Summary: Infamous host of Mad Money and founder of financial literacy website The Street, Jim Cramer, shared plans to buy Bitcoin to leave for his children as a hedge against inflation in a recent interview with Anthony "Pomp" Pompliano. The financial figure took cues from Pompliano who explained the Bitcoin halving and bet Cramer that if he ...
Infamous host of Mad Money and founder of financial literacy website The Street, Jim Cramer, shared plans to buy Bitcoin to leave for his children as a hedge against inflation in a recent interview with Anthony "Pomp" Pompliano.
The financial figure took cues from Pompliano who explained the Bitcoin halving and bet Cramer that if he took 1% of the 10% of his portfolio dedicated to gold and put in Bitcoin that 1% would outperform the remaining 9% left in gold. Pompliano labeled Bitcoin as an asymmetric asset noting that while there are huge swings in value, he doesn't see Bitcoin ever dropping below a certain threshold.
The conversation came as Cramer expressed concern over government money-printing, stating that he believes it was necessary to avoid a depression but that we are all going to face the consequences in 3 to 5 years.
"I know we're going to get hurt so when I go to my inflation handbook what it says is buy gold, buy masterpieces and buy mansions," Cramer said.
He added that what's missing from the inflation handbook is buying crypto. Cramer owns huge stores of gold which he said he purchased not for the appreciation, but instead for the alternative to the dollar which he feels sure will depreciate in value.
"I have to start recognizing that I am maybe using a typewriter," Cramer said of his gold holdings.
His comments emphasized that while he feels gold is a sound inflation hedge it may be out of touch with the current financial moment. Cramer's primary concern was passing on assets with staying power to his children.
"I need something that my kids will understand as a hedge against inflation and they will never understand gold. They think it's dangerous," Cramer said. "They think it's dangerous because it can be stolen, they don't want to take it out of the bank, they may forget where it is."
Cramer highlighted that in the past he had steered away from cryptocurrencies, but today feels as if he missed out on an opportunity. He went on to say that his policy towards Bitcoin had worked until the three trillion dollar Federal aid package. He marked this as one of the first times in his life where he has felt the United States does not have the money to pay for what it's trying to do.
In the midst of the COVID-19 pandemic the Federal Reserve has expressed a willingness to allow inflation to grow beyond the usual 2% target to help the economy get through the troubling times. These signals from the Central Bank have led to increasing demand for gold and more interest in inflation-indexed bonds. For those open to crypto holdings, the Federal Reserve's willingness to allow inflation to rise has driven them to Bitcoin.
Cramer ended by noting that Bitcoin price swings won't bother him because the asset will be in his portfolio as an alternative asset for hedging against inflation. Pompliano advised Cramer on how to purchase Bitcoin, choose a custodial service and why the asset is a better bet than gold.
By Emily Mason