A Jefferies executive said the multi-billion dollar investment company is removing some gold from its portfolio to invest in Bitcoin.
As Bitcoin continues to consolidate over $20,000, Jefferies’ head of global equity strategy, Christopher Wood, stated that the company is buying top cryptocurrencies at the expense of precious metals.
According to Business Standard, the company has $51 billion under management as of Q3 2020 and is currently converting some of its gold holdings to the world’s long-only global portfolio for US dollar-denominated pension funds. Wood said if the market sees a correction after the recent surge, he plans to increase his cryptocurrency exposure in the portfolio.
“The 50 per cent 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 invested in Bitcoin. If there is a big drawdown in bitcoin from the current level, after the historic breakout above the $20,000 level, the intention will be to add to this position.”
The distribution of this special fund is 45% of the physical gold bars and 30% of the Asian (excluding Japan) stocks, weighted according to long-term portfolios, 20% of the unhedged gold mining stocks and 5% of the Bitcoin.
Wood pointed out that he is still bullish on gold because he believes the central bank will continue to have a loose monetary policy.
Other Companies like Jefferies investment in Bitcoin could continue moving it upward
At the same time, analysts Juan Villaverde and Bruce Ng of Weiss Rating said that Bitcoin may have more headroom to move higher if other companies like Jefferies prioritize these asset classes over bonds to hedge against inflation and economic turmoil.
“…Roughly $30 trillion is sitting in government bonds. Suppose 10% of that amount finds its way into gold and Bitcoin. That works out to an exodus of $3 trillion. And if that is split evenly, we’d end up with…
$1.5 trillion going into gold – which is 15% of gold’s market cap (now about $10 trillion). And…$1.5 trillion going into Bitcoin – which is 4.4 times its market cap (now about $338 billion).
Due to Bitcoin’s much lower market cap and trading volume, it has the potential to rise far faster than gold… as new money from disillusioned bond investors pours in.”