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Apocalyptic Assets Finally , while reasonable analysis can address many of these apocalyptic scenarios , should investors consider buying gold or cryptocurrencies anyway ?

These two assets should probably be considered separately .

Gold does have some positive characteristics . It has been a form of money for millennia ; it is used as an asset by central banks . It has some industrial uses and does , of course , make beautiful jewelry . In addition , short of nuclear fusion , it is in genuinely limited supply .

However , this limited supply ultimately means that it cannot be used as a modern currency . In a global economy with positive real economic growth , a gold-standard economy would either be doomed to a perpetual mild deflation or require some artificial mechanism to increase the velocity of transactions at a steady pace . Moreover , while gold has been seen as a hedge against inflation in the past , this has not worked out recently . Since January 1991 , the correlation between gold and inflation has barely been positive , and over the past decade it has actually been negative .

The price of gold has risen by over 20 % so far this year . However , it is fundamentally a speculative asset , and , as such , should only merit a very small allocation , if any , in a diversified portfolio .

That being said , the fundamentals of gold positively glisten relative to cryptocurrencies , which have gained new interest this year as the industry has invested heavily in advertising and political contributions . However , it needs to be emphasized that an “ asset ” such as bitcoin can never really be used as a currency , since the primary requirement of a currency is stability , and that those buying and holding bitcoin are only doing so on the conviction that it will go up . Needless to say , bitcoin is not used as a reserve asset of global central banks , has no assets or taxing authority backing it and is not used in any extensive way in transactions . Nor is it really in limited supply . While the algorithms upon which bitcoin is based allow for a maximum of 21 million coins , there is absolutely nothing to stop an enterprising young crypto enthusiast from setting up “ mitcoin ,” “ zitcoin ” ( or my personal favorite “ davecoin .”)

This is not a place to review the shortcomings of cryptocurrencies . For any financial mania to succeed you don ’ t need to fool all of the people all of the time — you only need to fool some of the people some of the time . You can even make a profit if , according to the greater fool theory of finance , you can find some greater fool to take it off your hands at a higher price .

However , for serious long-term investors , there is really no reason to dabble in speculation or the hunt for greater fools . The reality is that , while the U . S . economy faces plenty of risks , the noisiest alarm bells are mostly false alarms . As we enter the fall of 2024 , global financial markets still offer plenty of opportunity to those willing to invest in a diversified way with one eye on valuations and the other on their own return goals and risk tolerance .

DAVID KELLY is chief global strategist at J . P . Morgan Asset Management .

OCTOBER 2024 | FINANCIAL ADVISOR MAGAZINE | 59