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Speaker 1: Welcome to Shanes.

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Speaker 2: I'm Joel Webber and I'm Eric Belchernas.

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Speaker 3: Eric, Bitcoin has had a year, ETF's contributed a huge

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Speaker 3: part to that. There's this other asset class though that

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Speaker 3: maybe it was the original bitcoin, called.

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Speaker 1: Gold, and gold has also had a hell of a year.

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Speaker 2: Yeah, bitcoin is called digital gold. They even call it that,

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Speaker 2: and it's interesting. These two camps are constantly at war,

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Speaker 2: but they have a lot in common in my opinion,

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Speaker 2: from my sort of objective view. They're both about storing value.

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Speaker 2: They both think the government debasis currency. The one big

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Speaker 2: difference is Bitcoin's very volatile. I've always called Bitcoin like

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Speaker 2: teenager gold. It's because it's literally sixteen years old and

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Speaker 2: gold is four thousand years old, So to me it's weird.

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Speaker 2: It's almost like gold is looking at itself as a

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Speaker 2: as a little kid. So I think they should get along.

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Speaker 2: But in a portfolio they play different roles because they

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Speaker 2: move differently to stocks. But this year bitcoin ETFs have

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Speaker 2: taken in so much money, right, and gold is up

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Speaker 2: a lot but hasn't really taken in flows. So there

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Speaker 2: is a bit of like bitcoin stealing gold's thunder as

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Speaker 2: like the store of value or it would appear all.

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Speaker 3: Right, So to actually debate all of that, Bloomberg hosted

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Speaker 3: an ETF's in Depth event here at Bloomberg Headquarters in

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Speaker 3: New York on December twelfth, and we moderated a panel.

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Speaker 3: On that panel with us was David Lavelle, who's the

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Speaker 3: head of Global head of ETFs at Greyscale, George milling

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Speaker 3: Stanley who's the chief Gold Advisor at State Street Global Advisors,

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Speaker 3: and then Sime and Himan who's the global investment strategist

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Speaker 3: and head of Investment Strategy Group at pro Shares, this

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Speaker 3: time on trillions the crypto versus gold debate. Today we're

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Speaker 3: moderating on knife Fight, so so welcome, We're going to

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Speaker 3: talk about gold versus bitcoin.

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Speaker 1: We got simeon, David and George.

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Speaker 3: So as Eric and I talked about this, we were like,

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Speaker 3: how do we have you know that that part of

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Speaker 3: Anchorman where the different networks go have like a street fight.

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Speaker 3: We're like, let's have a street fight on stage between

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Speaker 3: Golden Bitcoin.

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Speaker 1: How much you guys hate each other.

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Speaker 4: It's really we were just saying, I hope we were

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Speaker 4: going to fight. You know, George and I work together

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Speaker 4: for a long time and have a deep mutual respectymore,

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Speaker 4: not meymore. No, I think it's a mischaracterization. There's a

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Speaker 4: spot for golden bitcoin and everyone's portfolio.

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Speaker 1: I think you just made this so morning, you just

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Speaker 1: mad this.

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Speaker 5: You do that at the beginning, we were supposed to work

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Speaker 5: to it.

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Speaker 4: Yeah, well, well I think I think there is. But no,

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Speaker 4: I have respect for both of both of these, but.

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Speaker 3: There's so many things that you do sort of probably

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Speaker 3: see eye to eye on you like both hate the government.

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Speaker 3: You're a hedge against inflation, you know, like distrust of everything.

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Speaker 3: But then like, what what's the thing that you all?

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Speaker 3: You know, really, you know, I can agree on.

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Speaker 6: Am I on the right panel here? I'm I'm not

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Speaker 6: sure I recognize myself in any of that.

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Speaker 3: Okay, Well, it's been a good year. Everything has gone up,

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Speaker 3: especially for crypto and gold like.

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Speaker 6: Year, yes, and p's up, bitcoins up, Gold's up and

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Speaker 6: an amazing year.

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Speaker 7: I love it.

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Speaker 3: The flows for bitcoin are way bigger than gold.

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Speaker 1: How does that feel for this year? Yeah?

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Speaker 6: No, Look, I think that there are plenty of other

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Speaker 6: ways of investing in gold. There aren't that many ways

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Speaker 6: of investing in bitcoin. So I think that that the

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Speaker 6: other ways of investing in gold have benefited, probably to

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Speaker 6: the detriment of ETFs. But it's interesting to see that

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Speaker 6: in the last few months we've started to see some

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Speaker 6: sizable inflows coming into gold ETFs, and I think that that,

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Speaker 6: to my mind, makes makes a lot of sense.

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Speaker 8: And do you view bitcoin flows this year as a

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Speaker 8: goal guy as like, oh, it's just you know, shiny object,

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Speaker 8: new plaything, or do you think those flows are store

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Speaker 8: of value flows that are buying to hedge against currency

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Speaker 8: debasement like.

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Speaker 6: Gold would I'm not sure I see bitcoin as a

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Speaker 6: store of value. I think that's a question that I

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Speaker 6: hope that we're going to get into. But I think

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Speaker 6: that the main reason why people have been buying bitcoin

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Speaker 6: is because.

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Speaker 7: They're chasing returns.

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Speaker 6: The returns have been stellar in the fifteen years that

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Speaker 6: bitcoin has been around. I don't know that that's a

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Speaker 6: long enough period to draw statistically significant conclusions on. I

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Speaker 6: love representing an asset with a six thousand year track record,

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Speaker 6: but I think that gives me a confidence that some

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Speaker 6: of the things I say may make more sense.

