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

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

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Engineering stocks led the market decline, with the Nasdaq 100 index down almost as 6 %. Mega-cap tech winners as Apple, Amazon, and Microsoft fell 8 %, 7 %, in addition to 6 % respectively.

Meanwhile, the S&P 500 fell almost as 4 %, 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 non-traditional and traditional collection hedges like gold and bitcoin.

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

The two gold and bitcoin have just recently been bid set up by investors worried about the expanding balance sheet of the US Fed and its the latest policy overhaul which will probably result in higher levels of inflation.

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

Investors typically look to all gold and bitcoin as a hedge to inflation, deflation, and decreasing stock prices because of their historically small correlation to equities.

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

One traditional asset class which 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 conversation with Wall Street analysts that the favorite 60 40 investment profile that balances stocks & bonds is actually “dead,” it’s alive and well today.