Major Australian Investment Firm Moves From Negative-Yielding Assets Like Gold to Bitcoin

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A billion-dollar Australian investment management firm has gotten into bitcoin, citing that the cryptocurrency is superior to gold. Many of the firm’s clients have been asking about investing in bitcoin. “We have been positioning in gold for our clients for many many years now. Now we’re doing it with bitcoin,” said an executive of the firm.

Bitcoin ‘Entering the Realm of the Mainstream’

Australian investment management company Pendal Group has started investing in bitcoin through futures contracts on the Chicago Mercantile Exchange, AFR publication reported Monday. Pendal is a global investment management company listed on the Australian Stock Exchange (ASX) under the symbol PDL. Its market capitalization is currently $1.6 billion.

“We have so many clients asking us about bitcoin and what to do and how to get access,” said Pendal Group’s head of bond, income, and defensive strategies, Vimal Gor. “Large institutions have stayed away so far, but high-net-worth clients and wholesale investors are leading the charge.” He elaborated:

All the big hitters in the hedge fund world are coming out to endorse bitcoin now; it is entering the realm of the mainstream.

Among famed billionaire investors who have endorsed bitcoin one way or another are Paul Tudor Jones, Bill Miller, and Stan Druckenmiller. Jones recently said he sees massive upside to bitcoin, comparing the cryptocurrency to investing in early tech stocks, such as Apple. Miller believes that eventually all major banks, investment banks, and high net worth firms will have exposure to bitcoin, while Druckenmiller said the cryptocurrency could beat gold.

Bitcoin Superior to Gold

Gor believes that “bitcoin is superior to gold,” AFR conveyed and quoted him as saying:

We have been positioning in gold for our clients for many many years now. Now we’re doing it with bitcoin.

His sentiment echoes what he told online business channel Ausbiz in August when he explained the reasons he invested in gold for his clients. “Gold is a negative-yielding asset,” but since “virtually every asset in the world is a negative-yielding asset,” gold looks better than these assets on a relative basis, he detailed. However, when compared to bitcoin, he said the cryptocurrency “has an advantage over gold.”

Gor opined: “If Bitcoin is considered a store of value and a store value is purely a social construct. Then it is better than gold as it’s transferable as you don’t need to go and physically pick up a big heavy bar and just give it to someone else.” In addition, he described bitcoin as “a call option on the digitalization of the world, which is very clear where we’re going with all the central banks in the world, looking at their own coins.”

Government Bonds Will Be a Dead Asset Class

Gor also shared that his fundamental analysis of bitcoin takes into account central banks’ trillion-dollar quantitative easing (QE) programs, and government bonds becoming less relevant.

“Covid just accelerated the large structural trends that were already in place,” Gor remarked. “The first and main one was falling official interest rates and bond yields. With large scale central bank QE programs in place, bond yields are going to stay low for a very long time.” He continued:

We think ultimately that government bonds will turn into a dead asset class, so we now have to imagine what it will be like for other assets classes when bonds are no longer relevant to hold in a portfolio.

What do you think about all the big money moving into bitcoin? Let us know in the comments section below.

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