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Speaker 1: Jump right in. Those are fighting words, Listen.

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Speaker 5: I'm just glad I'm not on a panel they have

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Speaker 5: to talk about spot versus futures ets. However, I would

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Speaker 5: like to let everybody know that reports of our demise

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Speaker 5: are great leads aggerated. We have five billion dollars in

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Speaker 5: our crypto suite. Bidoh is a two and a half,

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Speaker 5: and b ITU the two x is over a billion dollars.

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Speaker 5: And we even have five hundred million dollars in the

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Speaker 5: mutual fund BTCFX. So there's utility there and it's important stuff.

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Speaker 5: But you know what I think about everybody says it's

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Speaker 5: chasing returns in bit coin is a risk asset, and

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Speaker 5: I just go back to the regional bank little mini

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Speaker 5: crisis we had, and that was crypto related banks. You

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Speaker 5: know that month of March almost two years ago, the

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Speaker 5: S and P five hundred financial sector went down twenty percent.

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Speaker 5: It bitcoin went up ten go. No, maybe it's not

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Speaker 5: a risk asset. Maybe it's a diversifier, which is I

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Speaker 5: think what some of some of the folks who maybe

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Speaker 5: aren't chasing so much do see it zigging when other

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Speaker 5: things zagg Yeah, I.

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Speaker 6: Think it depends on the other things that zag I

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Speaker 6: think one of the things that I'm a little concerned

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Speaker 6: about with bitcoin, it's in its short history is that

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Speaker 6: when bitcoin was launched, there didn't seem to be any

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Speaker 6: relationship to the stock market. In the last few years,

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Speaker 6: I think a significant correlation is developed with the stock market,

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Speaker 6: and I find that concerning when the bitcoin guys, you

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Speaker 6: and and Dave are out there claiming that it's.

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Speaker 1: Old guys too.

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Speaker 5: So I'm on your side, Tip.

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Speaker 7: I'm delighted to do hear it. You're very welcome on

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Speaker 7: my side.

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Speaker 5: But it's interesting though, coin and gold aren't correlated.

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Speaker 7: No, that's kind of cool. We don't see a relationship

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Speaker 7: at all between them, you know.

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Speaker 4: I would say that bitcoin means different things to different people,

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Speaker 4: and therefore it has a different place in different investors' portfolios.

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Speaker 4: And so those no, so those that are those that

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Speaker 4: are seeking an opportunity to invest in something they believe

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Speaker 4: is that disruptive technology can do that and can make

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Speaker 4: an allocation to a spot in their portfolio that's a

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Speaker 4: risk asset. And for those that are gold bugs that

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Speaker 4: really feel in the basement of currency and all sorts

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Speaker 4: of other characteristics of store value, have an opportunity to

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Speaker 4: make an allocation in their portfolio that might otherwise be

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Speaker 4: put to place where their gold allocation is, So I

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Speaker 4: think it's very early in the life of this asset.

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Speaker 4: I think when you take a look at some of

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Speaker 4: the liquidity characteristics of it, and you know the general

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Speaker 4: properties of ETFs, you know, democratizing the investment, validating this

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Speaker 4: type of investment, you know, it's incredibly bullish.

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Speaker 1: But it's very very early, and.

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Speaker 4: So we haven't gotten to the you know, if you

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Speaker 4: have dials on a on a radio, you got the

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Speaker 4: big deals over here in the little dials. We're still

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Speaker 4: in the big dials. Do I want to invest in

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Speaker 4: this or don't I want to invest in this? And

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Speaker 4: some of the debates that we're willing to have here

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Speaker 4: are the smaller dial over here around you know, other characteristics.

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Speaker 2: So one of the ways to define bitcoin and the

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Speaker 2: Gary Gensler and the SEC had to deal with this

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Speaker 2: was is it a commodity or a security?

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Speaker 1: Dave, what would you say?

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Speaker 7: What's commodity?

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Speaker 1: Simeon?

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Speaker 5: It's a commodity, and it differs from ether because ether's

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Speaker 5: got staking yield and that makes it a different animal.

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Speaker 6: George Still, I think commodities have practical uses in the world.

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Speaker 6: I'm not sure that bitcoin actually does have that. It

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Speaker 6: can be a fine investment if return is what you're

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Speaker 6: looking for, But I'm not really sure. I tend to

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Speaker 6: lean toward the Genstler view, which was that bitcoin is

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Speaker 6: probably a security.

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Speaker 1: So hang on for a second. So all right, here

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Speaker 1: we go, if we finally.

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Speaker 4: I don't disagree with you when you talk about the

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Speaker 4: properties of bitcoin not really having usefulness when you're in

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Speaker 4: a country that has a monetary policy and dollar that

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Speaker 4: can be relied upon if you were to go to

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Speaker 4: a country that has hyper inflation, or if you were

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Speaker 4: somebody who really needed to rely upon a transfer of

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Speaker 4: currency across borders with a high degree of confidence, with speed,

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Speaker 4: with flexibility, with just an Internet connection, and needed to

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Speaker 4: kind of move money to let's say, a family member

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Speaker 4: halfway around the world. I think you would probably say

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Speaker 4: it has tremendous utility. It just in the US market.

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Speaker 4: This happens to be a transformative technology where the first

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Speaker 4: application of that transformative technology doesn't have a great utility here.

