Bloomberg Survey: High Risk of U.S. Debt Default, Is Gold or Bitcoin a Wealth Protection?

The issue of the U.S. debt ceiling remains unresolved. According to the latest Markets Live Pulse survey by Bloomberg, gold is the top choice for asset protection, with over half of financial professionals indicating they would buy gold if the U.S. government fails to meet its obligations.

There is a dedicated article on gold investments: With gold prices nearing historical highs, what are the avenues for investing in gold? What is gold-backed stablecoin?

Analysis of the U.S. debt crisis: Yellen warns of a potential constitutional crisis; JPMorgan analyst says no one wants to get hit by a bus

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Buying U.S. Treasury Bonds as a Hedge Against U.S. Debt Default?

It is interesting to note that the second most popular choice is U.S. Treasury Bonds, considering the possibility of the U.S. facing a debt default. This result seems somewhat ironic. During the debt ceiling crisis in 2011, although the U.S. did not actually default, Standard & Poor's downgraded the U.S. credit rating, leading to a surge in the purchase of U.S. Treasury Bonds, causing the price of 10-year Treasury Bonds to rise and yields to drop to historic lows at the time. Gold prices rose, while global stock values evaporated by trillions of dollars.

Impact of U.S. Debt Default on Stock Market

During the 2011 debt ceiling crisis, the S&P 500 index dropped by 17%, and professional investors were less pessimistic about the impact of this crisis on the S&P 500 index compared to retail investors.

Impact of the U.S. Dollar's Position as the Global Primary Reserve Currency?

Some investors believe that the debt ceiling drama has already caused some damage to the U.S. dollar, with 41% of investors indicating that if the U.S. defaults, the U.S. dollar's status as the global primary reserve currency will be at risk. According to another Bloomberg survey, investors are seriously considering moving away from the U.S. dollar. A previous MLIV Pulse survey showed that most respondents believe the U.S. dollar's share of global reserves will drop below half within a decade.

Bitcoin Ranks Third, More Popular Among Retail Investors Than Institutional Investors

In this survey, Bitcoin ranks third, more popular than traditional safe-haven currencies such as the Japanese Yen and Swiss Franc, with some investors viewing Bitcoin as a digital gold. However, the price of Bitcoin has experienced little volatility recently, with a price of $27,279 at the time of writing.