising consumer prices, regardless of Fed action, are often a self-fulfilling prophecy. Many investors may not be able to afford to avoid gold and bitcoin.
Gold and crypto beat tech stocks
While inflation wouldn’t be all that worrisome, gold and bitcoin have done well enough over the past few months to justify adding them to your portfolio.
According to a recent report by Bloomberg commodities strategist Mike McGlone, a simple 80/20 index for metals and cryptos has beaten the tech-heavy Nasdaq 100 since August 2017, when the Bloomberg Galaxy Crypto Index was launched.
Combined with a 20% weighting with the Bloomberg All Metals Index, Mike’s Metals-Cryptos 80/20 index was very competitive and ended the period higher than the Nasdaq-100. And that with lower volatility.
“Volatility is relative, and when combined with gold, Bitcoin was less risky than the S&P 500, which was supposed to keep the quasi-currency outperforming in 2021,” writes Mike.
That’s not to say that Bitcoin is risk-free. Far from it. But if used judiciously with gold, it could help protect investors from potentially rocky market volatility triggered by unexpectedly high inflation.
Originally released by US funds, 6/17/21
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The Commodity Research Bureau (CRB) index serves as a representative indicator for today’s global commodity markets. The CRB measures the aggregated price direction of various commodity sectors and is designed to isolate and reveal directional price movements throughout commodity trading. The final demand producer price index (PMI) measures the change in prices domestic producers receive for goods, services and construction for private consumption, investment, government and export. The Nasdaq 100 Index is a basket of the 100 largest and most actively traded US companies listed on the Nasdaq Stock Exchange. Bloomberg Galaxy Crypto Index (BGCI) is designed to measure the performance of the largest cryptocurrencies traded in USD. The S&P 500 is a stock market index that tracks the stocks of 500 US large capitalization companies.
The stocks can change daily. The stocks are shown at the end of the last quarter. The following securities mentioned in the article were held by one or more accounts managed by US Global Investors as of March 31, 2021: Barrick Gold Corp., Newmont Corp., Wheaton Precious Metals Corp.