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Speaker 4: So it would be like you know, the Internet showing

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Speaker 4: up and you know email being useless to me. It

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Speaker 4: just happens to be that the first practical application of

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Speaker 4: bitcoin is something that doesn't have utility to you or.

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Speaker 7: Me, okay, with respect Dave as always.

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Speaker 4: Of course, yeah, the most respectful guy.

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Speaker 6: And I'm definitely going to disagree with you there. I

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Speaker 6: think it's probably not helpful to your case to bring

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Speaker 6: in the L. Salbator example, because the response to L.

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Speaker 6: S Aalberta are basically adopting bitcoin in a very very

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Speaker 6: big way, was that the IMF said, basically, you are

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Speaker 6: never going to get a dollar of IMF help unless

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Speaker 6: you actually abandon this stupid policy that you embraced. I'm

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Speaker 6: not saying it's a stupid policy, but the IMF is

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Speaker 6: somebody that I do pay attention.

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Speaker 4: To, respectfully, not saying that it can be utilized as

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Speaker 4: a national currency. But if I'm sitting in Buenos Aires

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Speaker 4: and you know, essentially I can get a two to

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Speaker 4: one you know conversion ratio on the Argentinian pace, well,

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Speaker 4: if I use actual US dollars, they need something that

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Speaker 4: is going to hold its value much better. I'm not

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Speaker 4: suggesting they can utilize as a national currency. I'm just

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Speaker 4: saying that despite its volatility characteristics, it is very volatile,

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Speaker 4: but it doesn't devalue, and so they have something that

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Speaker 4: they would rather have that volatility. But know that it's

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Speaker 4: going to have and hold its value properly.

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Speaker 1: I forgot to bring the popcorn. This is like there.

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Speaker 4: You can carry gold bars around and try that.

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Speaker 1: Yeah, ask your alternative the aluminum SAMSONI briefcase. It's like very.

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Speaker 3: I've almost told you that I want to ask prisoner

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Speaker 3: like Trump is indicated that there could be something resembling

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Speaker 3: a bitcoin stockpile. George, do we put that right next

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Speaker 3: to Fort Knox or or is there another place that

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Speaker 3: it goes?

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Speaker 4: It's much easier to store.

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Speaker 7: Is there an it that you need to put somewhere?

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Speaker 4: I mean, isn't this all up in the air, George, George, George,

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Speaker 4: come on twenty years and for like the past fifteen years,

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Speaker 4: people are saying, is there gold in the ball? For

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Speaker 4: GLD and g LDM. We have pitches of you in

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Speaker 4: the vall. We know there's gold in the ball. It's

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Speaker 4: a thirty three Act dellow grant tor trusts exchange trader

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Speaker 4: product that holds the bitcoin.

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Speaker 5: An argument I've set us because we're a forty act

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Speaker 5: fund and in case you can't use a grant or trust,

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Speaker 5: then you should know that b it t O BIDDO

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Speaker 5: is indeed a forty act fund.

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Speaker 1: I don't worry. Is that the weirdest knife fight I've

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Speaker 1: ever been to. It's very cerebral nerds knife fighting. Okay,

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Speaker 1: leave back to this.

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Speaker 2: I think what George is saying is that not we

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Speaker 2: don't know if the bitcoin's there, and I know you guys,

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Speaker 2: you have something in common there.

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Speaker 1: The hardcore people question that.

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Speaker 2: I think he's saying it isn't even a thing, so

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Speaker 2: why on earth could it be a reserve?

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Speaker 1: Right?

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Speaker 6: Look, I'm not saying that it's a bad idea. I

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Speaker 6: think the problem is a lot of people have taken

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Speaker 6: what the President elect said out of context completely, not

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Speaker 6: for the first time in his case. A lot of

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Speaker 6: people have suggested that maybe he's planning to sell some

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Speaker 6: of our gold reserve out of Fort Knox and replace

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Speaker 6: it with bitcoin. He never said that. I hope he

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Speaker 6: never does. I don't think that would be a good idea.

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Speaker 6: But if he thinks it's a good idea to just

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Speaker 6: stockpile some bitcoins, I'm certainly not going to be the

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Speaker 6: person to argue with him.

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Speaker 5: There's more analogous stuff here than there are differences, I think,

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Speaker 5: which is going back to how you started and sort

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Speaker 5: of front ran it.

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Speaker 1: Gold is the thing that I really have time out.

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Speaker 4: I didn't front run anything.

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Speaker 1: I don't.

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Speaker 5: Perhaps it suggested a unifying his lawyers here at the

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Speaker 5: front end of our conversation. But gold is the thing

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Speaker 5: that doesn't have the industrial use for the most part.

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Speaker 5: It's not copper, it's not so it's a store of value.

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Speaker 5: It happens to have a physical thing. And if you

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Speaker 5: went through the financial crisis, then you were wondering, did

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Speaker 5: you have your own bar of gold? Did it have

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Speaker 5: your initials on it? And all that crazy stuff. But

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Speaker 5: it's around for a long time. And one of the

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Speaker 5: ways that you can see how well functioning gold is

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Speaker 5: is if you look at the gold futures market and

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Speaker 5: you've got the Bloomberg Index, the Gold sub index. If

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Speaker 5: you look at it just a little in the weeds.

