Gold, bitcoin fail to protect investors against Thursday’s stock market meltdown

  • Despite Thursday’s stock market plunge, traditional and non-traditional hedges as yellow as well as bitcoin were not immune from the sell-off.
  • Engineering stocks led a steep sell off of the market, with the Nasdaq 100 index down almost as 5.5 % in Thursday afternoon trades.
  • Gold traded down pretty much as 1 %, while bitcoin fell six % on Thursday.
  • Typically, investors look to these non traditional assets to provide protection during stock market sell-offs.

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Technology stocks led the marketplace decline, with the Nasdaq 100 index down as much as six %. Mega-cap tech winners as Apple, Microsoft, and Amazon fell 8 %, 7 %, along with six % respectively.

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

The high technology-driven sell off in the stock market spread to traditional and non-traditional profile hedges as orange and bitcoin.

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

Each of those gold and bitcoin have recently been bid in place by investors worried about the growing balance sheet of the US Fed and its recent policy overhaul which will probably result in greater levels of inflation.

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

Investors often look to all gold as well as bitcoin as a hedge to inflation, deflation, and decreasing stock prices owing to their historically low correlation to equities.

But that historical correlation did not play out on Thursday.

One particular standard asset type that did provide protection to investors from Thursday’s promote sell off was bonds. The Bloomberg Barclay’s US Aggregate Bond Index traded up almost as 0.20 %.

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