Investors may see opportunity in gold’s historic rally, but they shouldn’t be selling Bitcoin to latch onto the precious metal, according to real estate investor and entrepreneur Grant Cardone.
Although gold’s price has increased more than 50% this year, while outperforming Wall Street darlings like Nvidia, the largest cryptocurrency by market capitalization remains a superior store of value and has better long-term prospects, he told Decrypt in an interview.
“Don’t be stupid,” Cardone said on Wednesday. “I wouldn’t be chasing this thing right now. For every Bitcoin you sell, you’re going to cost yourself a million dollars.”
Cardone’s assessment comes as investors are piling into alternative assets as a way to shield themselves from a potential slump in the U.S. economy and accompanying drop in the U.S. dollar, a dynamic that analysts and onlookers have dubbed the debasement trade.
On Wednesday, gold’s price crossed the $4,000 an ounce level for the first time. A day before, Bitcoin’s price set an all-time high of $126,000, according to crypto data provider CoinGecko.
A Myriad market found that 60% of respondents believe Bitcoin is more likely to ascend to $140,000 than dip to $110,000. Myriad is part of Dastan, the parent company of an editorially independent Decrypt.
Today, Bitcoin’s price may be more volatile than gold’s, but Cardone thinks that technological innovations will dull the precious metal’s luster in years to come. He said automation could negatively affect gold’s scarcity, pointing to reduced labor costs inherent in robots.
“Once Elon’s Optimus works, you can dig 24/7, 365 with no payroll,” he said, referring to the billionaire tech CEO’s robotics push at electric carmaker Tesla. “The amount of gold we mine is limited to the number of people that can mine it.”
That’s distinct compared to Bitcoin, which has a total supply of 21 million, and real estate, which faces geographical constraints, he added. Projections suggest that 2093 will be the year that the penultimate Bitcoin will be mined, based on the network’s current rules.
Investors may seek exchange-traded funds that are backed by gold, but Cardone argued that they are effectively investing in paper. In order for them to truly own gold. They have to manage the asset’s custody, while running the risk that it’s stolen, Cardone said.
For investors holding Bitcoin in self-custodial wallets, the same principles apply. But Cardone noted that Bitcoin doesn’t require a physical vault, while also being easier to spend.
Cardone may prefer Bitcoin to gold, but other entrepreneurs have advocated for a combination of both, including star hedge fund investor Ray Dalio. In late July, when gold was changing hands around $3,300 an ounce, he urged investors to allocate 15% of their portfolios to them.
At the time, he said rising government debts hadn’t been priced into global markets, and was “strongly preferring” gold. Last month, he echoed that sentiment, saying the U.S. risks a “debt-fueled heart attack” if the government doesn’t reign in spendthrift habits.
The Bridgewater Associates founder has argued that Bitcoin is unlikely to be adopted by central banks as a reserve currency because it lacks privacy. He also raised doubts about whether changes to Bitcoin’s codebase could make it a “less effective” store of value.
This week, investment firm VanEck estimated that Bitcoin could capture half of gold’s $26 trillion market capitalization, but that could take several years. Bitcoin is currently valued at $2.4 trillion compared to $1.2 trillion a year ago.
This year, Cardone began mixing real estate and Bitcoin in funds offered to accredited investors through Cardone Capital, which manages a $5 billion portfolio. As tenants living in commercial properties pay rent, those funds are allocated to Bitcoin over time.
Even then, Cardone said he’s encouraged several curious Bitcoiners to stand pat.
“I’ve had people come to me and say, ‘Hey, I want to invest Bitcoin into your projects.’ And I'm like, ‘Why would you do that?’” he said. “Why don’t you just keep your Bitcoin and convert some of your cash? I don’t know why someone would get rid of that asset.”
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