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Gold, bitcoin neglect to guard investors against Thursday’s stock market meltdown

  • Despite Thursday’s stock market plunge, non-traditional and traditional hedges like yellow and bitcoin weren’t immune from the sell-off.
  • Engineering stocks led a steep sell off of the market, with the Nasdaq hundred index down pretty much as 5.5 % in Thursday afternoon trades.
  • Gold traded down pretty much as one %, while bitcoin fell 6 % on Thursday.
  • Often, investors appear to these non-traditional assets to provide shelter in the course of stock market sell offs.

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Engineering stocks led the marketplace decline, with the Nasdaq hundred index down pretty much as 6 %. Mega-cap tech winners like Apple, Amazon, and Microsoft fell eight %, 7 %, along with 6 % respectively.

Meanwhile, the S&P 500 fell as much as 4 %, while the Dow Jones industrial average fell over 1,000 steps for a loss of three %.

The steep technology driven sell off in the stock market spread to non-traditional and traditional profile hedges like yellow and bitcoin.

Gold fell pretty much as 1 % to $US1,927.20 per ounce in Thursday trades, while bitcoin fell pretty much as 6 % to $US10,455.

Each of those gold and bitcoin have recently been bid in place by investors anxious about the expanding balance sheet of the US Fed and its recent policy overhaul which will likely lead to higher 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 generally look to both gold as well as bitcoin as a hedge to inflation, deflation, and dropping stock prices owing to their historically low correlation to equities.

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

One particular standard asset class that did give protection to investors from Thursday’s market sell-off was bonds. The Bloomberg Barclay’s US Aggregate Bond Index traded up pretty much as 0.20 %.

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

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