Billionaire Howard Marks Critiques Bitcoin and Gold for Lack of Intrinsic Value

• Billionaire Howard Marks comments on the intrinsic value of gold and cryptocurrencies.
• Both gold and crypto are seen as lacking cash flow, a key element of intrinsic value.
• Marks views these assets as driven by limited supply and investor perception.

In a recent Bloomberg podcast, Howard Marks, billionaire and Oaktree Capital founder, shared his views on the lack of intrinsic value in both gold and cryptocurrencies, sparking discussion in the investment community.

Defining Intrinsic Value: Marks’ Perspective on Crypto and Gold

On Bloomberg’s “Merryn Talks Money” podcast, Howard Marks expressed his skepticism about the intrinsic value of gold and cryptocurrencies like Bitcoin. He emphasized that unlike traditional assets such as stocks, bonds, and real estate, gold and crypto do not generate cash flow, which he sees as a fundamental aspect of intrinsic value. This perspective challenges the popular notion of these assets as reliable stores of value or hedges against inflation.

Gold vs. Bitcoin: A Comparative Lack of Foundation

Marks highlighted that both gold and Bitcoin’s values are largely driven by their limited supply and what others are willing to pay for them. While acknowledging gold’s historical role and its perceived stability, he pointed out its lack of an “analytical raison d’etre.” When pressed to choose between gold or Bitcoin, Marks leaned towards gold for its longer history but maintained his stance on the lack of intrinsic value in both.

Wall Street’s Divergent Views on Gold and Crypto

The debate on the intrinsic value of gold and cryptocurrencies is not limited to Marks. Other prominent investors, including Ray Dalio, have shared their views, often focusing on the volatility and attention demands of cryptocurrencies. While Dalio acknowledged holding Bitcoin, he expressed a preference for gold, citing its status as a top reserve asset among central banks.

Investment Hedge: Bitcoin’s Rising Popularity

Despite Marks’ criticism, Bitcoin has gained popularity as an investment hedge, recently surpassing the dollar in preference according to a Bloomberg survey. This growing interest in Bitcoin as a hedge reflects its increasing acceptance among investors, even as debates continue about its long-term viability and value proposition compared to traditional assets like gold.

Conclusion

Howard Marks’ comments on the intrinsic value of gold and cryptocurrencies highlight a fundamental divide in the investment community. While traditional assets remain favored for their tangible returns, the debate over the true value and role of gold and cryptocurrencies in investment portfolios continues, reflecting the evolving nature of financial markets and investor preferences.