Weren’t some UKB posters lauding crypto a few years ago as a hedge against inflation? I wonder how that worked out…
That's an odd thing for you to post, considering the markets have gone through the biggest sell-off in bonds in 150 years.
https://www.ii.co.uk/analysis-commentary/benstead-bonds-bond-crash-has-broken-records-it-finally-time-buy-ii529520#:~:text=Bloomberg%20data%20shows%20that%20this,down%20another%204%25%20this%20year.
Maybe the last 2 years for bitcoin has seen a large decline. But looked at over 2 years a lot of things look rubbish - including long duration bonds!
The 5yr+ year gain for crypto is still gigantic despite the last 2 years drawdown. If you'd bought bitcoin 5 years ago in Nov 2018, today your investment would have increased in value by over 500%, beating inflation by massively more than any other asset class. If you'd bought bitcoin in 2015, the value of your crypto today has increased by a ridiculous 13,000%, even accounting for the last 2 years 50% decline from the $50k peak in Nov 2021! A 13,000% gain in 8 years is a pretty amazing return over inflation by anyone's standards.
Whereas, to show how much the world has turned on its head in the past 18 months, if you'd bought a US 10-yr treasury bond in the mid to late 2010's decade of low interest rates, thinking you were buying sensible asset and a counter-balance against stock market volatility, today your bond investment will have taken a very significant haircut if you had to sell it now rather than hold to maturity (but are at least guaranteed your initial money back after 10 years if you hold). Inflation hedge? Not for people who bought bonds during the years of ultra low interest rates, which was a lot of people.
JB's a fan of crypto I think? Waiting for systemic collapse so he can set fire to all his £50 notes..
For me crypto's a no-go / not interested. I don't own any crypto as an investment and don't speculate on crypto in the short-term. I do however
very occasionally (as in maybe once every couple of years) make a short-term momentum trade on a crypto mining company inside my ISA, if there's a high chance of a major upswing in the BTC price. That way I can potentially make a tax-free capital gin on crypto volatility. Not my area of interest though.
That isn't meant to suggest anyone should place a load of their money in crypto (although as noted they'd have done well if they had, and stayed the course). And the risk/reward picture is looking much more positive for bonds now we have proper interest rates again. Coupons are higher (though mostly not higher than inflation) and if rates fall in the foreseeable future it would lead to a capital gain in some bonds purchased today, depending on duration/coupon.
I'm amazed that in this age of tech, the world continues to believe in the value of the magic pet rock (gold) as the asset that keeps pace with inflation but it does*. The absurdity of using vast amounts of energy and resources to dig out a useless rock in order to put it back in a hole in the ground (vault) must eventually lead to an emperor's new clothes moment. But I'll make hay while the sun shines (I don't own any gold, not a doomsdayer, but one or two miners as leverage on the price).
*1 oz of gold supposedly retains the same purchasing power over millennia - a good quality tailored suit etc.
