Combining Bitcoin and Gold

EG: You have been referred to as the ‘world’s foremost expert on combining gold and Bitcoin into a portfolio’. What advantages may this Dual Wealth Strategy offer that investors should be aware of?

MV: In our In Gold We Trust Report 2019, we published the article ‘Gold & Bitcoin – Stronger Together’, in which we argued that precious metals should be combined with Bitcoin within a dedicated ”non-inflatable money” portfolio bucket.

This approach offers several key advantages:
>Low correlation: Gold and Bitcoin exhibit a low correlation, enhancing diversification benefits.

>Volatility management: Gold helps dampen Bitcoin’s high volatility, improving overall portfolio stability.

>Anti-cyclical rebalancing: The combination allows for systematic rebalancing between the assets, capitalizing on price fluctuations.

>Taking advantage: of high implied volatility of bitcoin via covered call- or put writing when getting close to a rebalancing event

In 2020, we put this theory into practice by launching the Incrementum Digital & Physical Gold Fund (IDPGF) for professional investors. This fund serves as a building block for integrating gold and Bitcoin into a traditional asset allocation, allowing investors to benefit from their complementary characteristics in a structured manner.

Given our perspective on the fiat currency system and the structural over-indebtedness of the global economy, we believe that the absence of traditional cash flows should not be seen as a disadvantage when allocating a significant portion of a portfolio to these asset classes. For instance, a structural allocation of 5% Bitcoin and 15% gold can easily be added to the traditional 60/40 portfolio by allocating 20% of our fund to the investor’s portfolio.

It is important to mention that the negligible storage costs and lack of counter-party risk set gold and Bitcoin apart from other commodities, which often involve significant storage expenses or reliance on intermediaries. This makes both assets particularly valuable in an environment of persistent monetary intervention, where financial system vulnerabilities continue to grow.

EG: Gold is private wealth with a history spanning back millennia. As suppliers like Suisse Gold accept payment for metals in Monero, what future role do you think that private cryptocurrencies can play in offering greater monetary autonomy, while aiding wealth preservation?
 

MV: While gold has historically been a form of private wealth for millennia, its modern trade is subject to KYC and AML regulations, limiting its complete anonymity. Private cryptocurrencies like Monero can facilitate anonymous transactions, but achieving a fully anonymous wealth management strategy remains unrealistic, regardless of ideological perspectives. Ultimately, the more relevant question is the role of the state in financial sovereignty—how much privacy and autonomy a given jurisdiction is willing to grant individuals. The future of private cryptocurrencies in wealth preservation will likely depend on regulatory attitudes toward financial privacy and the balance between individual sovereignty and state oversight.
 

EG: Over fifty years ago, John Exeter warned that currencies would fail and a deflationary collapse of the financial system was inevitable. To what extent do you agree with the inverted debt pyramid financial model that he established?
 

MV: In our In Gold We Trust Report 2019, we analyzed John Exeter’s inverted debt pyramid as a valuable framework for assessing the hierarchy of assets and their liquidity. Exeter’s concept places gold at the base of the pyramid, highlighting its unmatched liquidity and lack of counter-party risk, in contrast to other assets that are more vulnerable to market fluctuations and credit risks.

His model suggests that during times of financial instability, capital flows from higher-risk assets at the top of the pyramid toward the safety of gold. Exeter debated extensively with Austrian economist Ludwig von Mises, who argued that, in the end, the crisis would not result in a deflationary collapse but rather in an inflationary outcome, as governments would not allow a full-scale debt deflation to unfold. Given the repeated monetary interventions and ever-expanding debt levels in recent decades, von Mises’ perspective appears increasingly relevant.
 

EG: How would you evaluate the skyrocketing price of gold and the record-breaking central bank acquisition of the metal? Is this merely tacit admission of foolhardy debt monetisation and central bank policy?
 

MV: The recent surge in gold prices, approaching the $3,000 per ounce mark, coupled with record-breaking central bank acquisitions, reflects a growing unease with current monetary policies and global economic stability. We extensively analyzed this shifting landscape in our latest In Gold We Trust report, coining the leitmotif ‘The New Gold Playbook.’ This framework highlights the evolving role of gold in a world characterized by high debt levels, persistent inflationary pressures, and increasing geopolitical uncertainty.

While these actions may not constitute an explicit admission of imprudent debt monetization, they do indicate a cautious approach by monetary authorities to mitigate risks associated with excessive debt levels and expansive monetary policies. The increased demand for gold underscores its enduring role as a safe-haven asset in times of economic uncertainty.

   

EG: Why is the jurisdiction of Liechtenstein such a favoured location for wealthy individuals?
 

MV: Liechtenstein offers exceptional legal certainty, a stable financial system, and a debt-free national budget, ensuring long-term economic resilience. Unlike EU member states, it is not liable for EU sovereign debt, providing an additional layer of security against potential financial crises. However, as a member of the European Economic Area (EEA), it benefits from access to the European single market while maintaining a high degree of regulatory and financial autonomy.
 

EG: Considering both fundamental and technical analysis, what ceiling price do you realistically see Bitcoin reaching before leveling off?

​

MV: Priced in fiat currency, both Bitcoin and gold conceptually have no ceiling, as their value—beyond adoption and network effects—is also linked to the ongoing debasement of fiat money. However, both asset classes will inevitably go through significant boom-and-bust cycles, experiencing severe bear markets along the way.

From a relative valuation perspective, we expect Bitcoin to reach approximately 50% of gold’s total market capitalization by 2030. Given our gold price target of $4,800 per ounce by that time, this projection would place Bitcoin close to a seven-digit price range in USD. While short-term volatility will remain a defining feature, Bitcoin’s increasing adoption, its role as digital gold, and its fixed supply continue to support the long-term bullish case.

​​

EG: What macroeconomic trends do you see on the horizon in the next 5-10 years and how may investors prepare for this?
 

MV: Over the next 5–10 years, we anticipate a macroeconomic environment characterized by persistent inflationary pressures, heightened geopolitical uncertainties, and once more increased monetary intervention to sustain excessive debt levels.

One of the biggest structural issues is that most institutional investors—particularly large capital allocators like insurance companies and pension funds—remain too traditionally invested, with an over-reliance on bonds.

On the other hand, hard assets exhibit good odds to be the long-term winners. We expect tangible, scarce assets such as gold, Bitcoin, commodities, and select real estate to outperform as investors seek protection against financial repression and the erosion of purchasing power. Those who strategically diversify their allocations away from overvalued financial assets and toward debasement-resistant stores of value, will be better positioned for the coming decade.​​   EG