Fidelity's Director Thinks of Bitcoin as 'Exponential Gold'
Jurrien Timmer, the director of global macro at financial services giant Fidelity, recently expressed his outlook on bitcoin, referring to it as "exponential gold." In a series of social media posts on platform X, Timmer shared his thoughts on Wednesday, stating:
"In my view, bitcoin is a commodity currency that aims to be a store of value and a hedge against monetary debasement. I consider it as exponential gold."
Timmer further explained that historically, during periods of high inflation, negative real rates, or excessive money supply growth, gold tends to shine and gain market share relative to GDP. He specifically mentioned the 1970s and 2000s as notable examples.
While acknowledging that gold is considered money, Timmer argued that it is too deflationary and cumbersome to be used as a medium of exchange. Consequently, investors primarily view gold as a store of value. This is one of the reasons why bitcoin is often compared to gold.
Bitcoin's Correlation and Portfolio Placement
On Friday, Timmer continued the discussion on bitcoin, focusing on its correlation with other assets and its potential placement in investment portfolios. He stated:
"Based on monthly data as of September, bitcoin still shows a positive correlation to equities, although less so compared to many other assets. As for its position in a 60/40 portfolio, I believe it belongs in the alternative investments (alts) category. While bitcoin's correlation with the S&P 500 is becoming less positive, it remains uncorrelated with many other assets."
Timmer also highlighted that bitcoin is negatively correlated with the U.S. dollar and T-bills. However, he noted that it is surprising that bitcoin is uncorrelated with gold. While this questions the notion that bitcoin and gold play for the same team, it is positive because it allows for diversification among alternative investments. Timmer concluded by saying, "If bitcoin and gold play on the same team but in different games, then that's not too bad."
What Does Fidelity's Director's Perspective Mean?
Fidelity's director of global macro, Jurrien Timmer, believes that bitcoin has the potential to become a store of value and a hedge against monetary debasement, similar to gold. His view is that bitcoin acts as "exponential gold" due to its ability to perform well in periods of inflation and excessive money supply growth.
Regarding its correlation with other assets, Timmer recognizes that bitcoin still shows a positive correlation with equities but is less correlated compared to many other assets. He suggests that bitcoin should be considered as an alternative investment within a diversified portfolio.
Timmer's observation that bitcoin is uncorrelated with gold raises questions about their relationship. However, he sees this as a positive aspect, as it allows for greater diversification among alternative investments.
As opinions on bitcoin and gold continue to evolve, it is important to consider various perspectives. What are your thoughts on Fidelity's director of global macro's statements about bitcoin and gold? Share your views in the comments section below.
Frequently Asked Questions
How much of your portfolio should be in precious metals?
First, let's define precious metals to answer the question. Precious metals refer to elements with a very high value relative other commodities. This makes them highly valuable for both investment and trading. Today, gold is the most commonly traded precious metal.
However, many other types of precious metals exist, including silver and platinum. The price for gold is subject to fluctuations, but stays relatively stable in times of economic turmoil. It is also unaffected significantly by inflation and Deflation.
All precious metals prices tend to rise with the overall market. That said, they do not always move in lockstep with each other. If the economy is struggling, the gold price tends to rise, while the prices for other precious metals tends to fall. This is because investors expect lower interest rates, making bonds less attractive investments.
When the economy is healthy, however, the opposite effect occurs. Investors are more inclined to invest in safe assets, such as Treasury Bonds, and they will not demand precious metals. Since these are scarce, they become more expensive and decrease in value.
Diversifying across precious metals is a great way to maximize your investment returns. Because precious metals prices are subject to fluctuations, it is best to invest across multiple precious metal types, rather than focusing on one.
How Much of Your IRA Should Include Precious Metals?
It's important to understand that precious metals aren't only for wealthy people. It doesn't matter how rich you are to invest in precious metals. In fact, there are many ways to make money from gold and silver investments without spending much money.
You may consider buying physical coins such as bullion bars or rounds. Shares in precious metals-producing companies could be an option. Another option is to make use of the IRA rollover programs offered by your retirement plan provider.
