Mad Money host Jim Cramer advised investors to steer clear of crypto and stick to gold if they “seriously want a real hedge against inflation or economic chaos.” He added that bitcoin is too volatile to be used as currency. “Imagine business owners trying to transact with shares of Facebook or Google…it’s ridiculous,” he said.
Jim Cramer prefers gold to crypto
CNBC’s Mad Money host Jim Cramer gave investment advice on gold and cryptocurrencies on Monday. Cramer is a former hedge fund manager who co-founded Thestreet.com, a financial news and literacy website.
He thinks investors should stay away from cryptocurrencies despite bitcoin’s recent gains. Referencing charts interpreted by Carley Garner, senior commodity strategist and options broker at Decarley Trading, Cramer pointed out that investors “should ignore the crypto cheerleaders now that bitcoin is bouncing back.” He continued to advise:
If you’re serious about real inflation or economic chaos hedging, it [Garner] says you should stick with gold. And I agree.
Quoting Garner, the Mad Money host explained that the correlation between bitcoin futures and the tech-heavy Nasdaq-100 is very high, as seen on their daily charts dating back to March 2021. This indicates that bitcoin behaves more like a risky asset rather than a stable store of value or currency, Cramer asserted, elaborating:
Imagine business owners trying to trade Facebook or Google stocks…it’s ridiculous, they’re too volatile. Bitcoin is no different.
Contrary to Cramer, some people think bitcoin is a better inflation hedge than gold, including venture capitalist Tim Draper and billionaire hedge fund manager Paul Tudor Jones.
Cramer also warned of “counterparty risk,” the possibility of the other party in a transaction or investment not fulfilling its obligations. “Of course, you can just own bitcoins directly in a decentralized wallet – that protects you from counterparty risk,” he said. “But if you ever want to use it for anything, risk is back on the table. And as FTX customers have learned, it can be devastating.
The Mad Money host used to invest in bitcoin, ether and non-fungible tokens (NFTs), but it sold off all of its crypto holdings last year. He used to recommend bitcoin alongside gold. In March 2021 he said: “I have for years said you should have gold…but gold has let me down. Gold is subject to too many vicissitudes. It is prone to mining issues. It is frankly likely to fail in many cases.
He has also repeatedly warned that the United States Securities and Exchange Commission (SEC) is conducting a “roundup” of non-compliant crypto firms, advising investors to get out of crypto now. “I wouldn’t touch crypto in a million years,” he pointed out. Cramer often quoted John Reed Stark, a former SEC internet enforcement chief, who recently said that a “regulatory attack has only just begun.”
What do you think of Jim Cramer’s advice? Let us know in the comments section below.
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