(Oct 28): BlackRock Inc’s chief executive officer Larry Fink said investors are flocking to alternative assets like precious metals and cryptocurrencies as they have grown increasingly worried about the growing piles of government debt around the world.
“Owning crypto assets or gold are assets of fear,” Fink said at the Future Investment Initiative in Riyadh. “You own these assets because you are frightened of the debasement of your assets. You are worried about your financial security. You are worried about your physical security.”
Fink’s comments come amid growing momentum for the so-called debasement trade, which has investors selling government debt, as well as currencies like the dollar, yen and euro and hoovering up gold, silver and crypto. The term debasement is a reference to when rulers such as King Henry VIII and Nero diluted or debased their gold and silver coins with cheaper metals such as copper.
Even so, Fink said the US has remained the primary destination for investments despite some outflows from “overweighted US assets” earlier in the year. And, he added, most global investors think the US is going to be the place to have your overweight position for the next 18 months.
Fink appeared on a panel at FII alongside a slew of other Wall Street heavyweights including Goldman Sachs Group Inc’s David Solomon and JPMorgan Chase & Co’s Jamie Dimon. While Dimon singled out growing government deficits around the world as his key concern, Fink said his biggest worry is US dependency on selling its dollar asset to international investors.
“We still are a nation that needs 30% to 35% of all our Treasury sales going overseas, and, to me, that’s the biggest issue today,” Fink said. “We are lucky that people would like to invest in US dollars, invest in the US economy. If that ever changed, it has a multiplier effect because of the dependency on selling dollar-based assets to foreigners.”
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Pershing Square Holdings Ltd’s Bill Ackman, meanwhile, said the key to avoiding any future issues will be focusing on growth of assets. Fink noted that further unlocking private capital could help boost US economic growth to 3%.
“I am not worried about our solvency, although I would like to see slower growth in our liabilities,” Ackman said.
Uploaded by Tham Yek Lee