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Speaker 5: You can look at the regular one, but look at

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Speaker 5: the one that says t r on it your on

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Speaker 5: your terminal. That's the fully collateralized guy and it and

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Speaker 5: that means you hold cash with your futures track spot

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Speaker 5: absolutely spot on. What does that mean? Gold is the

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Speaker 5: future of bitcoin?

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Speaker 1: Like they are?

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Speaker 5: They are so similar. I would argue they're much more

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Speaker 5: similar than you than you guys are suggesting. But what

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Speaker 5: is cool right now is that they really aren't correlating.

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Speaker 5: Bitcoin's got a point three correlation to the stock market,

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Speaker 5: something like point two to bonds and point one to gold.

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Speaker 5: That seems to me kind of a useful thing in

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Speaker 5: a portfolio.

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Speaker 6: Yeah, point three correlation the stock market would worry me.

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Speaker 6: Goals correlation to the stock Markey's point zero three. In

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Speaker 6: other words, statistically nothing correlation with the bond market is bigger.

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Speaker 6: It's point zero nine. Statistically that's still zero. That's what

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Speaker 6: I like about Gold's a lack of correlation with the

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Speaker 6: assets that you'd find in a typical portfolio. Bitcoin, I'm afraid,

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Speaker 6: does correlate a bit more so, I don't think it's

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Speaker 6: offering you the same kind of protections. And I think

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Speaker 6: the first reason why people turn to gold as an

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Speaker 6: investment is because of its protective capabilities. It's a good

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Speaker 6: diversifier in a portfolio. It has a long track record

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Speaker 6: of offering some protection against sustained high inflation. Not sudden

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Speaker 6: moves in the rate of inflation, but sustained high inflation.

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Speaker 6: It's got a good track record is offering some protection

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Speaker 6: against a sudden downturn in the equity market. Think of

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Speaker 6: Black Monday in nineteen eighty seven, dot Com bubble bursting

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Speaker 6: in two thousand, think of the global financial crisis two

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Speaker 6: thousand and eight, COVID in twenty twenty, plenty of examples.

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Speaker 6: It also has a good long historical track record offering

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Speaker 6: some protection against currency depreciation. So all of those things

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Speaker 6: put together, I think that that's the principal reason why

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Speaker 6: people turn to gold. Now, sometimes God will and offer

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Speaker 6: you not just protection, but it will offer you protection

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Speaker 6: plus performance. And in my defense here I would cite

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Speaker 6: twenty twenty four when the goal price is up thirty

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Speaker 6: three percent year to date. I think protection plus performance

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Speaker 6: is a very very powerful mantra, and I don't think

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Speaker 6: the bitcoin cur actually matched that mantra right now.

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Speaker 4: I think protection plus performance is actually exactly what bitcoin

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Speaker 4: would would provide you. And I would say that all

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Speaker 4: those characters you talked about, inflation, protection, currency debase, and protection,

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Speaker 4: all those things are properties that bitcoin actually does. In

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Speaker 4: the case of inflation, I think the inflation properties of

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Speaker 4: bitcoin is half of that of gold. You know, doing

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Speaker 4: a better job of protecting against inflation. And I think

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Speaker 4: that you know there.

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Speaker 7: Any evidence for this thing my research. That's su your thing.

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Speaker 4: One percent versus two percent is what I've got for

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Speaker 4: my research team. But we should have to talk about

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Speaker 4: that more.

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Speaker 6: I guess when I say inflation, I did stress sustained

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Speaker 6: high inflation. Gold comes into its own when we have

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Speaker 6: inflation for more than two years at more than five

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Speaker 6: percent a year. We didn't have that in the most

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Speaker 6: recent round of inflation. Gold was going up for different reasons.

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Speaker 6: It wasn't chasing inflation.

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Speaker 4: So let's take two If two year is a time prime,

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Speaker 4: two years, minimum two years, So let's take a look

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Speaker 4: at the return profile of a minimum two years against

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Speaker 4: gold against bitcoin. I don't think you're going to find a.

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Speaker 7: Two year period.

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Speaker 4: I haven't looked at this, but I suspect you're not

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Speaker 4: going to take a two year period where you have

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Speaker 4: gold that's out before.

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Speaker 1: In bitcoin.

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Speaker 6: I'm happy to accept with respect that that bitcoin does

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Speaker 6: in fact demonstrate superior returns to go in the short

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Speaker 6: life that it's had provided. Of course, we leave out

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Speaker 6: twenty twenty two, which nobody really wants to talk.

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Speaker 4: Two year period the on the bitcoin, we've gotten a

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Speaker 4: couple of bad years, don't get me wrong eight the

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Speaker 4: past eleven has been number one performance.

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Speaker 7: Like somebody said about the Chicago Cubs. Any team can

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Speaker 7: have a bad centure.

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Speaker 1: Okay, and Eric and I asked a question.

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Speaker 3: No, I'm so glad there wasn't you're carrying a knife joke?

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Speaker 1: Probably let's check them.

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Speaker 2: Okay, So let's talk a little bit about, uh, this

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Speaker 2: idea of putting this stuff into an ETF.

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Speaker 1: You know, oh yeah.

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Speaker 2: What I found is when I tweet about bitcoin, there

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Speaker 2: are definitely people who come in and go, oh, this

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Speaker 2: is like against the whole idea. You're centralizing something that's

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Speaker 2: supposed to be decentralized. And the same with gold. Okay,

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Speaker 2: I think that there's going to be like real like

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Speaker 2: apocalyptic scenes out there. Society is going to collapse. I

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Speaker 2: want gold in my basement and a lot of bitcoin people.

