Gold & Bitcoin:

The note below was written before the overnight attacks on Iran, and the price action today drives home the conclusion that both assets deserve allocation considerations. Gold is breaking to new all time highs today, but Bitcoin is down along with other risks assets like the S&P 500.

As Jurrien Timmer of Fidelity aptly puts it, Gold and Bitcoin are "different players on the same team." I wholeheartedly agree! That said, Bitcoin possesses notable advantages over gold due to its unique digital properties and declining supply. Our thinking is laid out below.

Gold’s enduring Strengths

• Historical Comfort: Gold boasts centuries of history, offering a sense of security to both retail and institutional investors.
• Central Bank Acceptance: Global central bank reserve managers have held gold for decades, and increasing their reserves remains a non-controversial action.

Where Gold Faces Challenges (Relative to Bitcoin)

• Supply Sensitivity: Higher prices for gold can lead to increased supply, potentially capping price appreciation.
• Market Cap & Price Movement: With a market capitalization exceeding $20 trillion, gold is approximately ten times larger than Bitcoin. This means significantly larger capital flows are required to move gold's price compared to Bitcoin's, all else being equal.
  • Note:Gold is widely owned by both retail and institutional investors, though there's significant room for growth in allocations (see allocation section below
• Stock-to-Flow Ratio: In 2024, gold's stock-to-flow ratio (annual supply over above-ground stock) is2.3%, whereas Bitcoin's is less than 1%.
• Demographic Tailwind: Younger, digitally native retail investors are less likely to gravitate towards a physical"shiny metal" compared to "digital gold."

Bitcoin's Distinct Advantages

• Price Impact from Inflows: Bitcoin's approximately $2 trillion market cap means that smaller dollar inflows can have a more substantial impact on its price.
• Superior & Declining Stock-to-Flow Ratio: Bitcoin's stock-to-flow ratio is a superior 0.83%, and this is projected to fall by 50% in under three years. This dwindling supply makes Bitcoin a truly unique asset, arguably unprecedented in human history.
• Divisibility and Transferability: Bitcoin is easily divisible, unlike an ounce of gold. It can also be transferred globally, nearly instantly, to anyone with an internet connection.
• Digital Native Appeal: A younger, digitally native audience is naturally inclined towards a digital store of value rather than owning and storing a physical metal

Where Bitcoin Still Lags Gold

• Relative Youth: Bitcoin has only been in existence for 16 years.
  • However: The Bitcoin network operates 24/7, meaning it has accumulated as many operating hours as the New York Stock Exchange's trading hours over the past century!
    
• Technology Risk: As a software protocol, Bitcoin introduces technological risks that are not present with a physical asset like gold.

Details of Stock-to-Flow Ratio

The World Gold Council estimates 216,000 tonnes of above-ground gold stock at the end of 2024. They estimate total supply of ~ 5,000 tonnes in2024, leading to a stock-to-flow ratio of 2.3%.
 Source: World Gold Council

With gold prices up over 40% over the last 12 months, it’s just common sense that producers can more profitable mine lower reserve grades and spend more on exploration to raise future production. This is simply how commodities work.

• Price up --> incentivizes more production/ crimps demand/substitution àprice declines as supply increases to match demand.
  • Bitcoin’s uniqueness is that it breaks the above cycle.
• Price up --> No immediate supply response &supply falls 50% every four years regardless of price à price stays robust, assuming demand grows as more people globally adopt the unique digital asset.  
   

 
 Bitcoin’s higher volatility is often seen as an adoption headwind. However, volatility is in structural decline which should provide a tailwind for global investors. Our view remains that the direction and the rate of change matters far more than the absolute level.  

Source: BitwiseAsset Management

The ~ 40-60% annualized volatility is still meaningfully higher than gold’s ~ 20% volatility since 1971.

Gold also offers lower correlation to risk assets like the S&P 500

 Source: JurrienTimmer of Fidelity

Both assets are under owned relative to traditional stock, bonds, Private Equity, etc. Gold is under owned, and Bitcoin doesn’t even register within large pool of global institutional capital. The chart below is from UBS’s 2025 survey of 317 global family offices managing ~ $350bn of assets. Among these sophisticated investors, gold represents a mere 1% allocation and Bitcoin does not even register.

Source: UBS Global Family Office Report 2025

In a separate report, State Street Global Advisors estimates that gold makes up 3.6% of the $175 trillion global investible asset portfolio as of June 2024. This includes gold owned by central banks. Bitcoin is once again a zero!

Source: State Street Global

Both above charts illustrate the upside potential from rising allocation. This generally underpins the significantly higher price targets set by bitcoin analysts.

From a longer-term perspective, it's tough to argue against Bitcoin's superior supply-demand dynamics. Couple that with lower current adoption, favorable demographics (a growing pool of digital-native younger investors), and falling volatility, and the gold vs. Bitcoin discussion tilts into the latter's court.

We do believe that it's not one versus the other;rather, it's a case for allocating to both assets.

I hope this analysis provides some insights into how to think about these two monetary assets.

These broad general views for educational purposes and not intended as financial advice. For that, you need to speak with YOUR advisor about your specific circumstance, goals and risk tolerances.