JPMorgan Chase as a substitute for gold, and therefore a hedge against inflation.
However, with inflation still trending upward, the Federal Reserve officially beginning to taper its bond purchases, and the market pricing in interest rate hikes in 2022, thinking about hedging your portfolio against inflation certainly isn’t a bad idea.
SEN has helped the bank bring in tons of deposits that it doesn’t have to pay any interest on, as well as attract a large clientele to whom it can cross-sell its traditional banking products.
Bank stocks tend to be effective hedges against inflation — as long as it’s not runaway inflation — because inflation usually results in the Fed hiking its benchmark interest rates.
Silvergate disclosed in its second-quarter regulatory filing that if the Federal Reserve were to raise the fed funds rate by 1%, net interest income at the bank — revenue it makes from loans and securities after covering its cost of funding — would rise by nearly 52% over the next year.
Signature Bank , too, has developed a real-time payments network — in this case, called Signet — that works to better serve the transactional side of cryptocurrency trading.
Additionally, Signature is still changing the overall composition of its deposit base, and still has a lot of interest-paying deposits, rates on which rise in line with interest rates, dragging on the bank’s margins.