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Paul Tudor Jones is currently very bullish on Bitcoin and could give crypto the same 5% weighting as gold, commodities and cash.
Two years ago this month, the billionaire hedge fund manager declared gold to be his preferred trade over the next 12-24 months due to geopolitical turmoil, among other factors. 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, and in August 2020, it finally hit its all-time high of $ 2,073, an increase of 55 % since the day Jones announced his optimism.
This week, he made a similar appeal in response to soaring inflation, saying he would go all out not only on gold but also on crypto and commodities if the Federal Reserve refuses to step in and control the rise in consumer prices. (For the record, that’s exactly what the Fed did, leaving rates at all-time lows for now.)
Yes [the Fed governors]say, were on the way, things are going well, so i would just go full out on inflation trades. I would probably buy commodities, crypto, gold, Jones told CNBC.
He added that he wanted 5% in gold, 5% in Bitcoin, 5% in cash, 5% in commodities.
Joness’s comments come just weeks after billionaire hedge fund guru Ray Dalio surprised investors by saying he owns more Bitcoin than government bonds.
Like Jones, Dalio is traditionally a fan of gold, and at the time of Bridgewaters’ last 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 the mining of precious metals, including Barrick Gold, Newmont, Agnico-Eagle Mines and Wheaton Precious Metals.
With inflation on the rise, investors may not be able to afford to avoid gold and bitcoin
I think Paul Tudor Jones and Ray Dalio are correct in allocating funds to gold as well as its digital cousin Bitcoin. Some investors try to make this a debate, but in general I think there is enough room in most portfolios for both assets, let alone the exposure to commodities.
I’ll show you why in a moment, but for now it shouldn’t be a question of inflation being there, transient or not. A basket of commodities, including gold, is on the verge of touching and breaking its 2011 all-time high as a shortage. , labor shortages and a growing backlog of orders are pushing up the prices of everything from aluminum to wheat.
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As a result, prices received by producers for finished goods and services increased at the fastest rate ever recorded last month. The final demand index rose 6.6% in May, the largest increase on record since 12-month data collection began in late 2010.
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Seeking refuge therefore makes a lot of sense to me at the moment. Stocks have so far ignored higher inflation, but it’s important to recognize that rising consumer prices are often a self-fulfilling prophecy, regardless of the Fed’s actions. Many investors may not be able to afford to avoid gold and Bitcoin.
Gold and Crypto Shares Beat Tech
While inflation was not such a concern, gold and Bitcoin have performed well enough in recent months to warrant having them in your wallet.
In fact, according to a recent report by Bloomberg commodities strategist Mike McGlone, a simple 80/20 index of metals and cryptos has beaten the tech-heavy Nasdaq-100 since August 2017, when the Bloomberg Galaxy Crypto Index broke. been launched.
Combined with a 20% weighting with the Bloomberg All Metals Index, the Mikes Metals-Cryptos 80/20 Index was very competitive and ended the period above the Nasdaq-100. In addition, it did so with lower volatility.
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Volatility is relative, and when combined with gold, Bitcoin has been less risky than the S&P 500, which should support the outperformance of quasi-currencies in 2021, writes Mike.
This is not to say that Bitcoin is risk free. Far from there. But when used cautiously with gold, it could help protect investors from potentially unstable market volatility triggered by higher than expected inflation.
Originally posted by US Funds, 6/17/21
All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be suitable for all investors. By clicking on the link (s) above, you will be redirected to one or more third party websites. US Global Investors does not endorse all of the information provided by this site (s) and is not responsible for its / their content. Beta is a measure of the volatility, or systematic risk, of a security or portfolio relative to the market as a whole.
The Commodity Research Bureau (CRB) index acts as a representative indicator of today’s global commodity markets. The CRB measures the aggregate price direction of various commodity sectors and is designed to isolate and reveal the directional movement of prices across commodity trading. The Producer Price Index (PMI) for final demand measures the change in prices received by domestic producers for goods, services and construction sold for personal consumption, capital investment, government and l ‘export. The Nasdaq 100 Index is a basket of the 100 largest and most actively traded US companies 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 large-cap US companies.
Holdings may change daily. Holdings are reported at the end of the most recent quarter. The following securities mentioned in the article were held by one or more accounts managed by US Global Investors as of 03/31/2021: Barrick Gold Corp., Newmont Corp., Wheaton Precious Metals Corp.
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