He Could Be the Next Fed Chief and He Says to Add These Two Assets to Your Portfolio

There's a new candidate to replace Federal Reserve Chairman Jerome Powell when his term ends in May 2026.

In mid-September, Rick Rieder, chief investment officer of global fixed income at BlackRock, the world's largest asset management company, met with Treasury Secretary Scott Bessent to discuss the job and how Rieder might lead the planet's most important central bank.

Rieder's star is rising because he is considered to have a deep and broad understanding of macroeconomics and financial markets. Also, of course, the White House likes him because he's calling for a larger-than-usual 50 basis point cut in interest rates by the Fed, exactly what President Trump has been hounding Powell to do.

This is important for investors because a more aggressive rate-cutting cycle will almost certainly drive stocks higher.

In addition, Rieder recommends that investors add two non-stock assets to their portfolios.

Two hard assets

Last month, in an interview with CNBC, Rieder said that investors should allocate a portion of their money to gold and Bitcoin (CRYPTO: BTC). Both belong in an "ideal" investment portfolio, he added.

Rieder called gold a good currency hedge, in reference to the fact that the dollar is down more than 9% this year against a basket of other currencies. He recommended an allocation of 3% to 5% of your portfolio to gold.

Gold is up 52% this year, driven primarily by central banks' accumulation of the commodity during the past two years. This week, it topped $4,000 an ounce for the first time ever.

Rieder said he believes the price of Bitcoin is going to rise, too, though he suggested that a smaller allocation is appropriate for the king of cryptocurrencies. Bitcoin has climbed 31% so far in 2025. One coin now trades at about $120,000, though that price has historically been highly volatile.

Image source: Getty Images.

A crypto-friendly Fed

Fed Chief Powell has been somewhat ambiguous toward Bitcoin. In December 2024, he called it a speculative asset and a digital rival to gold. He also said he wanted to make sure that crypto assets don't threaten the health and well-being of banks.

Should Rieder become Fed chair next spring, he would likely be more friendly to Bitcoin and other cryptocurrencies. That would align him with the Trump White House, which has embraced crypto. Indeed, last year on the campaign trail, Trump promised to make the U.S. "the Bitcoin superpower of the world."

The Fed does not regulate Bitcoin. In fact, no single entity does. The Commodity Futures Trading Commission (CFTC), the Securities and Exchange Commission (SEC), and the IRS all have some regulatory authority over cryptos.

But having a Federal Reserve chief who openly approves of Bitcoin and other cryptos would almost certainly give them a shot in the arm.

And a dovish Fed chief who wants to cut interest rates aggressively -- as Rieder suggests he would be -- would also be a boon for gold. Inflation, at about 2.9% (as measured by the core Personal Consumption Expenditure Price index, the Fed's preferred measure), remains stubbornly higher than the Fed's 2% long-term target. So, cutting interest rates now would likely send inflation even higher -- and further from that target.

That would further erode investors' confidence in the dollar (and perhaps in the independence of the Federal Reserve, too), and drive the price of gold -- a traditional hedge against inflation -- even higher.

So, investors who believe that Rick Rieder -- or someone like him -- will be the next Fed chair should heed his advice on gold and Bitcoin. As they say in Washington, personnel is policy, and perhaps profits too, for the right asset allocation.

Matthew Benjamin has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.