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

  • Despite Thursday’s stock market plunge, traditional and non-traditional hedges like gold and bitcoin weren’t immune from the sell-off.
  • Engineering stocks led a steep sell-off in the sector, with the Nasdaq hundred index down almost as 5.5 % in Thursday afternoon trades.
  • Gold traded down almost as one %, while bitcoin fell 6 % on Thursday.
  • Often, investors look to these non traditional assets to provide protection during stock market sell-offs.

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Engineering 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 %, seven %, along with 6 % respectively.

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

The steep technology-driven sell-off in the stock market spread to traditional and non-traditional portfolio hedges like bitcoin and gold.

Gold fell as much as 1 % to $US1,927.20 per ounce in Thursday trades, while bitcoin fell almost as 6 % to $US10,455.

Both gold and bitcoin have recently been bid set up by investors worried about the developing balance sheet of the US Fed and its recent policy overhaul that will likely lead to higher levels of inflation.

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

Investors typically look to all gold and bitcoin as a hedge to inflation, deflation, and dropping stock prices due to their historically small correlation to equities.

But that historical correlation did not play out on Thursday.

One conventional asset class that did provide protection to investors from Thursday’s market sell-off was bonds. The Bloomberg Barclay’s US Aggregate Bond Index traded up pretty much as 0.20 %.

For all the dialogue with Wall Street analysts that the well known 60 40 investment profile that balances stocks & bonds is actually “dead,” it’s alive and nicely today.