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Speaker 2: I will call these the extreme types. The ETF defeats

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Speaker 2: all that purpose in that the government could just tell,

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Speaker 2: you know, confiscate it. I guess my point is how much.

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Speaker 1: Is by the way, Yes, that's right.

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Speaker 2: Well there's one Goldie TF that keeps it in Switzerland,

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Speaker 2: which is like next level.

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Speaker 1: But what about this idea of.

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Speaker 2: Is an ETF against the spiritual foundation of both of Europe.

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Speaker 4: So I think we are going to be really really lying.

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Speaker 4: So that this guy was in the room when it

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Speaker 4: happened twenty years ago, I have me in the room

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Speaker 4: when it happened when Bitcoin spot products came to market,

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Speaker 4: and I think there were naysayers, and we've talked about this. Naysayers.

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Speaker 4: The gold bugs were like, this is insane, and there

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Speaker 4: are lots of naysayers and the bitcoin market saying this

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Speaker 4: is also insane. But what the gold bugs and the

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Speaker 4: bitcoin has really loved is that as a result of

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Speaker 4: this democratization asset and putting it in this wrapper, that

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Speaker 4: the price performance as a result of it, because of

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Speaker 4: that democratization, was incredibly bullish.

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Speaker 1: And I think that they would both agree.

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Speaker 4: They wouldn't want to admit that it helped, but I

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Speaker 4: think the reality is that it did.

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Speaker 6: I don't think anybody made that sort of complain when

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Speaker 6: we launched gold twenty years ago. I think most people

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Speaker 6: were very happy that what we had done, in the

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Speaker 6: words of Bob Pisani if I mentioned his name in

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Speaker 6: these Allied precincts, we had taken the friction out of

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Speaker 6: investing in gold.

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Speaker 7: That was what Bob.

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Speaker 6: Pisani said, we democratized it this same way that the

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Speaker 6: launch of spot bitcoin ETFs, I think helped to democratize that.

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Speaker 6: It was an advance on what you guys have. Let

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Speaker 6: me put it that way.

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Speaker 5: You don't need to be using the utility of the

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Speaker 5: underlying investment for the ETF to be meaningful. I don't

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Speaker 5: drive a tractor, but I might want to invest in

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Speaker 5: John Deere. Like the fact that it has an important use.

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Speaker 5: And we're having a little debate here, but if for

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Speaker 5: those of us who believe that there's an underlying use

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Speaker 5: for the blockchain for bitcoin as a store value, remember

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Speaker 5: it's got fixed supply and all that stuff. Whether you're

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Speaker 5: going to use it in an apocalypse, it doesn't matter

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Speaker 5: to me as an investor. There's lots of things you

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Speaker 5: own that you don't need the underlying utility for. So

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Speaker 5: I think that's almost a diversion from what most of

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Speaker 5: us are thinking about as to what will it do

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Speaker 5: in my portfolio.

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Speaker 6: I think you're blending blockchain and bitcoin. I still think

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Speaker 6: of them very much as separate entities, and you guys know.

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Speaker 7: Much more than anything I do about this.

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Speaker 6: I think that blockchain technology has never been hacked. Unlike

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Speaker 6: various exchanges that have traded cryptocurrencies, or unlike various wallets

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Speaker 6: that previously contained cryptocurrencies, the blockchain has never been hacked,

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Speaker 6: and I think that that is an incredibly important contribution

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Speaker 6: to society. I think that blockchain is a solution, and

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Speaker 6: I think what it's looking for as a problem. I'm

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Speaker 6: not sure that a currency is actually the problem that

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Speaker 6: blockchain can resolve. I think there's a lot of other

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Speaker 6: things that blockchain can do too. I'm looking at investing

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Speaker 6: in companies that are going to gain from grow growing

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Speaker 6: use of the blockchain, rather than me looking directly to

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Speaker 6: invest in bitcoin.

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Speaker 5: Well, but that's not dissimilar to wanting to own oil

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Speaker 5: and an oil company. They're both very important in valid,

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Speaker 5: valid investments. So I don't think it's in either or

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Speaker 5: in this case one hundred percent. There are tremendous opportunities

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Speaker 5: in companies that are leveraging the blockchain, but there are

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Speaker 5: also opportunities to simply own coin as well.

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Speaker 4: But different people want to invest in different things in

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Speaker 4: different ways. You're going to want want people who are

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Speaker 4: going to want own gold and keep it in the vault.

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Speaker 4: There are people that don't want to use a financial product.

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Speaker 4: There's people that don't want to own, you know, mining

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Speaker 4: companies or you know, those that are actually using gold

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Speaker 4: in their in their you know, for commercial uses. The

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Speaker 4: same as also the case for for bickcoin.

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Speaker 6: So you raised the specter of armageddon. I think I

435
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Speaker 6: think we ought to tackle this one a little bit.

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Speaker 6: I happen to be an old fashioned guy. I believe

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Speaker 6: that there will always be a New York Stock Exchange

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Speaker 6: where I can trade my g l D or a

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Speaker 6: successor body. I believe there will always be a vault

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Speaker 6: at the Bank of HSBC in London, or a successor

441
00:20:37,880 --> 00:20:41,040
Speaker 6: vault where we're going to store g l D. And

442
00:20:41,160 --> 00:20:43,679
Speaker 6: if somebody is going to come through that door with

443
00:20:43,760 --> 00:20:46,680
Speaker 6: the machete between his teeth and evil in his heart,

444
00:20:47,000 --> 00:20:48,560
Speaker 6: the metal that I'm going to I'm not going to

445
00:20:48,600 --> 00:20:50,199
Speaker 6: try to beat him to death with a gold bar.

