Gold and Crypto Sent Soaring as Investors Seek Shelter From Inflation

With the Fed now contending with a complete collapse of its transitory narrative, gold and bitcoin have been enjoying a strong rally as investors flee towards the safety of inflation-immune assets.

The price of gold jumped to nearly $1850 on Wednesday, as the latest CPI print from the BLS confirmed what everyone but the Fed already knew— that inflation is stubbornly persistent and is creeping into components not related to the reopening of the economy.

Likewise, cryptocurrencies also enjoyed a influx of activity on Wednesday, with bitcoin hitting a record-high of nearly $69,000 as investors embraced the world’s largest cryptocurrency as a hedge against rising price pressures.

Prices across nearly all components— even those not related to the reopening of the economy— accelerated by the fastest pace since the early 1990s, further dismantling the Fed’s argument that price pressures are merely momentary. The subsequent rally in bitcoin further strengthens the crypto bull argument that virtual currencies can also act as a wedge against inflation given that there is a finite supply of tokens— unlike fiat currencies, which have been spewing out of the Fed’s printing press since the early days of the pandemic.

On the other hand, with a relatively short history on the market, the cryptocurrency has yet to prove itself as a robust inflation hedge. “It’s hard to say if it’s an inflation hedge or not because we haven’t lived through inflation with cryptocurrencies. It’s one of those things where everyone thinks it will be, but time will tell,” TD Ameritrade chief market strategist JJ Kinahan told Bloomberg.

Information for this briefing was found via Bloomberg and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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