Two Classes of Bitcoin? | Kitco NEWS

Joining me now is serial entrepreneur, Shark Tank star, and chairman of O shares ETFs, the one and only Kevin O'Leary, Mr. Wonderful. Wonderful to have you back with us!

Great to be here. Thank you so much!

All right, so Kevin, Jamie Dimon is saying that regulators are quote "going to regulate the hell out of bitcoin." Now, you told me last time you were with us that regulation is in fact a positive, that it creates clarity, allowing more institutional investors to come in. But you got Gary Gensler calling the space the wild west. You have the infrastructure bill crammed with what many have called oppressive regulation. So are you concerned that the crypto space could become over-regulated and over-taxed?

Well, it tells you that there's so much activity from all of these different players. First of all, I'm a huge Jamie Dimon fan and a shareholder of JPMorgan as well. I listened to his comments regarding this. I for one would welcome the regulator to come in here and start to apply regulatory platforms to all of these crypto currencies and all of the level one and level two chain blockchains. Because in order, you've got to understand something: people are very excited about crypto, but the truth is, the real money, the institutional money, is not there yet. So the majority of bitcoin is held by individuals or hedge funds or high net worth individuals or family offices in the domestic market.

But I, you know, I work closely with lots of pension plans and sovereign funds. They're not touching any of this yet for one singular reason: the regulator has not ruled, and secondly, there's no infrastructure to actually be compliant. And so the reason you would want to take a position in this is you see the long-term opportunity of saving costs, being more efficient, more transparent, faster. All of these things can be provided by cryptocurrencies and the blockchain. This is great technical innovation, but you don't have a regulator that's made a decision yet. So in some ways, you know, Jamie Dimon's right; we should get it regulated. But that's also why I'm a shareholder in cryptocurrencies because when the regulator does finally resolve this issue, there's going to be a huge amount of capital that's been sitting on the sidelines coming in to take allocations from the institutional perspective.

And that I'm pretty excited about. And yes, to your point, as you've said before, regulation creates clarity, opens up the door to institutional investors. But is there a point of perhaps over-regulation? Are you no longer concerned about a big existential crisis that the U.S. follows China’s lead and it becomes outlawed? Is that still an issue or is that an existential threat that for the most part people are now dismissing, at least regarding bitcoin?

Yeah, it's a good, it's a great point, and you're raising a very good question. But you have to think about the way the American economy has developed versus the Chinese centrally regulated economy. The innovation today in the world, the U.S. economy is still the largest, most productive economy, is because we embrace innovation: cryptocurrencies, blockchain, you know, all of this is technical innovation and provides productivity enhancement while also reducing fees.

The largest market on earth is the currency market. There's just one use case I’d point to you and say that when I want to buy a stock in Swiss francs, or in euro, or in British pounds, or in, you know, any other country, and be on that domestic exchange, I have to go through the whole FX currency traders platform where I pay fees left and right. Over time, as regulators adopt payment systems that are, you know, regulated and approved by regulators in multiple geographies, those costs and that transparency and that blockchain is going to be far more efficient than anything we're doing right now.

I think even the SEC realizes that and knows that this is innovation and it requires a good study before they actually rule on it. But I don't think we're going to be like China, where the great leader, or whatever you want to call him, decides personally he doesn't like how many hours your kids are watching videos or whether or not blockchain has merit as a productivity tool. That's not the way the American economy works.

So I'm making the assumption that you just have to wait until the regular makes their movement. There are so many different use cases that look so much great potential that why wouldn't I be an investor? Why wouldn't I place some bets with a diversified portfolio of cryptocurrencies and level one and level two blockchains?

Okay, so regulation you are still seeing as a positive, and you don't think that there is this big existential threat of it being outlawed. Last time we spoke you correctly identified the issue of ESG. Since then, there's actually been a big shift to use clean energy. In fact, mining operations are actually facilitating the creation of more and more clean energy resources. We've got the Bitcoin Mining Council. There's certainly been a shift, especially with China banning it, more mining activity moving to North America and Europe. So where are you on the ESG issue? Do you think that that is being addressed sufficiently well at this point?

Well, you know, I don't have a crystal ball on those issues. I simply listen to institutional investors. They off the record tell me what they're thinking, and they brought up the ESG issue two years ago, saying they have ESG committees, they have sustainability committees that look at every asset class, including crypto, including bitcoin. And at that time, there were lots of people burning coal to create electricity in various geographies around the world to mine bitcoin. That's simply not sustainable; it doesn't work, and they didn't want all those coins.

