Christopher Wood, Global Head of Equity at Jefferies, a global financial services firm, says the company would limit exposure to gold in favour of bitcoin. He adds that there are proposals to raise the crypto portion of Jefferies' long-running global portfolio for the US dollar-denominated pension fund if and when bitcoin values slip from current levels. As a part of this decision, 5% of the fund will now be made up of bitcoin.
The Case for Bitcoin
Before making the decision, Jefferies allocated funds as follows: 50% towards (now 45%) physical gold bullion, 30% to Asia ex-Japan equities, and 20% to unhedged gold mining stocks.
Writing in his weekly “Greed and Fear” note to investors, the global head of equity explains the multinational investment bank’s rationale for choosing bitcoin over gold at this stage. Wood says:
The 50 percent weight in physical gold bullion in the portfolio will be reduced for the first time in several years by five percentage points with the money invested in bitcoin.
If there is a big drawdown in bitcoin from the current level, after the historic breakout above the $20,000 level, the intention will be to add to this position.
Global Equity Head at Jefferies Says the Investment Bank Will Buy Bitcoin and Reduce Exposure to Gold
Bitcoin, which recently surged past the $24,000 mark, has been rising since its infamous crash in March. Since Jan. 1, BTC has grown by more than 200% buoyed by rising institutional investors’ interest in the most dominant crypto.
Global Equity Head at Jefferies Says the Investment Bank Will Buy Bitcoin and Reduce Exposure to Gold
Gold Losing and Bitcoin Gaining
Despite Jefferies’ decision to opt for bitcoin at the expense of gold, Wood remains bullish on the precious metal. He says:
The yellow metal should rally again if the Fed stays dovish in the face of the dramatic cyclical recovery that is coming on the other side of the pandemic, in line with greed & fear’s base case.
Meanwhile, the decision by Jefferies to trim the gold portion of its long-standing pension fund seems to undercut Peter Schiff's reluctance to encourage retail investors to substitute gold with BTC.
In his latest comments, the gold bug and the cryptocurrency foe claimed that big corporations were not purchasing bitcoin using gold sales revenues.
Schiff's new remarks echo JP Morgan's strategists' expectations that retail buyers would divest some of their gold reserves and use the funds to fund bitcoin purchases.
