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

  • Despite Thursday’s stock market plunge, traditional and non-traditional hedges like yellow and bitcoin weren’t immune from the sell-off.
  • Technology stocks led a steep sell-off of the industry, with the Nasdaq 100 index down as much as 5.5 % in Thursday afternoon trades.
  • Gold traded down almost as 1 %, while bitcoin fell six % on Thursday.
  • Usually, investors appear to these non traditional assets to provide shelter in the course of stock market sell-offs.

____

Technological innovation stocks led the marketplace decline, with the Nasdaq 100 index down almost as six %. Mega-cap tech winners as Apple, Amazon, and Microsoft fell eight %, seven %, in addition to 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 three %.

The high technology driven sell off in the stock market spread to non-traditional and traditional collection hedges like bitcoin and orange.

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

Both gold and bitcoin have just recently been bid up by investors anxious about the expanding balance sheet of the US Fed and its recent policy overhaul which will likely lead to greater 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 typically look to both gold as well as bitcoin as a hedge to inflation, deflation, and falling stock prices because of their historically low correlation to equities.

But that historical correlation didn’t play out on Thursday.

One standard asset type which did offer 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 talk among Wall Street analysts that the well known 60 40 investment portfolio that balances stocks and bonds is actually “dead,” it’s alive and very well today.