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(Kitco News) – Amid the rise in geopolitical conflicts, economic uncertainty, and persistently high inflation, hedge fund billionaire Paul Tudor Jones says that Bitcoin (BTC) and gold are becoming more attractive as safe havens for wealth in troubling times.
Jones made the comments during an interview on CNBC’s “Squawk Box” on Tuesday, saying he “would love gold and Bitcoin together” as a hedge against geopolitical uncertainty.
“I think they probably take on a larger percentage of your portfolio than historically they would because we’re going to go through both a challenging political time here in the United States, and we’re going to go through – we’ve obviously got a geopolitical situation,” he said.
Host Andrew Ross Sorkin questioned this premise, saying it was his understanding that high interest rates “were supposed to be the thing that was actually going to be unhelpful to Bitcoin.”
“I think, on a relative basis, look what’s happened to gold. Clearly, it’s suppressed,” Jones said. “So, you know that more likely than not, we’re going to go into a recession. There’s some pretty clear-cut recession trades.”
“The easiest are: the yield curve gets really steep, term premium goes into the backends of debt markets, into 30-year and 10-year and 7-year paper,” he said. “The stock market typically, right before a recession, declines about 12%. That’s probably going to happen at some point, from some level. And you look at the big shorts in gold, more likely than not in a recession, the market’s typically really long assets like Bitcoin and gold.”
Jones said there is “probably $40 billion worth of buying that has to come into gold at some point between now and if that recession actually occurs. So, yes, I like Bitcoin and I like gold right here.”
He said that the U.S. government has been unwilling to talk about raising taxes, which is needed alongside cuts in spending to really get a handle on spiraling debt.
“You cannot do this simply by cutting spending,” he said. “This year, we had $2.3 trillion of funding that the private sector is required to find the funding for. So, that has caused a 100-basis point spike in bond yields. In 2024, it’s going to be $2.7 trillion in the U.S. $2.7 trillion – almost 10% of our budget – is going to have to be to fund our federal spending.”
Host Becky Quick asked if this means it “doesn’t matter what the Federal Reserve says at this point” as “they’ve lost control. This is going to be the bond market talking and setting rates here,” she said.
“Yes, the bond market,” Jones said. “We’re probably going to go into a recession sometime in the first quarter of next year, probably because the bond market, simply through supply and demand, is going to deliver more rate hikes because we don’t have a clearing price yet for long-term debt. And so, those rate hikes are probably going to tip us into recession.”
While Jones is bullish on gold and Bitcoin in the face of an approaching recession, Jim Cramer, host of CNBC’s Mad Money, is bearish in the near term and has warned investors to exit the markets.
“I can’t go out with gold because gold is not good; I can’t go out with bitcoin because I can’t be in something where Mr. Bitcoin is about to go down big,” Cramer said.
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
