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Gold is good, but bitcoin is better for a $ 7.5 billion hedge fund

(Bloomberg) – Gold will jump to new highs next year, but investors are looking for alternatives to the currency as global debt bubbles need to look at bitcoins, according to a $ 7.5 billion hedge fund.

The two are likely to merge, even as the Federal Reserve focuses on curbing asset purchases, said Troy Gaeski, co-chairman of the investment director and senior portfolio manager at SkyBridge Capital. The two are often compared by investors, with former Treasury Secretary Lawrence Summers saying cryptocurrencies could remain a feature of global markets as something like digital gold.

“We will stick to bitcoin and crypto because we just think there is more,”

; Gaeski said in a telephone interview last week. Although there is more variability, “you will catch a little more juice than in gold from the same phenomenon,” he added.

Investors are following comments from the US Federal Reserve as inflation rises and politicians move closer to leveling off huge asset purchases that saved the economy from the turmoil caused by the pandemic. Monetary support brought the Fed’s balance sheet to a record, while muscular fiscal spending increased government debt. Both can pose a potential risk to the value of the dollar, which will potentially enhance the attractiveness of alternatives. “All the alternatives to the fiat currency – which have all undergone relatively recent significant adjustments – are now in a much better position to deal with this possible reduction and gradual slowdown in the growth of money supply than they were while doing “High peaks after higher peaks,” Gaeski said.

Both Bitcoin and gold have seen significant changes this year, amid a debate over whether cryptocurrency is diverting demand from bullion. The digital token jumped to a record nearly $ 65,000 in April before sinking. The last one was about $ 36,600. Meanwhile, gold was close to sinking in a bear market in March, but reversed to erase losses so far.

The leading Wall Street banks are divided over the relative merits of the couple – Citigroup Inc. said gold was “losing its luster” for cryptocurrencies, while Goldman Sachs Group Inc. has made the case that both assets can coexist. The head of Tesla Inc. Elon Musk, whose tweets have affected bitcoin prices this year, said in May that he supported cryptocurrencies against fiat or paper currencies.

Gold, which hit a record high of $ 2,075 an ounce last year, has now bottomed out, according to Gayeski. Much of the concern about cone calls has been withdrawn from the market, and even when it is announced, the Fed will not start slowing down its purchases until 2022, he said.

“From now on, the probability of gold continuing the upward trend is quite high, which makes new peaks next year,” he said.

Despite signs of recovery, the Fed is still buying $ 120 billion in government and mortgage-backed government securities a month, and its balance sheet is growing to $ 8 trillion, about a third of gross domestic product. Talks to reduce this support – which has the potential to increase treasury profitability and the dollar tarnishing the attractiveness of gold – are approaching.

SkyBridge, a fund manager, has a small exposure to a gold digger that is used to continue the price rally. Its main exposures are to cash-generating strategies in the United States, supported by tangible assets, troubled corporate loans and convertible bond arbitrage, among others. The company’s bitcoin fund has grown by 51.2% since its inception in December last year until June 1.

SkyBridge founder Anthony Scaramucci has teamed up with First Trust Advisors in an exchange-traded fund that plans to buy and sell bitcoins, and Gayeski expects the Securities and Exchange Commission to approve the product by the fourth quarter of 2021 or the first quarter of next. year.

“The only reason we exist professionally is to find interesting ways to generate attractive uncorrelated returns that also have an attractive profit and risk profile,” Gayeski said. “The combination of strategies in our broader portfolio is growing, with a small but significant position in alternatives to fiat currencies such as Bitcoin.”

(Updates the price of bitcoin in the sixth paragraph)

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