Veteran investor Paul Tudor Jones is betting on Bitcoin and other commodities, forecasting inflation in the U.S. after the November presidential election. In an interview with CNBC on Oct. 22, Jones expressed his investment preferences, saying, “I likely hold a mix of gold, Bitcoin, commodities, and NASDAQ [tech stocks], and I would completely avoid fixed income.” Jones, who is the founder of Tudor Investment Corporation, shared his thoughts on CNBC’s Squawk Box.
As of Oct. 15, the Federal Reserve Bank of New York reported that U.S. consumers expect inflation to be around 3% in the next 12 months. This contrasts with the Federal Reserve’s longer-term goal of keeping inflation at 2% annually.
However, Jones believes the rising government spending and upcoming tax cuts will make it hard for the U.S. to hit its inflation targets without major shifts in policy. “We’re going to run out of money fast unless we take our spending problems seriously,” he said.
The Congressional Budget Office (CBO) estimates that the federal government will run a $1.9 trillion deficit for the 2024 fiscal year, which could rise to $2.8 trillion by 2034.
Jones pointed out that inflation is often used to manage such large deficits, referring to Japan’s strategy as an example. He explained, “The usual approach to deal with this is inflating your way out.”
A recent report by JPMorgan also noted that many investors are turning to gold and Bitcoin as part of a “debasement trade” in response to rising global tensions and concerns about long-term inflation. The debasement trade refers to increased demand for gold due to factors such as heightened geopolitical uncertainty, ongoing inflation worries, and persistent government deficits in major economies.
According to JPMorgan, the return of inflows into Bitcoin exchange-traded funds (ETFs) in September, following outflows in August, suggests that retail investors are viewing both gold and Bitcoin as similar safe-haven assets.
Currently priced around $67,000, Bitcoin has surged over 50% since the start of the year. Analysts are now watching closely, with price targets just below Bitcoin’s record high of $73,679.
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