Every bubble and mania has its rock star. Perhaps Bitcoin will fit the bill for this era. I love the technology, and I am sure Central Banks worldwide will eventually enjoy it for their currencies. But I never drank the Bitcoin Kool-Aid as a hedge or long-term investment.
Not that gold has been a rock star in the wake of the recent inflation spike. Perhaps that is further evidence that inflation will be short-lived. But gold is slowly rising – and the Russia / Ukraine situation may have as much to do with it as inflation. The Gold ETF (GLD) had the highest inflows in its history on Friday – nearly $1.5 billion. The fund started in 2004.
Thus far, Bitcoin has dropped in half from its peak and is more correlated to the stock market and “risk-on” assets than “risk-off.” Maybe the adage that the more things change, the more they stay the same still applies.
As always, my preference is to hold the real gold rather than a fund. Someday, there will be an accounting for “paper” gold that may show some shenanigans. In other words, there might be more contracts than gold to back them up. Only time will tell.
A.F. Thornton