446
00:20:50,480 --> 00:20:52,480
Speaker 6: The metal I'm going to want is lead in cased

447
00:20:52,520 --> 00:20:55,640
Speaker 6: in brass, and something to project it with significant volatile

448
00:20:56,040 --> 00:20:57,760
Speaker 6: velocity toward my assailant.

449
00:20:58,040 --> 00:20:59,960
Speaker 1: George, I'll bet on running away.

450
00:21:00,000 --> 00:21:02,000
Speaker 4: And if you've got one hundred thousand in gold, I'm

451
00:21:02,000 --> 00:21:03,600
Speaker 4: gonna beat you with one hundred thousand in middle.

452
00:21:05,080 --> 00:21:06,800
Speaker 6: You don't have to be able to beat you say that,

453
00:21:06,880 --> 00:21:07,880
Speaker 6: you just have to be able to.

454
00:21:07,800 --> 00:21:10,080
Speaker 1: Beat me, and I think you welly quickly.

455
00:21:10,680 --> 00:21:13,800
Speaker 7: And then my next appointment is is my car theologist?

456
00:21:16,160 --> 00:21:18,080
Speaker 1: All right, we've done so many places.

457
00:21:18,240 --> 00:21:21,520
Speaker 2: Yeah, okay, I want to talk about allocation, right because

458
00:21:22,080 --> 00:21:24,360
Speaker 2: black Rock put out a report today saying that they

459
00:21:24,400 --> 00:21:26,600
Speaker 2: recommend one to two percent allocation if you're going to

460
00:21:26,640 --> 00:21:28,080
Speaker 2: do it. They said they get a lot of incoming

461
00:21:28,160 --> 00:21:30,199
Speaker 2: about ibit, and so they just said put it out

462
00:21:30,240 --> 00:21:33,040
Speaker 2: there to stop all the phone calls. But the Bitcoin

463
00:21:33,080 --> 00:21:34,840
Speaker 2: people I can see on my Twitter mentions are like

464
00:21:34,880 --> 00:21:37,520
Speaker 2: one that two percent. It's like Zoolander, what's this bitcoin

465
00:21:37,600 --> 00:21:40,159
Speaker 2: for ants? You know a lot of these people are

466
00:21:40,160 --> 00:21:42,160
Speaker 2: all in. They think the stocks in the bond market

467
00:21:42,160 --> 00:21:45,600
Speaker 2: are the scam. I've also heard with gold. You know,

468
00:21:45,600 --> 00:21:48,440
Speaker 2: one or two percent isn't enough to really do much.

469
00:21:48,640 --> 00:21:49,840
Speaker 1: So here's my question about.

470
00:21:49,680 --> 00:21:52,359
Speaker 6: The medical difference to the performance of a portfolio. She's

471
00:21:52,359 --> 00:21:53,560
Speaker 6: the only way to judge any.

472
00:21:53,560 --> 00:21:58,000
Speaker 2: Say, I'm a Iowa based advisor, I'm you know, middle

473
00:21:58,000 --> 00:22:00,679
Speaker 2: of the road. I come to each of you and

474
00:22:00,720 --> 00:22:03,720
Speaker 2: I say I'm interested in your goal or bitcoin? What

475
00:22:03,920 --> 00:22:05,600
Speaker 2: percent should it be of my portfolio?

476
00:22:05,640 --> 00:22:06,320
Speaker 1: Start with George.

477
00:22:06,359 --> 00:22:06,639
Speaker 7: Okay.

478
00:22:07,240 --> 00:22:10,119
Speaker 6: The literature suggests that any portfolio can benefit from a

479
00:22:10,160 --> 00:22:14,000
Speaker 6: long term strategic allocation somewhere between two and ten percent,

480
00:22:14,440 --> 00:22:17,720
Speaker 6: and if you are experiencing or anticipating a period of

481
00:22:17,760 --> 00:22:20,920
Speaker 6: exceptional volatility in the markets in general, then you can

482
00:22:20,960 --> 00:22:24,680
Speaker 6: double your allocation two to twenty percent. That's not very helpful,

483
00:22:24,920 --> 00:22:28,600
Speaker 6: but every financial advisor is now legally required to know

484
00:22:28,800 --> 00:22:32,439
Speaker 6: his or her customer and they can help to figure

485
00:22:32,480 --> 00:22:34,960
Speaker 6: out where on that two to twenty percent spectrum an

486
00:22:34,960 --> 00:22:38,960
Speaker 6: individual exists. Because people have different tolerance for risk, people

487
00:22:38,960 --> 00:22:41,520
Speaker 6: have different needs for liquidity. There are all kinds of

488
00:22:41,560 --> 00:22:44,159
Speaker 6: different needs that investors have, and it's up to the

489
00:22:44,200 --> 00:22:47,240
Speaker 6: financial advisor to know the customer and to know where

490
00:22:47,240 --> 00:22:49,280
Speaker 6: they fit on that two to twenty percent.

491
00:22:49,040 --> 00:22:52,280
Speaker 1: Spect Can bitcoin co exist in that relationship?

