Larry Fink of BlackRock Calls Cryptocurrency and Gold “Assets of Fear”

BlackRock CEO Larry Fink said that investors are increasingly turning to alternative assets — precious metals and cryptocurrencies — amid growing concerns over rising government debt worldwide.

According to Bloomberg, Fink made the remarks at the Future Investment Initiative (FII) conference in Riyadh, a major annual international forum often referred to as the “Davos in the Desert” for its scale and roster of participants.

“Owning cryptocurrency assets or gold are assets of fear,” Fink said. “You own these assets because you fear the debasement of your wealth. You worry about your financial security. You worry about your physical security.”

These comments came amid growing investor interest in the so-called “debasement trade”, a strategy based on expectations of a decline in the real value of traditional currencies.

Under this strategy, investors reduce their holdings of government bonds and currencies such as the U.S. dollar, yen, and euro, while increasing investments in gold, silver, and cryptocurrencies.

The term “debasement” dates back to historical examples when rulers — including Henry VIII and Nero — diluted gold and silver coins with cheaper metals like copper, Bloomberg notes.

Despite this shift in sentiment, Fink emphasized that the United States remains the main destination for investments, even amid partial profit-taking and a reduction in U.S. asset positions earlier this year.

He said that most global investors believe that “the U.S. will remain the place to hold a significant share of portfolios over the next 18 months.”

As Bloomberg reports, Fink took part in an FII panel discussion alongside other Wall Street executives, including Goldman Sachs CEO David Solomon and JPMorgan Chase head Jamie Dimon.

While Dimon cited rising budget deficits as the main problem, Fink said he is most concerned about the U.S. dependence on foreign buyers of dollar-denominated assets.

“We are still a country that needs 30–35% of all Treasury sales to go abroad, and in my view, that’s the biggest issue right now,” Fink said. “We are fortunate that investors want to invest in the U.S. dollar and the U.S. economy. But if that ever changes, the consequences will be multiplicative because of our reliance on foreign buyers of dollar assets.”

Meanwhile, Bill Ackman of Pershing Square Holdings noted that the key to preventing future risks lies in focusing on asset growth.
Fink added that greater private capital participation could accelerate U.S. economic growth to 3%.

“I’m not worried about our solvency, though I’d like to see a slower growth in our liabilities,” Ackman said.

#Gold #BlackRock #Crypto Assets

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