Gold, bitcoin fail to preserve investors from Thursday’s stock market meltdown

  • In spite of Thursday’s stock market plunge, traditional and non-traditional hedges as gold as well as bitcoin were not immune from the sell-off.
  • Engineering stocks led a steep sell off in the sector, with the Nasdaq hundred index down almost as 5.5 % in Thursday afternoon trades.
  • Gold traded down pretty much as 1 %, while bitcoin fell 6 % on Thursday.
  • Often, investors seem to these non-traditional assets to provide protection in the course of stock market sell offs.

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Technological innovation stocks led the market decline, with the Nasdaq hundred index down as much as 6 %. Mega-cap tech winners like Apple, Microsoft, and Amazon fell eight %, 7 %, in addition to six % respectively.

Meanwhile, the S&P 500 fell pretty much as four %, while the Dow Jones industrial average fell over 1,000 steps for a loss of three %.

The high technology-driven sell-off in the stock market spread to traditional and non-traditional portfolio hedges like bitcoin and orange.

Gold fell pretty much as 1 % to $US1,927.20 per ounce in Thursday trades, while bitcoin fell almost as six % to $US10,455.

Both gold and bitcoin have recently been bid set up by investors anxious about the expanding balance sheet of the US Fed and its recent policy overhaul that will likely lead to greater levels of inflation.

Very last month, gold touched all-time highs at $US2,089 an ounce, while bitcoin hit a multi-year high of $US12,473.

Investors typically look to both gold as well as bitcoin as a hedge to inflation, deflation, and decreasing stock prices owing to their historically low correlation to equities.

But that historical correlation didn’t play out on Thursday.

One traditional asset category which did give protection to investors from Thursday’s market sell off was bonds. The Bloomberg Barclay’s US Aggregate Bond Index traded up as much as 0.20 %.

For all of the talk with Wall Street analysts that the well known 60 40 investment collection which balances stocks & bonds is actually “dead,” it’s alive and well today.

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