FULL TRANSCRIPT
Eric Cantor (00:00)
Good afternoon. Welcome to Bitcoin versus Gold.
We're talking about competing stores of value in tumultuous times like what we're in. Thanks to everybody for joining, our awesome panelists, Kyle and Peter, as well as the many investors who sent in questions and who are in the room right now signed up. We're really in an unprecedented moment in today's market. We've got a lot of investors looking for hedges. We have two stores of value, both of which have a chance to shine.
Today, we're going to dig in deep with two experts here and learn what as investors we can expect and how we can benefit from both, neither, either of these assets. My name is Eric Cantor. I'll be moderating today. I'm the CEO of Vincent. At Vincent, we help individual investors get smarter about private markets. We do it through events like these. We do a daily newsletter on private markets. We send weekly investment picks, and we provide preferred access to great asset managers and providers like Kyle and Peter's Platinum.
Argo Vault and Milk Road. We also have a podcast with top private market investors and a lot more. So check us out at www.withvincent.com. with Vincent. Okay. First things first, you the investors who signed up to join us today, who are you and where are you coming from this topic of Bitcoin versus gold? We wanted to find that out. So we took a little tally. Turns out we've got a lot of
A lot of invested folks, only 18 % of you don't hold Bitcoin or gold. 36 % hold both. The majority hold Bitcoin, 71%. And a nice chunk of you also hold gold. So a lot of different views on the assets. And hopefully we'll get those views even more informed today. And we'll hear where your thoughts are with the Q &A. So today's discussion is a quick overview. It's going to come in four parts, which should last about 50 minutes.
First, we're going to introduce you to our awesome subject matter experts on gold and Bitcoin and learn about their backgrounds. We have Peter Grosskopf of Argo Vault, digital gold manager with a ton of experience in that industry. And we have Kyle Reidhead from Milk Road, who is the leading crypto publication and offers a lot of tips and tools for investors in the crypto side, including of course, Bitcoin. ⁓ After we meet our panelists, we're going to briefly review some of the high level data about both of these assets just to provide some context.
Third, kind of the main part of the show, Peter and Kyle are going to debate the fitness of each asset as a hedge, highlighting reasons to be bullish and talking about reasons to be bearish as well. Also addressing whether these are truly competitive or collaborative. Last, we're going to take your questions, investor questions, to hear what's on your mind related to these themes. We did get a lot of questions before the show. We'll try to get to as many as we can, but please ask a question with the Zoom links ⁓ in the Q &A button.
that should be on your Zoom screen. I see we already have questions coming in, which is great. ⁓ Just to be clear, what we're about to discuss here is for discussion purposes only. It is not financial advice. So please do your own research, talk to your own advisor, make your own decisions, and please read this disclaimer carefully before doing so.
All right, now that that's clear, let's introduce both of our parties. ⁓ Peter, Kyle, can you tell us each about yourself or your personal background, ⁓ either in your asset class, in the space, and what your company does at a high level? Let's have Peter go first.
Peter Grosskopf (03:29)
Thanks, Eric. And thanks. Thanks for having me. I have been involved with gold since 1987. When I first got out of university, I started as a gold futures trader and ⁓ worked my way through the banking ⁓ industry, ⁓ covering gold companies and what they do in the markets. I then joined Eric Sprott.
and ⁓ became the CEO of his company Sprott Inc, which was building gold investment products and built it to the largest specialty manager globally in the gold area. I've been a lifelong fan. ⁓ I've always thought that investors needed an alternative currency that wasn't controlled by governments and ⁓
I think that thesis has kind of increasingly played itself out. So I'm happy to be here, happy to answer any questions, of course.
Eric Cantor (04:25)
Awesome. Kyle.
Kyle Reidhead (04:27)
Yeah, thanks for having me by the way. Name is Kyle Reidhead I am the co-owner of Milk Road, which is a media and research company that helps everyday people become better investors. We have a focus on crypto and of course Bitcoin, but we also talk about macro and other asset classes as well. I've been in the crypto space for about eight years now and have been building digital companies for over a decade.
which is what kind of brought me into the crypto space, but I've also been investing in sort of newer, let's call it asset classes for about a decade as well, which is again what brought me into Bitcoin and eventually the rest of crypto. So a lot of experience in, well, I guess you can say a lot of experience, not from you, Peter, back, you know, been doing this since the 80s. I'm not quite there. A lot of experience in the crypto space, let's call it that, because it's very short-lived so far. ⁓
Peter Grosskopf (05:16)
I'm ancient.
Kyle Reidhead (05:23)
That's a bit about me.
Eric Cantor (05:25)
Great. So you see we're in good hands here. Let's walk through a little bit of data just to set some context on what we're about to discuss. First, a couple of things I wanted to call out on data points, relative market caps. You see gold has a lot more history and it's really 11X. I mean, it's one order of magnitude larger than Bitcoin in a market cap. Obviously, Bitcoin's, know, with its much more short timeline has been moving faster, but gold is more than 10X bigger.
With that in mind, both of these assets have been on a hot streak lately, but Bitcoin again, relatively has risen more than 140X faster in its ⁓ relative value to gold in the first decade that it's been around. So we got a fast mover, which probably has more volatility on it. So we've got a slow and steady that's been around for a very long time. Peter's going to tell us how long. ⁓ Interestingly, if you look at the factors behind
what drives the Bitcoin price, you do see that gold is a factor. So these two assets are intertwined, perhaps more than people realize. And I think that how they're correlated, how they work together is definitely something we want to get into in the discussion. So then if gold drives Bitcoin's price, what drives gold price? ⁓ Obviously there are supply issues. Obviously there's a lot of macro, you know, sort of flight to quality in challenging times.
