Christopher Wood, the global head of equity at Jefferies, a global financial services company, says the firm will reduce exposure to gold in favor of bitcoin. He adds that there are plans to increase the crypto component of Jefferiesâ€™ long-only global portfolio for U.S. dollar-denominated pension fund if and when the bitcoin price drops 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 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 â€œGreed and Fearâ€ note to investors, the global head of equity explains the multinational investment bankâ€™s rationale for choosing bitcoin over gold at this stage. Wood says:
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 investorsâ€™ interest in the most dominant crypto.
Gold Losing and Bitcoin Gaining
Despite Jefferiesâ€™ decision to opt for bitcoin at the expense of gold, Wood remains bullish on the precious metal. He says:
Meanwhile, the move by Jefferies to trim the gold component of its long-only pension fund appears to undercut Peter Schiffâ€™s denial that institutional investors are replacing gold with BTC. In his recent remarks, the gold bug and bitcoin opponent argued that large companies were not buying bitcoin using proceeds from gold sales.
Schiffâ€™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 finance bitcoin purchases.
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