In this edition of The Bull & The Bear podcast, I pit gold vs. bitcoin and tell you what I think is the better hedge bet in 2021.
For decades, seasoned investors have used gold as a means to hedge against potential market downturns and inflation.
Gold doesn’t have any credit or default risks; it holds intrinsic value because of its limited supply. If you wanted to protect your portfolio against market downside or a rise in inflation, you held gold in some form.
Today, investors have added a new asset to the list of potential hedges: cryptocurrency (more specifically, bitcoin).
In this episode of The Bull & The Bear, I compare using gold vs. bitcoin as a hedge against a market downturn or a rise in inflation.
Gold vs. Bitcoin: The Better Hedge Bet
Bitcoin is similar to gold as a viable hedge. Bitcoin, like gold, is in limited supply — only 21 million coins are available.
Since most bitcoin is traded against the dollar, if the dollar goes down without a corresponding drop in bitcoin prices, bitcoin value goes up.
But there is downside to bitcoin.
This chart shows just how high the cryptocurrency can rise, but also how far — and how fast — it can fall.
But investors still struggle with whether gold or bitcoin are better safe-haven plays against a market downturn or inflation.
I’m going to tell you in this week’s episode of The Bull & The Bear.
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The Bull & The Bear
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Matt Clark, CMSA®
Research Analyst, Money & Markets
Matt Clark is the research analyst for Money & Markets. He is a certified Capital Markets & Securities Analyst with the Corporate Finance Institute and a contributor to Seeking Alpha. Prior to joining Money & Markets, he was a journalist and editor for 25 years, covering college sports, business and politics.