Is inflation peaking? Investment mogul and Shark Tank star Kevin O’Leary doesn’t believe so.
“We don’t have it yet,” he tells Stansberry Research. “especially if this Build Back Better bill prints another $400 to $600 billion and flows it into the economy. That inflation is probably not going to be a good result, because it is very inflationary, even though it is being labeled as an anti-inflation bill.”
“Anytime you print money, you get inflation,” he says.
Inflation is a major concern for investors. If price levels continue to rise, an already hawkish rate hike is likely – and that’s probably not good news for stocks.
Many investors are using alternative assets to hedge against spiking levels. Did they work? Here’s O’Leary.
Gold cannot be printed out of thin air like fiat money, so it was an option for investors looking for an inflation hedge.
At the same time, the price of precious metals tends to remain resilient even during a crisis.
O’Leary has bought gold.
“I’ve added a bit of gold and I’m using the GLD, which is an expensive ETF. But it’s liquid enough, you can put millions in and out of them within an hour and not move the market,” he says, referring to SPDR Gold Shares (GLD).
Because of the huge increase in consumer prices and what’s happening around the world, gold should be a hot commodity this year – but it isn’t.
Despite a nice rally in February and early March, the price of the yellow metal is actually down about 9% year to date.
“Right now, gold as an indicator is not doing what it should be if you really believe we’re going to have hyperinflation,” says O’Leary.
One of the reasons some consider bitcoin to be the new gold is that bitcoin cannot be created out of thin air like fiat money. Mathematical algorithms limit the number of bitcoins to 21 million.
While some credit bitcoin for people’s lack of trust in fiat money, the cryptocurrency is far from smooth sailing.
Since rising to $68,990 last November, bitcoin has retreated 71%.
The downturn affected O’Leary’s portfolio.
“We took a hit, we were at 20%, and then it grew up to 23%, then it went down to 16% of the portfolio,” he says, adding that “it was very volatile.”
But such volatility was not unexpected.
“I’ve always said, you’re going to have this volatility as an unregulated industry, because there’s no institutional bidding.”
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O’Leary also mentions that in some cases big market cap names in the cryptocurrency world like bitcoin and ethereum are “doubling down” to take advantage of the high volatility.
“Why not add to the job if you’re going to stay a long time?” He says.
With the downturn in the financial markets, the second-hand market for luxury timepieces has also taken a hit. Bloomberg recently published an article titled The Crypto Collapse Has Flooded the Market With Rolex and Patek.
But O’Leary, who is an avid watch collector, is more optimistic.
“I’ve been listening to this dialogue for the past year about how watches will run. It didn’t happen simply because the demand for watch pieces, especially the brands Rolex, FP Journe, AP, even Omega recently, was very successful.”
He admits that watches have passed their prime, but they have still served him well.
“If you’ve owned these watches for 24 months, the S&P is still outpacing, it’s still outpacing the crypto. This has been the best asset class in the last two years.”
With inflation still on the horizon, more and more investors are considering real assets as another way to achieve market-beating returns.
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