The initiative now to solve that problem and to bring in that huge amount of institutional capital available to invest in, just let's talk about bitcoin, the granddaddy of all cryptocurrencies, is to set up operations in places like West Texas where you can do it with wind and solar, and also provide extra electricity to the grid when you're not using it all for mining. And so there's lots of potential there. There's lots of capital being raised to do that, and those coins for these miners are going to be held sequestered. They're going to be awarded using these clean ways of mining them, and they'll be owned by the institutions that have these sustainability mandates. So they'll know the origin and the date of award, and they'll know that it was done sustainably, and they're happy to hold it.

What people need to understand is most institutions don't consider bitcoin a trading vehicle; they consider it as property. They think it's just like a building going up in value over time, and that's the majority of concern around sustainability. So if they can buy the coin, mine sustainably, and just hold on to it, know with certainty the origin of that individual coin—problem solved. And believe me, there's lots of capital trying to solve that problem right now, and I'm part of it.

So do you think that there's going to be two asset classes of bitcoin: those that were mined previously using unsustainable energy, and those that have been mined using clean energy? Do you see a bifurcation in the classes of bitcoin going forward?

There was an attempt to do that and put a wrap around bitcoin, but that was rejected because we need fungibility. We can't have two classes because you could argue that one class would be worth more than the other, and it causes confusion if you consider it a simple asset. So there's going to be two classes of owners of bitcoin: those that don't care about sustainability—and I'm not one of those—and those that are mining their own coin getting it awarded in sustainable ways.

And there's a third way to play it: you can find the equities of public miners that only mine sustainably, that keep their coin on their balance sheet and own the shares. You'll find that they trade in the same volatile fashion as bitcoin does. Hud 8 (H.U.T.) on Nasdaq is a good example. I'm a shareholder of that company, and it's very correlated to the price of bitcoin. So I have exposure that way too. And the CEO there has a mandate to number one, maintain ownership of the coin on her balance sheet. Jamie Leverton is her name. And number two, mine sustainably. That's her mandate; that's what she wants to do. This is a really good company run by a very good manager and a woman that understands what institutions want.

Well, let's go beyond—if we're gonna go macro, let's go beyond bitcoin. Because people think that the only way you can invest in crypto is owning bitcoin or ethereum. The truth is, there's so much activity going on, so much research, so much development going on in other areas of decentralized finance that there's huge opportunities beyond just bitcoin. So the way I look at it, the best way—and this is a personal interpretation, I'm not saying that, you know, any of the indexes have decided this yet—but I'm now viewing cryptocurrencies and decentralized finance, so-called DeFi, as the 12th sector of the S&P. Nobody's decreed that yet, but I'm doing it in terms of how I manage my own operating portfolio and the operating company.

So in my view of the world in investing, I look at never owning more than 20 percent in any one sector—currently 11 sectors including real estate in the S&P 500—and never owning more than five percent of any one name in any sector. So when I put my—I wrap my head around those mandates that I have are self-imposed and how we operate, we make sure that we think of crypto that same way. So we don't want to just own bitcoin. We do, but I also own ethereum (ETH). I also own Solana. I also own all kinds of other blockchains, level one, level two.

And what I've decided to do, because I get bombarded with questions about what I own outside of bitcoin, I formed a relationship with FTX. As you may be aware, I'm a paid spokesperson for them and also a shareholder now in the FTX private company because I wanted a platform that could actually hold my interest in a compliant level, compliant basis with compliant infrastructure so I can report it to my own internal officers for compliance and my external auditors that can then, of course, sign off on my statements that I have to provide to regulators and the tax authorities and everything else. FTX was big enough to do that, so I'm using them. But I don’t want to ever be seen as someone who finds some collecting. There's 12,000 coins out there and you see this happening on the internet all the time: somebody starts promoting a coin that no one's ever heard of. I don't want to be involved in any of that.

So I'm just going to disclose my holdings, you understand, kind of the way I look at it. No more than 20 percent. Currently, I'm on target to get to 7 percent in cryptocurrencies and crypto tokens and crypto level one, level two chains by the end of December, and then I'm simply going to disclose what I own. And you know, hopefully we can have an intelligent conversation about why and what I own, but I'm certainly not going to be flipping and trading and day trading and all that stuff.

So if you've expanded the crypto sector to 7 percent of your overall allocation and you're seeing crypto as another sector, as you mentioned, can you break down for me the most prominent positions that you have within the crypto sector?

