Bitcoin “Is A Bubble”… But Gold Is Money Says World’s Biggest Hedge Fund Manager
The comments above & below is an edited and abridged synopsis of an article by Mark O’Byrne
The manager of the world’s biggest hedge fund, Ray Dalio, has a preference for gold over Bitcoin.
Dalio, of $160-billion Bridgewater Associates, labeled Bitcoin a ‘bubble.’ He believes the 300% increase in the most popular cryptocurrency is down to speculation over its expected price rise, as opposed to confidence in its future role as a currency.
Dalio’s comments come after JPMorgan’s Jamie Dimon said Bitcoin “is worse than tulip bulbs” and after Professor Robert Shiller said it was the best example of “a bubble right now.”
Bitcoin’s strong performance this year has prompted many experienced investors and economists to call it out for what it seems to be—a bubble. For Dalio, Bitcoin is too speculative to be an effective store of wealth.
Dalio says that gold is not volatile. For hundreds of years it has performed consistently. It has rarely surprised anyone, nor has the gold market been accused of any kind of irrational exuberance, making gold an effective store of value.
You are unlikely to check your gold savings account from one day to the next and find the price down by 40% in less than a week. This is not the case for Bitcoin.
Dalio said clients should move 5% to 10% of their capital to gold as a hedge to the two biggest risk events that are unfolding: North Korea and the debt ceiling crisis.
Then there are the other disasters-in-waiting: Washington’s inability to get anything done, central banks’ monetary policies for the last decade and the most bubbly of stock markets, to name a few.
Bitcoin too is unsustainable as a currency and store of value. Given the unknowns, it is important to diversify and anchor savings in this uncertain and volatile world.