Mad Money host Jim Cramer has advised investors to avoid cryptocurrencies and stick with gold if they “really want real protection against inflation or economic chaos.” He added that bitcoin is too volatile to use as a currency. “Imagine business owners trying to transact Facebook or Google stock…it’s ridiculous,” he stressed.
Jim Cramer prefers gold to cryptocurrencies
CNBC’s Mad Money host Jim Cramer gave some 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 believes that investors should steer clear of cryptocurrencies despite bitcoin’s recent gains. Referencing charts interpreted by Carley Garner, a senior commodity strategist and options broker at Decarley Trading, Cramer stressed that investors “should ignore crypto cheerleaders now that Bitcoin is bouncing.” He proceeded to advise:
If you really want a real hedge against inflation or economic chaos, she (Garner) says you should stick with gold. And I agree.
Citing Garner, the Mad Money host explained that the correlation between bitcoin futures and the high-tech Nasdaq-100 is very high, as shown on their daily charts dating back to March 2021. This indicates that bitcoin is behaves more like a risky asset than a risky asset. a stable store of value or currency, Cramer asserted, elaborating:
Imagine business owners trying to transact Facebook or Google shares… it’s ridiculous, they’re too volatile. Bitcoin is no different.
Unlike Cramer, some people believe Bitcoin is a better inflation hedge than gold, including venture capitalist Tim Draper and billionaire hedge fund manager Paul Tudor Jones.
Cramer also warned about “counterparty risk,” the possibility that the other party to a transaction or investment will default on its obligations. “Of course, you can hold bitcoins directly in a decentralized wallet, which protects you from counterparty risk,” he opined. “But if you ever want to use it for something, 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 sold all of his crypto last year. He used to recommend bitcoin along with gold. In March 2021, he said: “For years I have said that you should have gold… but gold let me down. Gold is subject to too many vicissitudes. It is subject to mining issues. It is frankly subject to failure in many cases.”
He has also repeatedly warned that the US Securities and Exchange Commission (SEC) is “rounding up” non-compliant crypto companies, advising investors to get out of crypto now. “I wouldn’t touch cryptocurrencies in a million years,” he emphasized. Cramer often quoted John Reed Stark, former SEC Internet enforcement chief, who recently said that “a regulatory onslaught is just beginning.”
What do you think about Jim Cramer’s advice? Let us know in the comments section.
image credits: Shutterstock, Pixabay, Wiki Commons
Disclaimer: This article is for informational purposes only. It is not a direct offer or a solicitation of an offer to buy or sell, or a recommendation or endorsement of any product, service or company. bitcoin.com does not provide investment, tax, legal or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.
