Gold, bitcoin as best defense against coming volatility, says ex-Goldman Sachs trader
(Kitco News) - The recession of 2020 has created record levels of unemployment, which in turn will cause permanent changes in consumption and spending habits. For investors, this means that a defensive portfolio is recommended, said Jason Urban, CEO of DrawBridge Lending, who spent a decade prior to DrawBridge working at Goldman Sachs as an institutional trader.
The situation now for financial markets is much worse than in 2008, Urban said.
“2008 was a banking crisis. It was concentrated in a handful of people. Now you’re seeing a broader crisis,” Urban told Kitco News. “In 2008, people were worried about losing their homes, or their second homes, or their third homes, or things of that nature. Now, you have people that don’t know necessarily if the stimulus check doesn’t come, where their next meal is coming from. That kind of fear changes behaviors across everything.”
Urban said that both gold and bitcoin can serve as defensive assets owing to many similarities that they share.
“The biggest thing is to look at [bitcoin] as a fixed, finite supply, similar to gold. Its scarcity is similar. So because of that, there isn’t a party or a government actively working to devalue it. From that standpoint, I look at that and say they have very similar characteristics,” he said.
Importantly, both assets have the ability to hedge against inflation and the U.S. dollar, Urban noted.
“As someone dealing in the institutional space, the same people that I see buying gold and the precious metals are also buying bitcoin, and they’re doing it simultaneously, and they’re doing it in equal amounts currently,” he said.
On the upcoming Presidential election, that certain regions may benefit more from infrastructure spending depending on which party wins.
“If you have a Democratic victory, you will see money dispersed to the major metropolitan areas: New York, Chicago, Los Angeles, California in general. If you see a Republican victory, I think you will see it spread more on the red states, and in oil and gas,” he said.