Well, I can, but I won't do it yet because I'm still amassing positions, which is why I'm saying sometime towards the end of the year, you and I will have this conversation again and I'll disclose the percentage holdings of everything I've got. But I must tell you it's broadening out every day, and I'm including the equities of companies that are 100 percent engaged in the crypto business. So I'm trying to get as diversified as I can get.

And you've got to remember: when you go past five percent weighting—which I'm on my way to go past—you have to have a stomach for volatility. I mean, you know, we get lots of volatility in these names. I don't care whether you want bitcoin or ethereum or anything else; the volatility is really, really heavy. And I'll tell you why: it's because there's no institutional support. That's why.

That's why it's such a benefit: if we could ever open this up, get the regulator on board, and get one or two or three percent allocation into cryptocurrencies within the sovereign and pension plans, it would reduce volatility in an incredible way. But we're not there yet, and we're probably a couple of years away at the earliest.

Well, I know one of the ways that you are playing the sector at large is through your One DeFi app, tapping into the DeFi interest that's launching very soon, I believe. Tell us a little bit about that, Kevin.

Yeah, so the investment there is an attempt to simplify decentralized finance. And I always use this use case as an example: You know, about 18 months ago, I started divesting out of our operating companies' holdings in commercial real estate for various reasons, and it's been a great long-term hold and it generated a lot of cash. And so when we went to the cash desk markets and started trying to deploy this cash on a short-term basis, we were getting offers like 21 basis points. Now, 21 basis points does not beat inflation when inflation's over 2, so I had a real problem there. I thought, my goodness, I can't lose 2 percent of buying power over the next 12 months. I've got to find a solution.

So that motivated me to go into the stablecoin market. And so let's take, you know, something like USDC or DAI. These are the concepts there. And I know the regulator is very active right now in stablecoins, but the concept is it's backed by something like the U.S. dollar, just like a money market fund could conceptually be thought of to be backed by, you know, short-term treasuries, etc. And there's been a lot of controversy, so I'm not saying it's the same, but the idea is if you take US dollars that you're making 21 basis points on and you buy USDC for an example, and then you stake it—in other words, you loan it out for a 30, 60, 90 day contract period—you can get paid back in a form of interest. I don't want to call it interest, but you might get 3.8 to 5.2 percent paid back in USDC, which is a stablecoin. Then you can convert that back into U.S. dollars.

This is not risky, I'm not saying it is, but I decided to want, I decided to do that with a portion of our cash in our operating company to get that set up. And this is a long answer to the wonderful question you asked me, but I want to bring out the basis upon why I invested in Wonderful. It took me six months to get that set up. I had to hire three new people inside of my organization just to manage that process and be compliant at the same time.

Now, nobody is going to do what I did if they have fourteen thousand dollars in their bank account; it's just not worth it. It's so complicated! So really what Wonderful is, is an attempt to simplify that. Just there's one example of what Wonderful hopefully will do in a use case where you could get some interest off your cash holdings in a decentralized platform.

And the whole idea is to make it easy for people to be compliant, to be able to do it simply so it's not that complicated, and be compliant with the tax authorities with the reporting requirements they need for each geography that they're doing that in. That is the essence of Wonderful: simplification, commoditization, and bringing the opportunities to a much wider base of people that certainly wouldn't go through what I went through to set this up within our operating company.

Now I get it, the opportunity is there, but to your point it's very complicated. But I want to circle back to regulation, and I'm using circle intentionally because of your partnership with Circle. And as you mentioned, Yellen really has stablecoins in her crosshairs, particularly keen to target regulations of USDC. Gensler's calling stablecoins "the poker chips in the crypto casino." SEC is currently putting together a report specifically about stablecoins. So where do you see that taking the whole world of DeFi? How do you see that impacting your DeFi venture?

Well, I'm very happy she's brought this up. I'm very happy if the regulators are looking at it. I want them to; I want them to rule on this. We know that they're engaged in a conversation with Circle. Circle was the creator and is backing USDC. There's over 30 billion dollars of USDC out there now, so this is not going away.

And the point is, it's a very, very efficient payment system, USDC. So I'm sure the regulator sees the benefit of harnessing this opportunity and working with Circle. And I'm speculating on how the outcome is going to occur, but I'm willing—you know I don't have all of my cash in USDC; I have an allocation of it. But I'm a believer in what they're trying to do. And, you know, I've also looked at it as an investment opportunity. They're currently in a despacking process. If it happens, I'm happy to buy some of the pipe of what they're going to be doing.