Peter's going to tell us more about how this works and what we can expect moving forward. In terms of price, mean, just to give it a, you know, put a dollar value on it. You can see again, the rapid increase in Bitcoin and the slow and steady increase in gold price. don't know when you could actually start to invest in quote unquote gold as a, you know, easily in the market. That's another thing we're going to talk about. But obviously if Bitcoin's had the velocity over the last 10 years.
Both stores of value though have done their job in these past few months of tumultuous times, like with the tariffs and everything that's been ⁓ turning the world upside down. You can see that these assets have outperformed other leading assets over, this is like April and we're really in the same pattern still, even though there's charts from a week or two ago. So there's a lot of reasons why ⁓ gold and Bitcoin,
separately or together would appeal to investors. Obviously some people on the call are feeling some of these and we want to get into this debate. I think everyone takes a screenshot of this particular visual and then thinks about, you know, why are you in the assets you're in? What is appealing to you? And then let's push our panelists on how durable those advantages really are. So in sum, we've got two stores of value. There's a lot of appeal to investors. Let's find out which one's better for our particular profile and why.
⁓ Let's start with a question just at a high level. Why is the asset you're representing, and we'll put Kyle on Team Bitcoin and Peter on Team Gold for now, why is it the best asset to use as a hedge in the present moment? ⁓ Let's start with Kyle on this one.
Kyle Reidhead (08:30)
Yeah, so I mean, I think the simple answer is that Bitcoin is the best performing asset over the last 15 years globally. So there's literally nothing else that has performed better. And in the last 15 years, we've gone through the covid crisis, we've gone through banking crisis, we've gone through the Yen carry trade unwind, we've gone through obviously the global trade war today, we've gone through bull markets, bear markets, etc. And Bitcoin continues to perform. ⁓ so I think it's very clear that
if you want to back the fastest horse in the race, is Bitcoin and it has been for many years. ⁓ In terms of why Bitcoin is the decentralized global store of value, which is digital. So kind of the same thing as what gold is, ⁓ but Bitcoin is that, but digital. And when I think of the two big trends that I would say are causing the adoption of Bitcoin, it's
debasement of fiat currencies, right, which is also what kind of gives the value to gold. And if you think there's going to be more and more debasement than gold or Bitcoin are going to be good investments. And then do you think more and more people are going to hold their assets or do payments and do things online rather than offline? And if you think that it's going to be more online, then I think Bitcoin as the sort of digital version of has its importance in the world as a result of that. so
Sort of those two trends, as long as you answered yes to both of those, more debasement of currency, more people going online, then I think there's no better investment than Bitcoin. In terms of a hedge against what's currently going on in like a global trade war, mean, maybe we'll dive into that with specific questions, but yeah, I'll answer more of that as we get there.
Eric Cantor (10:11)
Great. Peter?
Peter Grosskopf (10:12)
⁓ I think If you had to put a single chart up about why to hold gold and potentially why to hold Bitcoin as well, it would be global debt levels against the capacity of enterprises, governments, people to handle those debt levels. And we've never seen a bigger spread and it's getting completely out of control. So the engine behind the debasement is actually revving up right now.
And I'd agree with Kyle. It's for the reasons of that basement that both of these alternative currencies have value for all investors and all people and all households, and even central banks. ⁓ So that trend is not going to stop. In fact, if you had to list the number of reasons why it would continue, those reasons have continued to increase.
Gold is ⁓ a more legitimized market than Bitcoin in that it's accepted in more portfolios and securities regimes, central banks, store of value style accounts, professional portfolios. Bitcoin is the faster horse right now because it's had that mobile adoption. I wanna start out by saying right away, I think they both work.
And I think they both work at different times for different reasons. And I think increasingly investors need to understand the interplay between the two.
Eric Cantor (11:43)
Let's line up again of what people are holding on this call because a lot of people seem to already have, are already acting on that. So I guess 30, like a third of the people on this call, a little more actually have both assets. So let's just double click on what you just said, Peter, like are these collaborative? And I think since we're talking about diversification, I would add in the sort of sub question of if I want to be in digital assets and precious metals, like
Should I also be looking at silver or a diversified sleeve there or is gold just the king and always will be? So talk about diversification and collaboration between these and other assets in your purview.
Peter Grosskopf (12:23)
Kyle, I'll do you the honors.
Kyle Reidhead (12:24)
you want me to say that one? So look, think I agree with Peter that both gold and Bitcoin are important assets. I think I mean, obviously, they're both doing quite well here with with the global trade war. And they've both done really well historically. ⁓ And so you can you can definitely hold both. And I think that that's a wise decision. As you said, Peter, know, gold has been around a long time. And so there's just more access. It's just easier to get your hands on. ⁓
Whereas that's coming for Bitcoin, that's also probably the opportunity for Bitcoin is if you look at, mean, the last chart I think you had of like the properties of both gold and Bitcoin, Bitcoin wins in almost every single metric except for like, let's say, historical trust and like kind of the long term ability from it. But other than that, basically Bitcoin beats it in everything. And so it is the better asset, but it's also the most, I'd say, misunderstood asset versus the two.
And so I think as much as that is a bug, it's also probably the best thing from it, right? I think that's why it is valued at whatever it is, 10x lower than gold, is because it's not as accessible and not everyone currently understands it. ⁓ And so for me, it kind of depends on your time horizon on if you want to hold both. If you're more in the short term, gold is obviously a really good hedge when you have uncertainty in markets like we have today.
Even if you look at the chart of performance, gold did really, really well the moment that, you know, Liberation Day happened and everyone kind of tripped out and gold actually went up, I think, that day, whereas Bitcoin puked. And when you look at the what drives the price of Bitcoin, it's pretty much all the same as gold in terms of global liquidity and then just the price of gold. But there's about 20 % or I think it's 22 % of the price is driven by risk on. So gold is a complete risk off.
