Crypto

Gold or crypto: Jim Cramer’s take on economic turmoil

  • The Mad Money host has sold all of its crypto holdings over the past year.

Mad Money host Jim Cramer has advised investors to stay away from cryptocurrencies and invest in physical assets like gold if they really want a real hedge against inflation or economic instability. He went on to state that Bitcoin is too unpredictable to be used as money.

On Monday, Jim Cramer offered some gold and cryptocurrency investment advice. Cramer, a former hedge fund manager, is the co-founder of the financial news and education website Thestreet.com. Despite Bitcoin’s recent surges, he believes investors should stay away from cryptocurrencies.

Cramer insisted, citing charts read by Carley Garner, senior commodity strategist and options broker at Decarley Trading. He then gave the following advice that Garner recommends sticking with gold if you really want a real hedge against inflation or economic turmoil and agrees with her on this point.

The Mad Money host, citing Garner, explained that the daily charts of the two markets, dating back to March 2021, show a very strong connection between bitcoin futures and the Nasdaq 100, which is heavily tech-biased. This shows that Bitcoin is behaving more like a volatile asset than a reliable store of value or medium of exchange. Carmer argued, adding the following details: Think of business owners trying to transact in Google or Facebook stock. You are too unpredictable; it’s absurd. Bitcoin is no exception.

Tim Draper, a startup investor, and Paul Tudor Jones, a billionaire hedge fund manager, disagree with Cramer and think Bitcoin is a better inflation hedge than gold.

Cramer also cautioned against counterparty risk, which refers to the possibility that the counterparty to a transaction or investment might not live up to its end of the bargain. Of course, one could simply hold Bitcoin directly in a decentralized wallet; this would protect him/her from cryptocurrency risk, Cramer suggested.

The Mad Money host used to hold investments in non-fungible tokens (NFTs), ether and bitcoin, but he sold them all last year. He once suggested bitcoin along with gold. He explained in March 2021: “I’ve been telling you you should have gold for years, but gold has let me down. There are too many vicissitudes affecting gold. It is prone to mining issues. In many cases it could fail, to be honest.”

Additionally, he has repeatedly warned investors not to exit the cryptocurrency market as the US Securities and Exchange Commission (SEC) could round up non-compliant crypto firms. He further emphasized: “I wouldn’t touch crypto in a million years”.

Given gold’s long history as a store of value and the potential risks of investing in the highly volatile cryptocurrency market, Cramer’s advice to stay away from cryptocurrencies and stick with gold as a hedge against inflation and economic instability is based on both factors. However, investors should weigh the potential pros and cons of both gold and cryptocurrencies and base their choice on their own financial goals and risk tolerance. In order not to put all your eggs in one basket, it is important to diversify your portfolio. Before making any investment decisions, it is always advisable to seek the advice of a financial professional.

Steve Anderson
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