Christopher Wood, global head of equity at Jefferies, a global financial services firm, says the company will reduce exposure to gold in favor of bitcoin. He added that there are plans to increase the crypto component of Jefferies’ long-only global portfolio for a pension fund denominated on the US dollar if and when the bitcoin price drops from current levels. As a result of this decision, 5% of the fund will now include bitcoin.
The Case for Bitcoin
Prior to making the decision, Jefferies allocated funds as follows: 50% toward (now 45%) physical gold bullion, 30% to pre-Japan Asian equities, and 20% to uninvested gold mining stocks. Writing in his weekly “Greed and Fear” note to investors, the global head of equity explains the international investment bank’s rationale for opting for bitcoin rather than gold at present. 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 being invested in bitcoin. If there is a large pull-down in bitcoin from the current level, after the historical cut above the $ 20,000 level, the intention is to add to this situation.
Bitcoin, which recently surged past the $ 24,000 mark, has been rising since its infamous crash in March. Since January 1, BTC has grown more than 200% boiled by rising institutional investor interest in the dominant crypto.
Losing Gold and Earning Bitcoin
Despite Jefferies’ decision to choose 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 coming the other side of the pandemic, in line with the underlying cause of greed and fear.
Meanwhile, Jefferies’ move to dock the gold component of its long pension fund only seems to undermine Peter Schiff’s denial that institutional investors are replacing gold with BTC. In his recent remarks, the gold bug and bitcoin opponent argued that big companies were not buying bitcoin using proceeds from gold sales.
Schiff’s latest comments follow predictions from strategists at JP Morgan that institutional investors will sell some of their gold holdings and use the proceeds to fund bitcoin purchases.
What are your thoughts on Jefferies bitcoin strategy? Share your thoughts in the comments section below.
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