Asset is not a risk on an asset at all. Whereas Bitcoin still has that because it's still new It is sort of a technological technology play and so it has that little bit of risk on and so when you have a moment like, liberation day or you have the yen carry trade unwind last year or Covid Bitcoin tends to puke in those moments, but then people go. wait It's actually a safe haven asset too It actually acts similar to gold and then all of a sudden when the risk off moment stops doesn't have to be risk on yet But just the risk off start stops
mainly that's driven by the liquidity event. People just need to sell assets to cover ⁓ their leverage. so Bitcoin pukes in that moment. It's also the most liquid because it's available on weekends, et cetera. And so whereas gold and stocks are not, so often Bitcoin gets sold first. It pukes and then it tends to outperform gold from that moment on. And so short term for institutions that have to meet certain guidelines or meet certain performance numbers on a monthly or a quarterly basis,
you probably want to be holding gold, right? Bitcoin, to be a large percent of your portfolio, is very difficult in the short term, which a lot of institutions have these sort of like mandates in a very short term time period. Who knows what's going to happen to Bitcoin in a short term time period. The thing is very, very volatile. However, I think as long as you look six months, maybe a year out, there's no time that gold has outperformed Bitcoin. And I think if you're looking at a year long or longer, I actually don't see a reason to hold gold whatsoever. I used to hold gold quite a bit of it back in the day.
Once I really got into Bitcoin, actually just sold all my gold and I just see no reason to hold gold and I only hold Bitcoin between the two. Now again though, that's because I'm young, I can take volatility, I can take risk, and I have a long-term time horizon for my investment portfolio for this aspect of it. If it was more short-term, think gold is a fantastic play because it really does act as a hedge against risk-off environments, whereas Bitcoin doesn't have that yet. It'll get there I think eventually.
Well, at I hope it will, but right now it's not. if you're long term, then they kind of go up for the same reasons and Bitcoin goes up, you know, if you look over the last five years, Bitcoin is up 1000%, while gold is up 100%. And so if you go another five years back, Bitcoin's up 10,000%, gold is up, I don't know, a little bit more than that. So it's like, if you have a long term time horizon, why hold anything but Bitcoin in my opinion? But they're both great for what they are.
Eric Cantor (16:39)
Can we just double click a little bit and just how much of what you just said applies to crypto versus Bitcoin? Bitcoin is the OG crypto, but there's like a million other coins ranging from the fairly reliable to the really like whimsical. like, does crypto play a role in that too? Or do you see Bitcoin and other crypto as like a totally different proposition?
Kyle Reidhead (17:03)
Bitcoin is the only asset in crypto that is a store of value and trying to be a store of value. Everything else you can think of as an equity or a stock. Now they're not all like Ethereum and Solana are not technically the same as like an equity. Basically every other like altcoin let's call it is that represents an app. But everything else is a technology like it's a technology play and you could think of it more like investing in the NASDAQ or something on the NASDAQ. Whereas Bitcoin is more like a commodity. It's more similar to gold and it's kind of the only one. Nothing else really has it.
When I'm comparing this, I'm comparing Bitcoin only, not crypto. Crypto is more aligned with, let's say, how you want to think about investing in the NASDAQ, et cetera, which in a risk-off environment is no bueno.
Eric Cantor (17:41)
Got it. Thank you. Peter, where do you stand on this kind of competitive? You know, are you a gold maxi that says, yeah, these are competitive. You only have one. Do you think they collaborate and I'd include your diversification version, i.e. silver or other gold comps in that answer.
Peter Grosskopf (17:59)
Yeah, I'm going to start out by disagreeing with Kyle on a couple of points. First of all, I don't think that gold doesn't beat Bitcoin on a bunch of metrics. I think it does. ⁓ first of all, daily liquidity, gold trades somewhere between 150 billion and 250 billion a day. So theoretically, for really large amounts of capital, it is a better trader. Secondly, it has a higher Sharpe ratio. ⁓
The issue with Bitcoin is it is that volatile and you do have to be a hero when you trade it. You have to get the timing right. Otherwise you could be down 30%. You could also be up 70%. So for portfolio managers that manage units of return by units of volatility, which is a pretty conventional method of saying how much it's going to add value, it's going to add to your portfolio. think gold does a more consistent job.
in protecting you. So I do agree with many of the things Kyle said as well in terms of the risk on risk off correlations. Gold is clearly a risk off asset in my view. And Bitcoin has that little bit of risk on with it. I do think they're going to the same place, which is higher. And ⁓ then talking about a portfolio of these assets, and I'll say a couple of points.
because I do advise a lot of clients on portfolio allocations. You used to talk about Bitcoin, not at all. And you used to talk about gold in terms of, you a 1%, 2%, 3 % portfolio allocator to gold for that risk off metric? Investors are starting to think about that in the context of 10 to 20 % now. That's how effective these two assets have been in taking
people out of the risk of currency debasement. I mean, they're more effective than US treasury bonds. So I wanna say that's really the market we're taking from here. And then in terms of diversifying that 10 to 20%, I think it's become increasingly important that you try and do that. Just buying Bitcoin or just buying gold isn't necessarily gonna meet your objectives.
In the precious metal area, do think that Silver is a fairly liquid market, a lot less liquid than Gold, probably 10 % of the liquidity, but it tends to run more than Gold. So if you're wanting kind of a Gold Plus version, Silver right now has less market size, it has less supply, and when Gold runs, Silver tends to run more. So, you know, people need to be thoughtful about
investing in all of these, thankfully all of them are being taken to the next level in terms of their efficiency. And Kyle did mention, for instance, Bitcoin does trade 24 seven, very impressive in the amount of time it's been out there. Gold will start to trade 24 seven shortly, I believe, and as stable coins get going. you know,
there are attributes to each technologically, which you do need to look at in your portfolio.
