Michael Cugino, president and portfolio manager of the Permanent Portfolio Fund, said that rather than being a gold substitute, cryptocurrencies are showing a closer correlation to the technology sector and easy monetary policy.
In an interview with CNBC, Cugino argued that investors should keep in mind that these two asset classes are not the same and need to respond to different dynamics.
Cugino said there was a time when he thought Bitcoin and other cryptocurrencies would replace gold, but now both are rising. He noted that cryptocurrencies' short trading histories of 10-15 years generally show a greater correlation in performance with technology indexes (Triple Q) and funds that track periods of monetary accommodation than gold.
Cuzzino noted that gold is a very long-cycle asset and explained that its recent strong performance is based on macro factors. These factors include a possible downward trend in the Fed's interest rate policy, geopolitical issues, central bank purchases, and expectations that real interest rates may trend negative.
*This is not investment advice.
