Bitcoin or gold? Dario: I prefer gold

Spark Global Limited reports:

In a recent interview, Dario, founder of bridgewater, the world’s largest hedge fund, said bitcoin is like a digital version of gold, but he prefers gold.

“If you put a gun to my head and said, ‘I can only pick one,’ I would pick gold,” Mr Dario said.

In May, Dario revealed that he owned an unknown amount of Bitcoins after years of expressing concerns about cryptocurrencies. Still, he doesn’t fully embrace the concept of cryptocurrencies.

“I hold a very small amount of bitcoin. I don’t hold a lot, “says Mr Dario. “If you want to diversify your portfolio through certain assets, bitcoin is like digital gold.”

Mr. Dario has long been bullish on gold. In 2019, he wrote on the media platform that adding gold can help balance a portfolio because it can both reduce risk and improve returns. Bridgewater invested more than $400 million in gold in the second quarter of last year.

Central banks around the world are reported to hold more than 35,000 tonnes of gold, about a fifth of what has been mined so far. Typically, central banks hold gold to diversify their reserves, and because it is a limited physical commodity, it is a natural hedge against inflation.

Bitcoin also helps hedge against inflation, as Mr. Dario said in May. But if forced to choose between gold and bitcoin, he said he would choose gold because of its long history as a “wealth reserve.”

In other words, bitcoin’s volatility is Dario’s concern, but it’s not his only concern.

In Dario’s view, bitcoin could eventually be banned by the U.S. federal government. There have been similar examples over the last hundred years. In 1934, President Roosevelt signed the Gold Reserve Act, which made it illegal for individuals to own Gold.

At the time, the United States stuck to the gold standard. Roosevelt hoped to push the country out of the Great Depression by devaluing the dollar. Dario said in March that any major economic downturn or inflationary event could prompt governments around the world to take similar action against Bitcoin and other cryptocurrencies.

Fed Chairman Jerome Powell is also not a supporter of cryptocurrencies, calling them “speculative instruments” in April. Powell also compared cryptocurrencies to gold, noting that humans have long assigned gold “a special value that it doesn’t have.”

In recent months and years, many financial experts have warned about the volatility of cryptocurrencies, advising people to only invest in what they can afford. For Dario, bitcoin is just a small part of his vast portfolio. “I just look at it as a diversification,” he says. “Overall, I really don’t know if bitcoin is going to go up or down.”

The key, he says, is to keep reevaluating those investments and avoid adding to them just because bitcoin is doing well for a while. “Be careful when investing in ⁠,” he said. “Diversify globally, not just in the United States.”

As of Wednesday afternoon EASTERN Time, bitcoin was trading at about $39,000, down from a high of about $63,000 in mid-April, according to cryptocurrency tracker Coindesk. Gold was trading at $1,800 an ounce, up slightly from $1,776 over the same period.