Eric Cantor (21:11)
So just to double click on that, you were talking about allocations. I think, let's say I'm hearing these arguments. say, wow, these guys are great. I want to allocate to gold and Bitcoin. So how should I be thinking about what that allocation looks like? I heard you mentioned one, two, 3 % or 10, 20%. So if I came to you and said, hey, I'm an individual investor, my 60, 40, my 401k, all the usual fun stuff. How do I think about how to create an allocation that makes sense here?
And let's frame it in like today's market situation, because maybe this changes over time. And so how should I think about that? And how does that compare to an institutional? Because we've seen a lot of institutional action goals as well. Let's start with Peter on this one.
Peter Grosskopf (21:53)
Well, I think you got to look at three things. Kyle ⁓ mentioned it, you got to look at your time horizon. And that's very important. Secondly, you got to look at the mandate of the funds you're running. Are these endowment funds? Are these like safe haven funds? Or is this your aggressive portfolio that you're looking to grow equity in over time? That very much determines how you allocate. then lastly,
⁓ Do you have ⁓ parameters? Like, do you need liquidity? Do you need liquidity instantly or can this be socked away for five or 10 years? And what other parameters? Is this fund need yield? Because that's a very important component. So it gets into the specifics. And I think it could drive you all over the map. What I'm saying universally, I believe, is that
you should be thinking about higher amounts now than you used to. And lots of pension plans, very conservative funds are starting to think of it in that inflation protection, currency debasement protection, portfolio protection, portfolio insurance, risk off insurance category, which needs to grow because treasuries are shrinking.
Eric Cantor (23:11)
Gotcha. Kyle, let's hear from you. How do you think about allocation? We're here like there's all these ETFs now into Bitcoin and other cryptos. There's I mean, I Brown University is allocating to Bitcoin. There's public companies putting on their balance sheet. How do how do I as just some guy wants to be invested? Well, how do I think about my own allocation and how does that differ from an institutional?
Kyle Reidhead (23:36)
Yeah, I think it really is all about risk tolerance and time horizons. If you need the capital in the short term, let's say by short term I mean in the next year, Bitcoin is probably not where you want to park it, right? Because this thing is very volatile. Over the last 15 years we've seen it go down 80 % plus four or five times. So it is a wild asset. Now, I think that volatility is lessening, but it's still very, very
very volatile and one of the most, I would say, of a lot of different assets. So ⁓ short term, isn't a thing you want to, we say it's a store of value and it's becoming this risk off asset. It is not that today. And so like it should not be treated that way. And so if there's capital that you need for, you know, an institutional side for performance on a short term basis, or you want it because you're going to use this capital for a ⁓ down payment on a home like in a year from now, Bitcoin's probably not where you want to park it. You want to be elsewhere.
part of your portfolio and again that'll be different for everyone. think you can start to take a much larger portion in percentage of Bitcoin than you ever have had before. Although if I'm speaking to crypto people they're like 100 % in Bitcoin. Their whole portfolio is very common to see that in the younger generation and at least in the crypto world. And so I don't necessarily advocate for that at all. However on the risk on part I think
It is instead of trying to go down the rabbit hole and pick a stock that you think is going to outperform or pick a crypto asset you think is going to outperform. If you're just an everyday average person who has a job doing something outside of finance, I see no reason why Bitcoin isn't a large percent of your risk on part of your portfolio ⁓ because it is the fast horse in the race. It's got a lot of liquidity versus a lot of the other risk on type assets and you don't have to do a lot of additional work. There's no earnings reports. There's no like
additional things, you just got to again answer the question, are we going more or less digital? Are we going to have more or less the basement of currency? And if the answer yes to those, you just kind of can keep buying it. Whereas if you're going to buy an altcoin or a stock, there's a lot more that you need to understand. And I know for a lot of people, at least on the retail side, it's not something they're paying attention to. so I think it can be a lot of your risk on part of your portfolio.
Eric Cantor (25:48)
makes sense. Let's shift gears a bit and talk about some of the more in the weeds aspects of these assets. had a question that I was going to ask that ties in with a couple of the investor questions coming in on the Q &A. And it's really about how should I hold these assets? So in both assets, we've heard a lot of fables about custody, about mining. On the Bitcoin side, it's like
Not your keys, not your coins, yet it seems like these big inflows are really coming through ETFs that obviously you don't have any keys on. There's mining operations in these coal regions using a lot of power, and there's all these rumors about who controls that. There's storage and security questions, quantum. So pulling that all together, and I think we'll start with Kyle on this one. What's the best way to hold Bitcoin? And are there some trade-offs that as an individual I should be?
thinking through or making.
Kyle Reidhead (26:43)
Yeah, absolutely. I think one of the best attributes of both gold and Bitcoin is that you have the ability to self-custody. That is kind of the big thing that these things offer in a world where there's a lot of uncertainty, in a world where there's not a lot of good trust with corporations or institutions or governments and banks, et cetera, around the world. Bitcoin and gold are sort of your escape to freedom, where no one can take that from you if you actually custody it.
there was a lot of people that don't custodian. So you sort of lose one of those big features. so in my opinion, the best way is to self-custodian, which is put it on a hardware wallet like Ledger or Trezor or whatever you want to do. Remember the seed phrase, write down the seed phrase, put it in a vault or whatever, and leave it at that. Then it doesn't matter what happens if you have the FTX fallout that happened a few years ago. If you have banks shut down, if you have governments which want to ban it or do anything, they can't take it and you own it.
