Bitcoin (BTC-USD) and gold (GC=F) rose to record levels this week, underscoring two sides of the so-called debasement trade as investors hedge against weakening fiat currencies.
Even traditional gold bulls are taking note of bitcoin’s growing role as “digital gold.”
“Bitcoin trading is too big to ignore,” Paul Karger, co-founder and managing partner of Twin Focus, told Yahoo Finance on Wednesday. “Everyone who has been talking nonsense about Bitcoin for the last decade has been proven wrong.”
On Wednesday, bitcoin was around $124,000, down from Monday’s all-time high of $125,000. The world’s largest cryptocurrency is up 31% so far this year.
Karger said he still favors a larger 5% allocation to gold, with a smaller stake in bitcoin across client portfolios, but acknowledged that the world’s largest cryptocurrency “has a place in a diversified portfolio.”
Karger suggested restructuring the fixed income portion of the traditional 60/40 portfolio, which typically allocates 60% to stocks and 40% to bonds.
He recommended diversifying away from long-term bonds in favor of shorter-term debt, real estate, digital assets, gold and broader commodities such as copper and artificial intelligence infrastructures.
Gold has been a stellar trade this year, hovering at an all-time high above $4,060 an ounce. It is on track for its best annual performance in more than four decades.
“Of course, you should own gold,” Karger said. “It’s just a great store of value. Gold has had a 2,000-year history of considering currencies nonsense.”
Read more: Are you thinking of buying gold? Here’s what investors need to keep in mind.
For those who own physical bullion, he recommended coins rather than bars, which can be more difficult to resell, although either form must be stored securely.
Gold futures have risen in nine of the last 10 sessions, setting new all-time highs for 10 consecutive trading days, an extraordinary streak that has fueled year-to-date gains of nearly 55%.
Inés Ferré is a senior business reporter at Yahoo Finance. Follow her on X in @ines_ferre.
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