Christopher Wood, the global head of equity at Jefferies, a global financial services firm, says the company will cut its exposure to gold in favor of bitcoin. He adds that there are plans to increase the crypto component of Jefferies’ long global portfolio for U.S. dollar-denominated pension funds if Bitcoin price falls from current levels. As a result of this decision, 5% of the fund will now consist of Bitcoin.
The case for Bitcoin
Before making the decision, Jefferies allocated the funds as follows: 50% for (now 45%) physical gold bullion, 30% for stocks from Asia ex Japan, and 20% for unhedged gold mining stocks. In his weekly “Greed and Fear” note to investors, the global Head of Equity explains the multinational investment bank’s reasons for choosing Bitcoin instead of gold at this stage. Wood says:
The 50 percent weight of the physical gold bars in the portfolio is reduced by five percentage points for the first time in several years when the money is invested in Bitcoin. If Bitcoin drops sharply from its current level after the historical breakout above the USD 20,000 level, this position should be increased.
Bitcoin, which recently crossed the $ 24,000 mark, has risen since its infamous March crash. Since January 1, BTC has grown by more than 200% due to the rising interest of institutional investors in the most dominant crypto.
Loss of gold and profit of bitcoin
Despite Jefferies’ decision to opt for Bitcoin at the expense of gold, Wood remains optimistic about the precious metal. He says:
The yellow metal should bounce back if the Fed remains cautious amid the dramatic cyclical rebound that is taking place on the other side of the pandemic in line with the base case of greed and fear.
Meanwhile, Jefferies’ move to cut the gold component of its long-only pension fund appears to undermine Peter Schiff’s refusal to have institutional investors replace gold with BTC. In his recent remarks, the opponent of Gold Bug and Bitcoin argued that large corporations did not buy Bitcoin with proceeds from gold sales.
Schiff’s latest comments follow predictions by strategists at JP Morgan that institutional investors will sell some of their gold holdings and use the proceeds to fund Bitcoin purchases.
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