That's obviously the worst case scenario. If you're in the US, you're in Canada where I am, like these are not things you generally have to worry about, but of course anything can happen. And especially in many parts around the world, they do and have happened. And so like, it's always nice to have that as kind of your insurance. That said, I actually own a lot of Bitcoin in my, what's called a TFSA here in Canada, and I use the ETFs. And the reason is I get tax benefits, right? And so I don't, I'm not a Bitcoin maxi. I'm not a decentralization maxi or self custody maxi. think.
There are many different reasons to hold this stuff and I was super excited for the ETFs to come in, not because I wanted to throw my Bitcoin in there, but because I have a bunch of assets in my TFSA, in my retirement account, and I'd love to get upside to Bitcoin. Now, I understand I don't own, technically own that Bitcoin, but at least I get the upside to it, right? And so I'm okay with that. It's a small percent of my entire net worth. so if anything was to happen, it's all good. And so I think both.
gold or Bitcoin if you can, the best case scenario is you hold it and you self custody it. But of course, there's many different vehicles you might want to hold these assets in because they also make great collateral to take out loans or to do other things with, right? And so holding them on chain or holding them in an ETF and doing different things with them is also very useful. So it kind of just depends on what your goals are with these assets.
Eric Cantor (28:57)
Gotcha. And so let's talk about the gold side of this and just to tie into mining, security, storage, and frankly, supply. I I don't know if there's a chance that some asteroid comes in near earth and has, you know, it's full of gold and that increases supply. One of our investors asked if there's market manipulation happening in silver particularly, and a couple asked, with reference to gold, are your statements geared more towards holding physical gold or ETFs or futures?
And regarding gold, do you see a difference owning physical gold versus GLD versus IAU that holds gold bullion and vaults or OUNZ, since we were talking about New Zealand that allows one to redeem shares for physical gold. just talk about the infrastructure behind gold and how that influences an investor's choice on how to hold.
Peter Grosskopf (29:44)
Well, I want to say I was really pleasantly surprised by what Kyle was talking about about decentralized storage and self custody because I'm a big advocate of that. That said, I think the gold world is very sophisticated in terms of having lots of different choices and how you hold it.
The ETFs, when they were first invented, there was a concern that they had allocated storage. I think they've answered that concern for the most part. I think they do have allocated storage. came up and created one at Sprott called the Sprott physical that guarantees it has dollar for dollar physical backing. And those types of features are available. ⁓ I want to say that of that $22 trillion market, only about
seven or eight trillion is investible gold, right? The rest has been jewelry that was created and made over time, much of which is probably lost. So the markets are a little bit closer in size on the tradable side than you would think. And a lot of that tradable gold is in commercial bank deposits. And those commercial bank deposits are spread everywhere. And a lot of investors still buy gold
unallocated or buy gold on futures or buy gold through products that are not fully allocated. And you've got to be very careful about that. I think there's a very big difference between buying unallocated gold, which is just really somebody's promise to deliver you that gold and actually having the gold in storage. Last thing I'll say is the next generation of gold will be direct to vault
personal ownership where you will have a certificate and eventually a token. And this is what we're doing at Argo, digitized, proven, custodied, direct access to the gold in the vault. And that's gonna be state of the art. And I think it's important. Investors need to know where that gold is custodied and that it's custodied in your name.
Eric Cantor (31:55)
Got it. Is it would it be correct to say that the idea of like not your keys, not your coins is kind of similar to, you know, grandma's earrings that she smuggled in and melted down to pay for the house? ⁓
Peter Grosskopf (32:10)
There are two separate concepts. And one is kind of what's a good delivery goal. What can actually be delivered into a bar of alts, know, versus grandma's earrings or some sort of, you know, artisanal goal that's been produced illegitimately. There are gates on the gold market that prevent illegitimate gold from getting in. The gold market is regulated. It does have KYC and AML. So there's some protections around it.
I'll also say that the gold market's evolving quickly and it will become more mobile, more 24-7, more direct to vault storage. So those are important distinctions. Most gold is bought through a promise by a bank to deliver that gold. It's called OTC, unallocated London pool gold. I don't understand why investors buy that.
It's a promise from a bank. So that bank goes down, you're caught Lehman Brothers style. I don't understand why the majority of that market doesn't switch to fully physically backed property vaulted gold.
Eric Cantor (33:23)
We're going to jump. sorry.
Kyle Reidhead (33:24)
I I
just want to comment one more thing when I think long term about the performance of Bitcoin and gold. think this reason is why Bitcoin will undoubtedly do a lot better ⁓ because try to ask anyone under the age of let's say 35 or 30 to actually own like physical gold and they will they will laugh. Right. It's very hard to get someone young to see a value of holding something like that. Like this. This my whole life is online. Right. Everyone who's
35 and under. so to me that reality of getting people to hold, and I know you're talking in a vault and whatever, so it's different, that will do well and that's fine. But I think again, the end result of these things is to be able to self-custody them and not have someone else custody them for you. And I think that's kind of like the big key. And I don't see a world where anyone under the age of let's say 35 actually wants to get a vault and then put physical things of gold in it.
If you think about, I don't know, let's say the Russian-Ukraine war, for example, a bunch of people from Ukraine had to leave and get out and like they want to bring their assets with them. What are they going to do? Bring a bunch of gold with them. Like that's very heavy, very difficult, but it's very easy to just grab your ledger or don't even grab your ledger. Just remember the 24 word or 12 word seed phrase and you leave and it goes with you. And so I just, as I think of the properties of gold, which are all very important, I just think once again, Bitcoin does them all better.
