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Gold will hit new highs next year, but investors looking for currency alternatives as global debt swells should look to Bitcoin, according to a $ 7.5 billion hedge fund.
Both are likely to recover even as the Federal Reserve prepares to cut back on asset purchases, said Troy Gayeski, co-chief investment officer and senior portfolio manager at SkyBridge Capital. The two are frequently compared by investors, with former Treasury Secretary Lawrence Summers saying cryptocurrencies could remain a feature of global markets as something akin to digital gold.
We were going to stick with Bitcoin and crypto because we just think there are more benefits, Gayeski said in a phone interview last week. While there is more volatility, you will be capturing a little more juice than you will in the gold of this same phenomenon, he added. Investors are following comments from the US central bank as inflation rises and policymakers move closer to cutting back on massive asset purchases. which saved the economy from the turmoil caused by the pandemic. Monetary support lifted the Fed’s balance sheet to a record high, while heavy budget spending inflated public debt. Both can present a potential risk to dollar value, potentially browning the appeal of alternatives.
All the alternatives to fiat money – all of which have undergone fairly recent substantial corrections – are now in a much better position to deal with this possible slowdown and gradual slowdown in money supply growth than they were when they were ‘they were reaching higher peaks after higher peaks, Gayeski said.
Bloomberg Bitcoin and gold have both seen substantial swings this year, which took place amid a debate over whether the cryptocurrency was diverting demand for bullion. The digital token hit a record high of nearly $ 65,000 in April, before plunging. It lasted around $ 36,000. Gold, meanwhile, almost slipped into a bearish market in March, but reversed the trend to erase losses since the start of the year. Major Wall Street banks are divided over the relative merits of the pair – Citigroup Inc. said gold is losing its luster to cryptocurrencies, while Goldman Sachs Group Inc. argued that both assets can coexist. Tesla Inc. boss Elon Musk, whose tweets rocked Bitcoin prices this year, said in May that he supported cryptocurrencies over fiat or paper currencies.
Bullion, which hit a record high above $ 2,075 an ounce last year, has now set a low, according to Gayeski. Much of the concern over the tapering talks has been taken off the market, and even when this is announced, the Fed will not start slowing the pace of its purchases until 2022, he said.
Going forward, the likelihood of gold continuing to trend up is quite high, hitting new highs in the next year or so, he said.
Even though signs of recovery are mounting, the Fed is still buying $ 120 billion in treasury and mortgage-backed securities per month, and its balance sheet has jumped to $ 8 trillion, or about a third of the proceeds. gross interior. Discussions of reducing this support – which has the potential to raise Treasury yields and the dollar, tarnishing gold’s appeal – are drawing closer.
SkyBridge, a fund of funds manager, has a small exposure to a gold miner that relies on a continuous rise in gold prices. His main exposures are to US cash flow strategies backed by tangible assets, distressed corporate loans and convertible bond arbitrage, among others. The company’s Bitcoin fund is up 51.2% since its inception last December through June 1.
SkyBridge founder Anthony Scaramucci has partnered with First Trust Advisors on an exchange-traded fund that plans to buy and sell Bitcoin, and Gayeski expects the Securities and Exchange Commission to approve the product. ‘by the fourth quarter of 2021 or the first quarter of next year. .
The only reason we exist professionally is to find interesting ways to generate attractive uncorrelated returns that also have an attractive risk / reward profile, Gayeski said. The mix of strategies in our larger portfolio is amplified by a small but significant position in alternatives to fiat currencies like Bitcoin.
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