Bitcoin has again failed the safe haven test. On Friday, as escalating trade tensions sent global stock markets plunging, investors sought refuge in monetary safe havens. The Japanese yen, Swiss franc, and especially gold all moved higher. Yet Bitcoin plunged by more than stocks!
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Fair, but then how would you explain gold’s lower sharpe ratio versus stocks? Irrationality?
Stocks do buybacks & sometimes pay dividends. Corporations get disproportionately cheap the money central banks conjure out of thin air. Gold's insecurity led to it being mainly confined to bank vaults. It's in the middle of a perhaps 2-century-long process of being demonetized.
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Do you think stocks are safer than gold from the deeper risk you described in the original tweet for these reasons?
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Stocks, as with bonds & gold ETFs, are part of the ubiquitous experiment in digital centralization. For a few people in some legal and political environments that can be very unsafe. Political trends suggest that the environments could get worse & number at risk greatly expand.
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I think the price of gold ETFs follows the price of physical gold rather than the other way around as implied. If gold ETFs were seized by the gov, I think the price of physical gold would go up So it’s fair to rephrase the q to do you think stocks are safer than physical gold?
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No, generally speaking (specifics depend on particular circumstances).
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Right, for that reason I don't think it makes sense for someone to use historical sharpe ratios to defend stocks as a safer investment from future risks than gold, and so I don't think it makes much sense to do w Bitcoin versus anything else either. But can agree to disagree
End of conversation
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