And then more importantly, the younger generation, which obviously there's going to be a large and already is a large kind of distribution of capital going from our parents down to the younger generations. I see a lot less of them wanting to custody gold and a lot more of them wanting to custody things digitally in a self custody way, which is what Bitcoin enables. And so I just think on a long term trend, that is the main reason why I Bitcoin outperforms ⁓ gold significantly over the decades.
Eric Cantor (35:12)
So you both touched on regulatory and governance. So I want to shift there for a minute because we're in a moment where governance is also what's impacting markets very directly. So regulatory shifting on both assets. How do politics and investor regulations play into your kind of forecasts? Maybe bringing in these issues of central bank digital currencies or strategic reserves, you know, if you feel that's relevant. But how will the
governance impact how these assets perform in the near term. Why don't we have Peter start with that one.
Peter Grosskopf (35:44)
Yeah, I'm going to have a tail on the last question though. And that is, I don't expect people to personally vault gold. I expect it to be digitally represented. I expect them to be able to leave countries with that digital representation and shift your gold from say Canada to Zurich or the Ukraine to another vault. So I think the gold system will evolve to allow that. And that said, gold cannot be hacked.
And generally speaking, is more built into, and now I'm going to shift to your question, Eric, gold is more built into the legal ownership laws of many different countries. And it's been tested for sure. Roosevelt tested it when he took everybody's gold in the thirties. He had to pay for it by the way, he didn't just take it and then he revalued it. But that was a way of devaluing the U S dollar. So doing more of what we're talking about right now.
But I think in general, ⁓ what's really relevant to both assets is the US government has ⁓ benefited from what we call exorbitant privilege for the last 50 years. It had the world's reserve currency. It had the world's reserve treasury markets. When it started pulling people off the switch system because it didn't like what they were doing politically, that ended that era.
of exorbitant privilege, in my view. It doesn't change the fact that the US dollar is a reserve currency, but it changes the fact that people can no longer hold all of their spare assets in US dollars. They need to hold them in something else. And that includes central banks. So central banks have been buying gold hand over fist in the last four five years, and increasingly so, because they need to back their currencies with something other than US dollars and US treasury bonds. And I think individuals, you know, it's been a very smart investment.
to advice in the last few years, which is don't fight the governments. Like governments are buying gold right now for that reason. So I think regulation or a lack thereof, having free assets that can travel the world and not be regulated by any government, that's what we're talking about here on both these assets.
Eric Cantor (37:59)
Do you see government pushing back? There's a question from Mark. Do you see a risk of government confiscation of gold or Bitcoin given that people plying those assets is going to crush treasuries?
Peter Grosskopf (38:09)
I don't. I think the only thing they care about is they want to tax it. That's what they care about.
Eric Cantor (38:15)
Makes sense. Kyle, moving over to you, just give us your take on regs, governance, strategic reserves and the like, and how that can impact Bitcoin going forward.
Kyle Reidhead (38:27)
Yeah, I think the regulatory environment is actually a nice tailwind for Bitcoin right now. Gold has already kind of gone through all that, so doesn't really have, nothing's really going to change for gold much. Whereas Bitcoin has basically been outlawed in the US for many years, especially under Biden. That's all changing, with Trump. I think that's a big tailwind because finally institutions of many different sorts can actually allocate to it, which even today many can't, even though we're starting to get
a more regulatory, clear environment, but it's still not quite there. We got to get a few things in place, like the Market Structure Bill. And so I think that's a massive tailwind for Bitcoin specifically. ⁓ And I think that's actually happening globally. There's some countries that have already kind of gotten ahead of it, like Singapore and others, and Dubai. These places are starting to become more friendly to not just Bitcoin, but crypto at large. But obviously, the US is what really matters. And we're finally starting to see it come in. ⁓
was kind of a whatever thing for me. ⁓ Obviously they're not necessarily buying anymore and that's fine. I didn't expect them. actually didn't think that was going to get passed at all. And it did. I think really what that does is just sends a message to the rest of the world that hey, Bitcoin is becoming more legitimate and ⁓ it's kind of getting that stamp of approval, is nice. ⁓ We'll see what other countries do. We're starting to see some pick up either they're mining or they're starting to buy it or whatever they're doing. And so I think that's again, just another tale when this is going to help push.
Bitcoin forward. And then to add to that is the corporate adoption as well and the sovereign wealth funds. Like we're starting to see all these different entities that I think wanted to accumulate it but never could because of the regulatory uncertainty, particularly in the US, which seems to be to be all, I don't know, I don't want to say going away, but getting much better. And so I think there's just a lot of tailwinds that come as a result of that.
Eric Cantor (40:17)
Just piggybacking on those answers, just to get some yes or no's to some short investor questions from the audience. Is there manipulation going on in these markets? And I think it's on two levels. the Bitcoin side, the mining has been not that transparent at times. And there's a lot of concerns about as the rewards drop, the block rewards drop over time, like what the incentives are looking like there. But also just on the ETF side, there's another question from anonymous person.
Is there an entity that's checking these ETFs to make sure that all the Bitcoin that they're supposed to have is there? So just, you know, how much can we trust these markets? I think is the overall question.
Kyle Reidhead (40:58)
Peter, you want to start that one?
Peter Grosskopf (40:59)
⁓ Yeah, I think in, I wouldn't call it manipulation. I governments have not wanted gold and silver to take off because they're kind of like anti-confidence thermometers. So they don't want to let them run loose. I would say the gold market's too big to manipulate. ⁓ You can low close it for a couple of times. You can hammer it in the after markets, but it always comes back. So I would say no to gold, maybe yes to silver. Silver industry is generally short.
meaning the refiners and the commercial banks are short and they're looking to low close when they can, I think. I wouldn't call it manipulation. I would call it just in their interest. They want the spread to be able to be closed by them when they pick off the offtake from the producers. it's kind of more like that's what happens in markets. And JP Morgan did get nailed for that. It's getting better. ⁓
So I'm not worried about it.
