During times of economic uncertainty, where would you invest your wealth? Would you consider all three assets to diversify your portfolio? How can you access these investments, and which ones offer the best returns?
◾ Davinci Jeremie, Bitcoin Guru, Crypto YouTube influencer “DavinciJ15”, CEO, Davinci Codes, Senior Software Developer
◾ Jeetu Kataria, CEO, DIFX – Digital Financial Exchange)
◾ Andrew N., Global Head of Public Policy, World Gold Council
◾ John Lyons, Managing Director, Espace Real Estate
◾ Nicholas K. Roper, Chief Investment Officer & Head of Wealth Management, Single Family Office
◾ Moderator Nigel Sillitoe, CEO & Founder, Insight Discovery
Different asset classes, including Bitcoin, gold, S&P 500, and Nasdaq, are shown with compound annual growth rates, but UAE real estate is not included. If you won the lottery, would you invest US$1 million in Bitcoin, Dubai real estate, or gold?
The returns since 2020 reveal that Bitcoin is at -20, the S&P is 33, and gold is at 24; thus, timing is important as well as knowing how to invest in each asset class. In its early stages, bitcoin was like gold, and in its later stages, it was similar to the stock market.
- It has been a boom in Dubai real estate in the last 12 months. The Dubai market is very cyclical, so there have been ups and downs. After a long decline from 2014 to 2019, the market has seen very positive conditions since 2020, and I think a real change is underway.
- End user demand is now driving the real estate market, and I can see a bright future for real estate. Dubai is still a very well-priced and tangible asset globally. If you take some of the prime location buildings in a place like Dubai Marina, for example, and start it over, it is unlikely that any developer would take on the project and try to construct it for the current price.
- During history, gold, bitcoin, and other cryptocurrencies have been seized at various times, and laws have been passed outlawing them at various times. The question is whether you will abide by the laws in the country where you live. Investing in real estate today will result in a reduction in capital value and rental value, but on a total return basis to today’s yields, you will receive a positive return on your investment.
- It is common for people to buy bitcoins from friends or strangers on the internet. Instead, go to an exchange and do not trust anybody who just randomly talks to you online. Start with a hot wallet on your phone or computer and move on to a hardware wallet like Trezor if you’re new to cryptocurrency. Be sure the keys never leave the device, otherwise, it is unclear whether they are secure enough.
- A hot wallet is relatively secure, but there is no guarantee that it will be as secure as a hardware wallet. In contrast, a hardware wallet is separate from the computer and does not leave the device. You must take your time and learn these things, do not try to do it all at once or you will make mistakes.
- The reason you should purchase bitcoins from an exchange is that it is centralized and there are both centralized and decentralized exchanges. Also, exchanges can be used to sell your bitcoins to others as well. There are several addresses in exchanges. Many of these addresses have been added to the system of companies across the globe that have used the coins either in hacks or for other criminal activities.
- Our intention was to not hold the assets ourselves. We brought in Fireblocks, the largest custodian with a history of not having any hacked wallets in the last seven years. As part of the integration process, every transaction can be monitored.
- The government cannot condemn bitcoins because it cannot verify whether the bitcoin transferred to them has been tampered with. This was the reason why Taproot and Schnorr signatures were added to Bitcoin to prevent this from happening.
- To trade, use a regulated broker that offers you the highest level of transparency. Demand your broker shows you all transactions in your market and find out why some transactions are up and some down.
- ETFs and ETNs are a great way to buy crypto without a wallet, and if you have a Saxo Bank account, you can buy an ETN over there as well.
- The government can seize real money at any time, and banks are now refusing to do business with nonresident aliens in America, so we are left with hundreds of thousands in manager’s checks that can’t be deposited.
- Gold investment can either be a physical investment or a synthetic investment based on gold ETFs, gold investment accounts, or gold jewelry.
- Allocate 5-15% of your portfolio to gold to hedge against risk, this preserves capital that can be deployed when prices of other assets drop.
- Gold is a legal asset, even if you hold it with another institution, and it does not appear on the bank’s balance sheet. It is effective as a portfolio diversifier, but it does not offer the same returns as other investments.
- Unlike many other assets, gold does not have a strong correlation to an asset class, nor does it have a pro-cyclical characteristic. It’s also a very liquid asset, with less sticky properties and digital assets.
What is the future of these different assets?
- While we do not forecast gold prices, we do look at the sources of gold demand, which are procyclical as gold is used in the real world, and central bank demand, which is countercyclical. As a reserve asset, gold is allocated by central banks as well as institutions such as pension funds, to improve risk-adjusted returns.
- Although interest rates are an important headwind for gold, as they become more priced in, their impact tends to diminish. I believe we are approaching the end of that cycle, which is often very supportive of gold.
- Although you stated that the money supply had gone up six times since 2000, you did not make any money and you lost holding gold, but you still have gold and do not need to sell it to make money.
- In general, gold reserves change with technology. However, on average, the gold supply grows at a rate of 1.5% per year. Demand typically outweighs the supply of new gold, so about 50% of the world’s gold needs are met through mine supply, while 50% are met through recycling.
- People moving to Dubai from Singapore, New York, Hong Kong, London, Paris, and many other cities are finding that there is still a great deal of value, and that the reinstatement cost is often lower than in some areas.
- In today’s market, buyers are feeling more confident and comfortable, and banks are feeling the same, allowing them to begin to be more aggressive with their debt repayments.
- It is important to note that as borrowers move down the term of their mortgage, the cost of that mortgage becomes more affordable, and lenders are becoming more aggressive with their margins to keep the market going and to keep money flowing into the market.
- It is important that you do not treat your house like a piggy bank since you will be wiped out if your financial system fails. You can still make money with real estate if you do it right, but 90% of you will not be able to do that.
- Dubai real estate is a tangible, cash-flowing asset that will benefit from the eventual decrease in borrowing rates, mortgage buyers will be buying properties when rates are lower.
- There has been no regulatory regime for crypto or digital assets in China, and the US is looking at the SEC, and I guess one question is whether crypto should be regulated. As far as I am concerned, regulation is a protection for large institutions from competition, and it is a result of individuals making mistakes and deciding not to repeat them.
- The bank that went under in recent weeks was not the result of cryptos, but rather their overleverage on bonds, and if this bubble bursts, it will be much more catastrophic than FTX or any other previous exchange.
- Bitcoin’s limited supply will drive the price up over time, think of investing in Bitcoin over 20+ year time horizons.
- If you are not a crypto enthusiast or just starting out, I recommend sticking to Bitcoin, Ethereum, the main ones and not investing in altcoins or low-volume coins because you may lose your entire investment. According to our calculations, real estate is worth $300 trillion, gold is worth $13 trillion, and bitcoin is worth $560 billion.
- In looking at the overall growth of Bitcoin in the last 13 years, we have shown that this asset class has outperformed all other asset classes. In addition, post the pandemic, 33 million Africans have signed up with different exchanges in order to trade cryptocurrencies.
- Bitcoin’s principal use case will be money, and people are already contributing to the Bitcoin protocol by adding new ordinals, and they are creating their own tokens, their own NFTs, and so forth based on the Bitcoin protocol.