492
00:22:52,359 --> 00:22:55,199
Speaker 6: I think bitcoin can co exist in that relationship. The

493
00:22:55,240 --> 00:22:57,359
Speaker 6: one thing I would say is that if you are

494
00:22:57,400 --> 00:23:01,040
Speaker 6: going to chase returns by by adding bitcoin to your portfolio,

495
00:23:01,080 --> 00:23:03,959
Speaker 6: because I think that's really what people are doing paramount,

496
00:23:04,840 --> 00:23:08,840
Speaker 6: then recognize that you're increasing the overall volatility of your portfolio.

497
00:23:09,080 --> 00:23:11,440
Speaker 6: So look at your risk off, look at your hedges

498
00:23:11,480 --> 00:23:16,000
Speaker 6: against portfolio volatility, light gold and give due consideration to

499
00:23:16,080 --> 00:23:19,119
Speaker 6: maybe upping the gold content at the same time that

500
00:23:19,160 --> 00:23:20,680
Speaker 6: you're adding bitcoin to the portfolio.

501
00:23:20,680 --> 00:23:22,080
Speaker 7: That's pretty it can coexist.

502
00:23:22,320 --> 00:23:25,480
Speaker 1: So gold is a hedge for your bitcoin, I think

503
00:23:25,480 --> 00:23:27,520
Speaker 1: a good one. I think that's pretty good.

504
00:23:27,640 --> 00:23:30,080
Speaker 2: You should run with that's that's pretty and that is

505
00:23:30,119 --> 00:23:31,800
Speaker 2: a great roll for the bitcoin craft.

506
00:23:31,800 --> 00:23:32,640
Speaker 1: I was all go nuts.

507
00:23:32,680 --> 00:23:35,920
Speaker 4: I wasn't just willing to go last risk is that's

508
00:23:35,920 --> 00:23:40,159
Speaker 4: a return five percent? Obviously volatility characteriss but but you know,

509
00:23:40,320 --> 00:23:43,240
Speaker 4: using sharp ratio sixty forty portfolio, five percent of bitcoin

510
00:23:43,480 --> 00:23:45,200
Speaker 4: is what our research team recommends.

511
00:23:45,640 --> 00:23:45,840
Speaker 7: Yeah.

512
00:23:45,880 --> 00:23:49,040
Speaker 5: I think the important thing that we all agree on,

513
00:23:49,080 --> 00:23:51,439
Speaker 5: and the facts are clear, is that bitcoin is more

514
00:23:51,520 --> 00:23:52,439
Speaker 5: volatile than gold.

515
00:23:53,280 --> 00:23:53,840
Speaker 1: Number two.

516
00:23:54,720 --> 00:23:59,160
Speaker 5: Both of them have not so much correlation with stocks

517
00:23:59,160 --> 00:24:01,840
Speaker 5: and bonds. We can quibble about that, but certainly lower

518
00:24:01,840 --> 00:24:04,480
Speaker 5: than even like emerging markets or things like that. Oh yeah,

519
00:24:04,640 --> 00:24:08,920
Speaker 5: So mathematically the thing that's the most volatile. You only

520
00:24:08,960 --> 00:24:13,200
Speaker 5: need a little bit in a portfolio to increase portfolio efficiency.

521
00:24:13,280 --> 00:24:16,680
Speaker 5: So it's easy to defend one or two percent for bitcoin.

522
00:24:16,880 --> 00:24:20,320
Speaker 5: And yes, because gold is less volatile for it to

523
00:24:20,400 --> 00:24:24,000
Speaker 5: do anything to contribute its diversification benefit, you'd need a

524
00:24:24,000 --> 00:24:24,480
Speaker 5: little more.

525
00:24:24,720 --> 00:24:26,320
Speaker 7: You know, it made me He's doing my job.

526
00:24:26,960 --> 00:24:29,200
Speaker 1: So do we have both funds? We're good. We got called.

527
00:24:29,760 --> 00:24:31,800
Speaker 3: I was worried that you could if you could co

528
00:24:31,880 --> 00:24:34,000
Speaker 3: exist on a stage together. Now I know that you

529
00:24:34,000 --> 00:24:35,240
Speaker 3: can co exist in a portfolio.

530
00:24:35,240 --> 00:24:35,920
Speaker 1: So this is good.

531
00:24:36,440 --> 00:24:36,560
Speaker 8: Uh.

532
00:24:37,200 --> 00:24:39,640
Speaker 3: I want to ask about President Trump again, and here

533
00:24:39,680 --> 00:24:43,439
Speaker 3: we are heading into a new administration, many many, many changes.

534
00:24:43,480 --> 00:24:47,119
Speaker 3: What changes are happening at your company? Mean, go ahead,

535
00:24:47,240 --> 00:24:48,080
Speaker 3: what changes are happening?

536
00:24:48,119 --> 00:24:48,840
Speaker 1: How are you preparing?

537
00:24:50,040 --> 00:24:52,719
Speaker 5: For the most part, we're just writing our market outlook

538
00:24:52,800 --> 00:24:54,840
Speaker 5: and thinking about what the best solutions are. We're all

539
00:24:54,840 --> 00:24:57,520
Speaker 5: in the same boat together, where we're looking at the

540
00:24:57,560 --> 00:25:01,440
Speaker 5: equity markets and seeing what the impact might be from

541
00:25:01,560 --> 00:25:05,560
Speaker 5: expansionary physical policy, what tariffs might do. We're looking for

542
00:25:05,600 --> 00:25:10,280
Speaker 5: what the impact of regulation is like interesting conundrums like well,

543
00:25:10,280 --> 00:25:13,160
Speaker 5: if there's less regulation and energy, but if it's drill, baby, drill,

544
00:25:13,200 --> 00:25:15,120
Speaker 5: How do I figure things like that out? I think

545
00:25:15,119 --> 00:25:19,720
Speaker 5: for almost any policy opportunity there is, there are two

546
00:25:19,760 --> 00:25:22,600
Speaker 5: sides of it. So even if you knew exactly what

547
00:25:22,640 --> 00:25:26,760
Speaker 5: the policy outcome was going to be, the impact is

548
00:25:26,760 --> 00:25:29,160
Speaker 5: still ambiguous. And that's the challenge of twenty twenty five.