Kyle Reidhead (42:00)
And I would say in Bitcoin, I mean, it's definitely a much smaller asset. So there if there was it would actually make an impact or could make an impact. I have no idea if there actually is. There's always been talk about it being manipulated in Bitcoin. I'm sure it has been for a long time. I'm sure it's just getting less and less over time. Definitely crypto at large. There's a ton of market manipulation in that entire space. And so I'd be very careful outside of Bitcoin ⁓ in terms of.
The ETFs again, I don't really know. It's regulated in the US and approved by the SEC. like, I'm sure it has many of the things that are required. One thing that's nice is some of the ETFs actually have their wallets, like public wallets available. So you can actually just check for yourself, which is pretty cool. You can't really do that with basically any other asset. So now not all the ETFs do that, but some have started to, especially the crypto native ones. So I think there's potential and also you can just hold the ETFs that actually have the public wallets available. ⁓ If that's something that you're...
you're worried about. overall, I would say there probably is in crypto, but I don't really know exactly how much or how much of an impact it makes.
Eric Cantor (43:04)
we talk about these macro movements, we like to think in scenarios, right? There's the like, bull case, if everything goes really well and what your thesis is right on, there's the kind of base case, like things kind of keep going as is. And then there's the bear. So let's talk about the bear. What confluence of events would be extremely negative for your asset and your claims to like why that asset's going to perform well over the next, say five to 10 years? What would be the scenario that would...
⁓ I think we'll start with gold. What would be the scenario that would just be terrible for somebody holding gold?
Peter Grosskopf (43:36)
⁓ Very high real interest rates, lots of austerity ⁓ and a willingness to stop spending tomorrow's money by governments and just a general sense of confidence that the government's got your back again and they're going to cover everything. ⁓ Now that could send gold materially lower.
not through the floor. It will always have a base value of being kind of mined and held by people for a rainy day. On the flip side, I think my own belief in the probability of government austerity has gone from 20 % to like two. So it's not gonna happen. I mean, I'm more convinced than ever that we're, I'm so convinced.
Even the governments know this is going to happen. And that's why they're letting both Bitcoin and gold run. And that's why governments are buying gold in the central bank. And that's why the congressional budget office in the US is forecasting 10 more years of deficits. They've got to just keep printing. So I just think the odds of my bear case are very low.
Eric Cantor (44:52)
Good to hear that. ⁓ Kyle, what's the Bitcoin doomsday scenario look like?
Kyle Reidhead (44:58)
I mean, I think it's the same thing for gold and Bitcoin, is the world decides that every country is going to get along and they're going to really cut back on their expenses and they're going to figure out how to balance their deficit and they're going to become this, every government's going to become profitable and stop needing to print money. And I think there's pretty much a 0 % chance that any of that's ever going to happen. so that of course would be the bear case for both of them.
I see no way that we can get the world to become kumbaya and work out. And I think there's no way that we can stop printing new money. That's just how the fiat system works. And that's why I think both Bitcoin and gold are going to do well for many years.
Eric Cantor (45:41)
Let's keep with these scenarios. Just think about kind of short term and long term. So short term, we have a bunch of investor questions about the interest rates in the Fed, the tariff, you know, is there going to be a trade deal with China? Is there going to be a trade deal with everybody else? So let's just think again about your asset. I think we'll start, let's start on the Bitcoin side this time. Give me a six month and a five year. Like what do you expect to happen on the macro level that will
great impact for this asset and where do think we could be then like five years out, Kyle?
Kyle Reidhead (46:16)
So when I look at markets, usually think things are never as bad as they seem, things are never as good as they seem. so I kind of think things actually don't change as much as everyone thinks right now. I don't think we're going to keep these, whatever we're at now, 200 and something percent tariffs with China. ⁓ And we're going to have this like crazy global trade war that lasts for forever. think but I also don't think they go to zero. I don't think they go away. I think we find some sort of balance and maybe it's 10 percent on average for some goods across different countries, like whatever it is that they sort of work out.
I think that gets figured out in the coming months. And if and when that happens, I mean, that's obviously a really good thing for, for let's say all markets for the most part. ⁓ But ultimately I think even if it doesn't the answer to, you know, a global trade war and a stoppage in the economy and all the bad things that come with this escalating or getting worse, the answer is to, print more money, right? It's been their answer for many, many, many years. And so again, does that happen?
tomorrow or does that happen six months from now or a year from now? I don't know. Ultimately though, think the end result of whatever goes on here in the next little bit is we're going to have to get more debt and go into more debt. I think ultimately that means both Bitcoin and gold do well. I would say in this environment right now, I feel very not confident in stocks and equities, mainly because tariffs actually impact them. And so whether we keep the 200%, we go down to 10 % or not,
there is still some sort of headwind there for certain stocks depending on what gets decided with this trade war. Whereas I think ⁓ gold and Bitcoin actually are not really impacted by that other than the fact that of course this kind of alters the macro environment, growth is getting crushed and so that changes things. Again though the end result is the Fed either steps in or we get rid of this trade war and we go back to normal.
I think look in the short term, let's say six months, think Bitcoin, like by the end of the year, I think Bitcoin is much, much, much higher than it is today. And I think we actually continue just down a a normal sort of like liquidity business cycle. It's just been a little bit delayed as a result of what's gone on here in the trade war. And so I think Bitcoin does well by the end of this year, probably gold does as well. And then in five years from now, I mean, who knows five years out, but ultimately I think the one thing Peter and I have said, and we agree on is like,
nothing's really going to change, we're still going to be going into more debt. so ultimately five years now I think Bitcoin is way higher. And actually I think it's a lot more legitimized too. I think that's the big tailwinds is that Bitcoin's going through its sort of like mainstream moment where it's finally the doors are being open to the other institutions around the world to actually start to allocate it. It's becoming a reserve ⁓ asset in the United States. It's starting to get, become on balance sheets in corporations all around the world.