And my attitude about all this is we should welcome the regulator; we really should because in my view it should be regulated the same way a money market fund is. You know, you never want the money market fund to break a buck; you don't want to run on the bank. There are risks in everything, but I love the idea that the regulator is going to really—when they regulate it, they're basically voting as a real asset class, provided they don't regulate it out of existence. And I guess that's my big question: you're not concerned that they won't come in and say no more stablecoins?

They could, but I think the cat's out of the bag. I think the genie's out of the bottle and all those other ways of looking at it because the productivity enhancement is proven already in the first 30 billion. The opportunity to be the leaders in this worldwide, the opportunity to enhance the productivity of our own economy and payment systems, and all of the other things that stablecoins could do are just too big an opportunity for an economy. The size of— and I just don't think the regulator is going to say no, no, no, no, we don't want any of that innovation. We don't want any of that enhancement to productivity. We don't want to cut fees in payment systems. We don't want to be more liquid, more transparent on the blockchain.

It doesn't make intuitive sense that that would happen. It does make intuitive sense that it would be regulated. When that occurs, much more money will come into it, so I'm willing to take a chance with that and put some dollars on the line as I have done.

All right, well we're waiting for the SEC report on stablecoins for clarity there. And speaking of reports, the Fed is planning to launch its review on issuing a CBDC, a U.S. digital currency. The Fed version, or Fedcoin, would be issued by the Fed, and officials are divided on the matter. We chatted about this last time, how the People's Bank of China was first to the party here. Some in the Fed think that this has to happen for the U.S. to stay in the lead to stay relevant, given the status of the dollar as a dominant currency in international payments. Powell has been a little bit more hesitant, some major privacy concerns he says. It can't happen without congressional approval. But Kevin, do you think that this Fedcoin idea is going to happen, and do you think it should happen?

This is, again, a personal opinion. I think you and I will be still talking about this 20 years from now as far as the Fed doing that. I think what's more likely to happen is that they will basically regulate issuers of stablecoins as banks. And so you look at Circle; they'll get a bank license, they'll be regulated, and if they're tying their stablecoin to the U.S. dollar, then one argument from the regulator's point of view would be, well, let's treat it like a bank through all the regulatory environments the banks have to deal with and all of the balance sheet scrutiny and everything else. And that would be a good outcome.

I mean, I'd be okay with that too. The idea that the Fed itself issues its own stablecoin, I actually don't think they're set up to do that. They don't have the infrastructure yet. It doesn't mean they couldn't do it. Why wouldn't they just take out one of the existing issuers of stablecoin that's already done all the work and has built up, you know, a large following? That could be another path. But to me, you want the market to be the market on innovation. These innovations came from the private markets to solve really big problems in financial services.

That's not what the Fed does. The Fed is not an entrepreneurial innovation engine; it's essentially a regulator. And I think be the best regulator you can be and be the best innovator you can be and put them in the same economy, and then you get the economy of the United States of America.

I think we're going to leave that alone to be and let it continue to work that way. The amount of innovation, and the deals that I'm seeing now and all the ideas that are coming down to decentralized finance, I never expect the government to deliver that. I expect, you know, somebody sitting in a basement dreaming that up, looking at Sam Bankman-Fried, a 29-year-old, 20, you know, multi-billionaire who dreamt up FTX as a global platform. And he delivered it. We need that kind of innovation in our economy to keep it cutting edge and leading the globe in these kinds of productivity tools.

What about the argument that the Fed has to follow the People's Bank of China's lead, that they've now taken the step, and in order to keep up, the Fed has to do it, whether it's in its mandate to do it or not? There needs to be that movement. You don't think that that's a concern?

Well, I don't think we have to worry about China's version of its stablecoin. What person outside of China would ever put that on their balance sheet? That thing, as far as I'm concerned, is toxic waste. I wouldn't touch it, and so I would never appeal any value to it. I don't like having the CH (Chinese Yuan), a single individual in a foreign government, deciding who can own it, who cannot, and having a track on it because that blockchain is going to let them know that I own it. No thanks.

And so I'm just one investor. The chance they convince global investors to buy that? Zero.

Okay, well I think many people find that very reassuring because the idea of a digital dollar and what it means for privacy is very disconcerting to many people. So I'm, I for one, am pretty reassured by the fact that you don't think it's happening in my lifetime! But this whole idea about currencies is stemming back to this concern about lack of faith in the U.S. dollar. We've got Citadel's Ken Griffin slamming cryptocurrencies and I quote, "as a jihadist call against the dollar." He's saying that it shows that we don't believe in the dollar, and, and I'm quoting, "it's a crazy concept that we as a country embrace so many bright young talented people to come up with a replacement for our own reserve currency." Do you see it that way?