549
00:25:29,840 --> 00:25:32,680
Speaker 4: So we're a firm grey Sales of firms, one hundred

550
00:25:32,680 --> 00:25:35,000
Speaker 4: percent focused on crypto. We're the largest crypto asset manager

551
00:25:35,040 --> 00:25:40,119
Speaker 4: in the world. The Trump administration is seemingly going to

552
00:25:40,160 --> 00:25:42,240
Speaker 4: be more favorable towards crypto and that's the way the

553
00:25:42,240 --> 00:25:44,119
Speaker 4: market is reading it. So we're going to continue to

554
00:25:44,119 --> 00:25:46,280
Speaker 4: be innovating and launching more products in the form of

555
00:25:46,280 --> 00:25:48,479
Speaker 4: single asset products. We're also going to be doing some

556
00:25:48,520 --> 00:25:50,439
Speaker 4: index based things, and we're going to figure out how

557
00:25:50,480 --> 00:25:52,600
Speaker 4: we push down the cap spectrum to bring exposures to

558
00:25:52,600 --> 00:25:55,760
Speaker 4: clients for what they want. We tried to file for

559
00:25:55,960 --> 00:25:59,080
Speaker 4: a Salona etf the SEC didn't seem ready for that.

560
00:25:59,440 --> 00:26:01,560
Speaker 4: We have five out for we assume.

561
00:26:01,280 --> 00:26:02,520
Speaker 1: Them, right, that's what happens.

562
00:26:02,560 --> 00:26:05,880
Speaker 4: Well, there's a little due process there. Yeah, we accepted

563
00:26:05,880 --> 00:26:09,879
Speaker 4: that for now. But you know, our GDLC product is

564
00:26:09,920 --> 00:26:12,040
Speaker 4: a product that we have filed that is in the

565
00:26:12,040 --> 00:26:13,879
Speaker 4: turner in forty day kind of waiting period. That's a

566
00:26:13,960 --> 00:26:16,119
Speaker 4: product that has you know, five assets inside of it

567
00:26:16,119 --> 00:26:17,440
Speaker 4: and we think has a good chance for a rule.

568
00:26:18,480 --> 00:26:20,560
Speaker 6: I've watched a lot of elections since I moved to

569
00:26:20,600 --> 00:26:23,639
Speaker 6: this country. Nearly forty years ago, and I've seen an

570
00:26:23,680 --> 00:26:26,600
Speaker 6: awful lot of election promises, and I've seen an awful

571
00:26:26,600 --> 00:26:29,679
Speaker 6: lot of election promises that were broken the moment somebody

572
00:26:29,680 --> 00:26:33,880
Speaker 6: actually became president. I have no idea what the next

573
00:26:33,880 --> 00:26:37,120
Speaker 6: administration is going to do. I don't think that anybody

574
00:26:37,200 --> 00:26:40,399
Speaker 6: really has a clear idea at all. Is there our

575
00:26:40,520 --> 00:26:44,600
Speaker 6: tariffs a threat that might offer leverage in terms of negotiations,

576
00:26:44,840 --> 00:26:46,959
Speaker 6: or are they something that has already been decided on?

577
00:26:47,200 --> 00:26:50,879
Speaker 6: For example, I think that what State Street is doing

578
00:26:51,160 --> 00:26:53,639
Speaker 6: is essentially what all of our clients are doing. We

579
00:26:53,720 --> 00:26:56,320
Speaker 6: are we're in wait and see mode, because I don't

580
00:26:56,400 --> 00:26:58,840
Speaker 6: think any of us know what's going to start happening

581
00:26:58,880 --> 00:27:00,000
Speaker 6: on January the twentyeth.

582
00:27:01,280 --> 00:27:04,119
Speaker 1: All right, that concludes this episode of Trillions.

583
00:27:06,359 --> 00:27:11,280
Speaker 3: George David Simeon, thank you so much for joining us.

584
00:27:09,880 --> 00:27:12,920
Speaker 1: Left We'll get.

585
00:27:15,200 --> 00:27:24,439
Speaker 3: Thanks Thanks for listening to Trillions until next time. You

586
00:27:24,440 --> 00:27:27,520
Speaker 3: can find us on the Bloomberg Terminal, Bloomberg dot com,

587
00:27:27,640 --> 00:27:31,480
Speaker 3: Apple Podcasts, Spotify, or wherever else you'd like to listen.

588
00:27:32,080 --> 00:27:34,800
Speaker 3: We'd love to hear from you. We're on Twitter. I'm

589
00:27:34,840 --> 00:27:39,840
Speaker 3: at Joel Webber Show. He's at Eric Balchunas. This episode

590
00:27:39,840 --> 00:27:45,040
Speaker 3: of Trillions was produced by Magnus Hendrickson Bye