It's finally kind of off to the races. So think five years from now, Bitcoin is going to do extremely well off the backs of all these things I just mentioned.
Eric Cantor (49:16)
You want to put a price target on way higher?
Kyle Reidhead (49:19)
Not five years from now. By the end of the year, I know there's a lot of people calling for a million dollar Bitcoin or 500,000. I don't think any of that's going to happen. I think we probably max out somewhere in the mid 100,000. So let's say 150. Maybe we get a bit more if things get real crazy. It kind of depends if we get animal spirits back. Remember, there's that 20 % or so that impacts Bitcoin's price on risk on. And so it depends. Do we go back into the 2021 days where governments are just printing a ton of money and
They're handing out stimulus checks and in that world Bitcoin really, really outperforms. I don't think we get that. so I think Bitcoin just does really well. But I don't think we're to have this hurrah craziness that we had in 2021.
Eric Cantor (50:02)
the 150k I'm gonna come back to you on that in a few months. I should attack this on the prior question but is quantum a couple investors asked about quantum people think the quantum is gonna break Bitcoin it goes to zero is that I mean how much is that on your radar screen?
Kyle Reidhead (50:16)
I've looked into it, it's not really on my radar screens now because I think we're just still a long way from that actually making any difference whatsoever. But I don't think it's going to impact Bitcoin. think there'll be ways to figure that out and get around it by also using quantum. So I don't think it's that big of a deal. I think it's more just fud right now. And it's not something that's really a risk in this moment or even in the foreseeable future.
Eric Cantor (50:38)
Peter, what's your short and midterm six months and five year forecast?
Peter Grosskopf (50:46)
Yeah, you know, in the short term, I think it's really tough to call. think gold could be choppy. It's had a massive gain here. It's outperformed almost everything. ⁓ I look at overbought ⁓ indicators and I'm a little concerned. You know, it's way ahead of its 100-day moving average. Its sentiment index is extremely high. It usually has, you know, many corrections when it gets like that, technically. ⁓
In the long term, I think what changes that and I think what changes the current environment, tariffs, no tariffs, I sort of agree with Kyle's approach in that it probably mediates, moderates way down. ⁓ But look, the government has run out of other people's money to spend. And I think what breaks it wide open is when they have to print again.
and people realize, holy crap, like they're doing it again. Like they just hit me with 10 and total maybe 20 % inflation during, I'm not getting that money back. And they're printing again because stocks, bonds, real estate, shopping, economy, everything is correlated to making it all work and to the printing. So I think they're gonna have to print again. When that happens, gates will open.
I think we're gonna see gold move up into the five to $10,000 range. I think it's gonna become a mandatory ⁓ portfolio hedge. I think it's gonna become a mandatory household currency edge. I think people that don't have it are going to suffer, unfortunately. I think that this becomes about hiding. And the other potential kind of game shifting event would be if...
the Fed lost control of the long rate, of the US long rate. If the US long rates started to trade like bonds were certificates of confiscation as opposed to valuable portfolio assets. And I think we're coming to that time. ⁓ I think these alternative assets become just a must have and everyone's gonna run for them.
So that's what I think is two, three years out here.
Eric Cantor (53:09)
Two quick tag-ons to that from investors. What's a good entry point for gold? If you see a correction coming, when should I buy in? You gave me a 5,000 on the outside.
Peter Grosskopf (53:18)
Well, I think the hundred days probably moved up into the 3000 range. I, you know, and, a significant correction now would be two, 300 bucks. ⁓ I think you see it down, you know, heavily for a few weeks or a month. I think that almost always has been a good entry point for gold. It cycles pretty, you know, pretty short.
Eric Cantor (53:39)
And maybe one more tidbit Fort Knox audit, maybe that's your version of the quantum question. Is that a thing? Is they're going to open up Fort Knox and find the gold's missing or is that just-
Peter Grosskopf (53:50)
I
find it strange that Trump and Musk said they were going and they haven't gone, right? Like, what, aren't their jets working? what's going on? Are you going or not? Like, you know, it's time to call the bluff. So I think the gold's there. If it isn't, holy smokes. mean, you know, the US government, you know, being illegitimate about the way it's reporting its assets, that would just be another potential weird moment, but it's gotta be there.
But then, you know, why haven't they got?
Eric Cantor (54:22)
Great, this has been an amazing conversation. I wanna keep our commitment on letting people get out of here by one. So we maybe have a minute left. Would either of you like to mention anything on top of mind that has not been said about either your asset class or how these stores of value compete with each other or anything else that has struck you? And we're gonna drop your URLs again on the chat so everybody can find you. And we're gonna follow up with a recording and a little overview to everybody who signed up.
by tomorrow, but anything else you want to share before we drop?
Peter Grosskopf (54:55)
would say do it for your kids, invest in the sector for your kids because that's what I'm concerned about. I'm concerned we're leaving them a sack of hammers ⁓ and you know like just think about housing affordability for a starter. You know you need this in your kids account. ⁓ Unfortunately that's the point we've gotten to.
Eric Cantor (55:17)
Great closing point. So let's say thanks to everybody. Thanks to Kyle and Peter for really leaning in and telling us what you think. Thanks to all these investors sticking with us for the hour. Great conversation and we look forward to seeing you on the next one. Have a great day.