Regardless of your choice, you'll still benefit from owning precious metals. Although they aren’t stocks, they offer the possibility for long-term gains.
They also tend to appreciate over time, unlike traditional investments. If you decide to make a sale of your investment in the future, you will likely realize more profit than with traditional investments.
Can the government seize your gold?
The government cannot take your gold because you own it. You earned it through hard work. It belongs exclusively to you. This rule could be broken by exceptions. You can lose your gold if you have been convicted for fraud against the federal governments. If you owe taxes, your precious metals could be taken away. You can keep your gold even if your taxes are not paid.
What precious metals can you invest in for retirement?
It is gold and silver that are the best precious metal investment. They're both easy to buy and sell and have been around forever. You should add them to your portfolio if you are looking to diversify.
Gold: One of the oldest forms of currency, gold, is one of mankind's most valuable. It's also very safe and stable. Because of this, it's considered a good way to preserve wealth during times of uncertainty.
Silver: Silver is a popular investment choice. This is a great choice for people who want to avoid volatility. Silver tends to move up, not down, unlike gold.
Platinum: A new form of precious metal, platinum is growing in popularity. Like gold and silver, it's very durable and resistant to corrosion. It is, however, more expensive than its competitors.
Rhodium: Rhodium is used in catalytic converters. It is also used to make jewelry. It is also quite affordable compared with other types of precious metals.
Palladium (or Palladium): Palladium can be compared to platinum, but is much more common. It's also more affordable. For these reasons, it's become a favorite among investors looking to add precious metals to their portfolios.
Should You Get Gold?
In the past, gold was considered a haven for investors during economic turmoil. Many people are now turning their backs on traditional investments like stocks and bonds, and instead look to precious metals like Gold.
While gold prices have been rising in recent years they are still low relative to other commodities, such as silver and oil.
Some experts believe that this could change very soon. Experts believe that gold prices could skyrocket in the face of another global financial crisis.
They also note that gold is increasingly popular because of its perceived intrinsic value and potential return.
If you are considering investing in gold, here are some things that you need to keep in mind.
- Consider whether you will actually need the money that you are saving for retirement. You can save money for retirement even if you don't invest in gold. The added protection that gold provides when you retire is a good option.
- You should also be aware of what you are getting into before you buy gold. There are many types of gold IRA accounts. Each account offers different levels of security and flexibility.
- Don't forget that gold does not offer the same safety level as a bank accounts. Your gold coins may be lost and you might never get them back.
If you are thinking of buying gold, do your research. Make sure to protect any gold you already own.
Is buying gold a good option for retirement planning?
While buying gold as an investment may seem unattractive at first glance it becomes worth the effort when you consider how much gold is consumed worldwide each year.
Physical bullion is the most popular method of investing in gold. However, there are many other ways to invest in gold. It's best to thoroughly research all options before you make a decision.
For example, purchasing shares of companies that extract gold or mining equipment might be a better option if you aren't looking for a safe place to store your wealth. If you require cash flow, gold stocks can work well.
ETFs are an exchange-traded investment that allows you to gain exposure to the market for gold. You hold gold-related securities and not actual gold. These ETFs typically include stocks from gold miners, precious metallics refiners, commodity trading companies, and other commodities.
- Indeed, several financial advisers interviewed for this article suggest you invest 5 to 15 percent of your portfolio in gold, just in case. (aarp.org)
- This is a 15% margin that has shown no stable direction of growth but fluctuates seemingly at random. (smartasset.com)
- (Basically, if your GDP grows by 2%, you need miners to dig 2% more gold out of the ground every year to keep prices steady.) (smartasset.com)
- Instead, the economy improved, stocks rebounded, and gold plunged, losing 28 percent of its value in 2013. (aarp.org)
- If you accidentally make an improper transaction, the IRS will disallow it and count it as a withdrawal, so you would owe income tax on the item's value and, if you are younger than 59 ½, an additional 10% early withdrawal penalty. (forbes.com)