No. You know, the big decision you have to make, and I appreciate every voice in the debate, and I encourage it. Having a free market of discussion of ideas enhances productivity, and not everybody agrees with each other, particularly when it comes to a new innovation like cryptocurrencies. And as an investor, you have to take this decision path: do I want to invest in cryptocurrencies? Yes or no?

And so that's decision number one. If you don't like them for whatever reason, then the answer is no. You don't have to worry about it anymore. If the answer is yes, you have to decide what percentage of my operating portfolio I'm going to put into this very volatile, nascent asset class, and what will I hold, and why will I hold it? That requires more work, more research. But the concept of debasing the U.S. dollar because there's cryptocurrencies? I don't believe that at all.

We just talked about stablecoins and how important it is that there be some of them tied to the U.S. dollar; that gives you the confidence to own them as even as the regulators are determining what the ratio should be of leverage and everything else or whatever else they're going to decide to do with it. Because that's the same regulation they put on money market funds, which are based around the strength of the U.S. dollar—short-term treasuries, short-term investment grade credits, bank loans, all the rest of that stuff.

This already exists. The best way I look at it is say this already exists as a format; we're just changing it into a digital format to be more efficient, more transparent, and certainly more liquid, and have less fees involved. And so I'm confident that this will get worked out, but I am not in that camp. Remember, I'm a convert; I was against this back in 2017, and I've changed my mind because things have changed around me, and I have to be listening. I've got to have my ear to the track; I got to see what's coming. Digital currencies, decentralized finance is not going away; it's here to stay now. Get over it. If you're somebody that's not an advocate, figure out where you fit in that continuum.

Well, I for one certainly applaud you for being bold enough to say, look, I've looked at the facts again, and I've changed my mind. A lot of people get too stuck in ego to reverse positions, but as you say, you have reevaluated the situation and ideologically you're on board. But I want to get back to this idea of dollar debasement because much of the interest in cryptos and bitcoin is fueled by this idea of dollar debasement and unprecedented stimulus. We've got the debt ceiling deadline approaching. Yellen is saying that it's going to be catastrophic if the U.S. doesn't raise the debt ceiling by October 18th and pay its bills. She's predicting a recession, amongst other consequences. Are you concerned about the fundamentals of the U.S. economy? Regardless of whether they manage to pull something off by October 18th, are the fundamentals of the U.S. economy sufficiently strong enough when you look at this post-COVID MMT-influenced environment?

You know, I have an advantage in some ways. I have investments in over 30 private companies in almost every sector, and so I get to see the tear sheets monthly and sometimes weekly on cash flows. We're having the best operating year ever. I have never seen such strength at the consumer level; it's remarkable. It's like coming out in the late '50s—an explosion after the Second World War—really strong single-digit GDP growth right in the quarter right now. I anticipate getting better, actually, as we get out of this COVID, the Delta issue. I’m very confident the American consumer is in a great place, and I just look at it from my own businesses. So I'm not worried about the economy, the debasement of the currency, this movie that's playing out again in Washington. We've all seen this movie before; I mean, it's very divisive.

Now they're not going to let the country go into default; everybody knows that. And so that's why the market doesn't care. All today, instead of working on that problem, they're Facebook bashing! If they can't get the infrastructure bill passed, Washington is very dysfunctional, but everybody knows that. And so yes, it's a lot of noise, but it's not—it’s not going to play out that way. We're going to get the last-minute decision. Thank goodness those politicians stayed awake until 12:01 and signed it. Oh my goodness, disaster has been avoided!

It's all a passion play that just is getting really tiresome and boring, and I'm just one taxpayer complaining about it. It's almost getting Monty Python-like, and I wish they could get their poop together and just get it done. It would be much, much better because it's tiring and it's stupid, and it's unnecessary, and everybody knows how it's going to end.

Well, hopefully it does repeat the same plot as we've seen in dozens of movies before, and we'll have the countdown clock, and in the nick of time, Congress manages to pull something together. But again, it is pointing to the divisive environment in Washington, which is divisive across the country. Ray Dalio, for one, says that that's one of his biggest concerns, that he's concerned that the societal tensions may spark some kind of civil war—perhaps not in the sense of guns and rifles and cannon, civil war—but he's very concerned about how the societal tensions are impacting the U.S. and the U.S. economy. Care to weigh in on that?

