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

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

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Technology stocks led the marketplace decline, with the Nasdaq 100 index down almost as 6 %. Mega-cap tech winners like Apple, Amazon, and Microsoft fell eight %, 7 %, and 6 % respectively.

Meanwhile, the S&P 500 fell as much as four %, while the Dow Jones industrial average fell more than 1,000 steps for a loss of 3 %.

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

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

Both gold and bitcoin have recently been bid up by investors worried 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 reach a multi-year high of $US12,473.

Investors often 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 did not play out on Thursday.

A classic asset category that did give 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 of the dialogue with Wall Street analysts that the popular 60-40 investment collection that balances stocks and bonds is actually “dead,” it’s alive and well today.