Well, for 200 years, the way to solve for individuals in an economy like the United States of America is to grow the economy so that it's for the benefit of everybody. And the best way to do that is to make the American economy competitive. And the way you make it competitive is you make sure that you don't charge more tax than your competing countries. Competitions of nations really, really matter. And so the concern I have—and I share Ray's concerns about divisiveness—but the package being proposed, in addition to the 1.2 trillion for infrastructure, another three-and-a-half trillion of just social spending makes no sense because it will take the tax rate for the United States from where it's in the middle of the G20 right now, right in the middle, the right place to be, and take it up to the top, right at the top—the most highly taxed country in the world for corporate taxes.

But then, in addition—which has never been tried before, which is really scary—if you want to worry about something, no country has ever taken itself to the top of corporate taxes and made their citizens in states like New York, Massachusetts, you know, places like California the highest taxed individuals in the world. They're paying the highest taxes in the world individually, and the companies they work for pay the highest corporate taxes. That's never been done; that won't work. That would cause catastrophe.

So I'm happy that Washington is really fighting about this as they should, and if they get nothing done, that would be better than actually bankrupting the American economy in a way that would make it so uncompetitive. So let the games continue. Politicians don't agree. But remember, most of these politicians—while I applaud their leadership as politicians—have never actually run businesses, and so the people that actually create the jobs in America don't want to be kicked to the sidelines through uncompetitive policies. That's my two cents as a business operator and owner.

All right, but say sanity does not prevail and some version of this gets passed. There's also this idea of taxing unrealized capital gains as well. I mean, tax laws are being sort of turned upside down now. If some version of this does pass, including that minimum global corporate tax rate, what does that mean?

Well, again, you have to be pragmatic and realistic about how this works. These outrageous ideas that are so fringe, whether they be fringe to the right or fringe to the left, is because politicians have to spend a third to half their day raising money every single day for their campaigns. The only way they're going to get in front of you and the rest of the media is to say crazy stuff so you'll give them some air time so that they can actually say, "Please send me some money so I can get this crazy policy implemented for their constituents."

And right now, the Democratic Party is being held primarily by very progressive and left-wing ideas, and Biden has to, you know, at least listen to them. He's got to try and keep his party together. But I'm very confident in the way that this works that sound or middle-of-the-road policies will actually be generated. So I don't think we're going to do things that have already been tried in France and England.

Remember, in England they had tax rates of 92 percent in the '60s—that didn't work! The French tried to tax unrealized gains in even more recent times; that really didn't work. They had a mass exodus of capital—the same thing would happen here. It just doesn't work. And there's lots of evidence that it won't. And so again, you have to respect politicians fighting for every dollar they can raise, trying to get media, trying to do what they can on the social platforms.

If you're just a rational middle-of-the-road politician, you get no air time! You got to be out on the fringe and you got to say stuff that really grabs clicks. And that's one of the big criticisms of social media these days.

You make some excellent points there, Kevin. I appreciate the overall optimism. Before I let you go, though, I do want to touch on gold because even Powell is saying that inflation is not that transitory; it's being seen as more persistent than even he initially expected. Now, last time you were on Kitco, you said you're still keeping a five percent allocation to gold. Is that still the case and how do you break down that gold allocation, if it is?

Yes, I have kept my five percent waiting, and I pay for storage of gold bullion, have for years. And then I also use various ETFs to balance every quarter, keeping it to five percent waiting—either buying in or selling it, selling down. And so I've always considered gold, which has been around for 2000 years, the Romans hoarded it.

I always say that I consider it a decent hedge against inflation. I see no reason to sell it. I'm not going to transfer all of it into crypto. What I have done is reduce my exposure to fixed income and bought more crypto with that. So that's one asset class I'm not that excited about right now because, as you pointed out, we're starting to see a little push on the 10-year and concerns about inflation that's not transitory.

But also, I would remind you, going back in history, when you do get inflation, that gives corporate pricing power. And so you often have a situation where you're getting inflation, as long as it's not runaway inflation, and you have corporations doing very, very well in stocks doing also doing well. So I'm still very constructive on a 70% weighting in equities versus 30% of fixed income and creeping into those equities or some of those companies that are involved in the crypto and decentralized finance in my holdings. So I would say it's a very, very interesting time to be an investor, and there are lots of different opinions out there, and that's what makes a market. And that's why I love to be in the markets!

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