Gold price at $6k? This asset is more likely to triple - Hugh Hendry
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(Kitco News) It is essential to have exposure to real assets in this uncertain macro environment, according to Hugh Hendry, Founder of Eclectica Macro. But Hendry still prefers to hold four times more Bitcoin than gold, and here's why.
From real assets Hendry's top pick is gold. "I would have 5% of my portfolio [in gold]," Hendry told Michelle Makori, Lead Anchor and Editor-in-Chief at Kitco News. "Why gold? Because for the last 12 years, gold has kept hitting this $2,000. It feels like there's a price barrier, and a lot of people want to own gold, but there's not enough economic stimulus or data to sponsor a consistently higher gold price."
In the months and years ahead, gold will move above this $2,000 an ounce resistance, which is when Hendry will start increasing his 5% position.
"When it gets to $2,000, it fades, and it falls away. But one of these days, maybe, it is going to go $2,100, $2,200, $2,300," he said. "When it breaks the barrier to the upside, I'm buying it."
Despite Hendry's positive outlook on gold, he is more bullish on Bitcoin — with a 20% allocation.
"I've got 20% of my portfolio in Bitcoin. Not crypto, Bitcoin," he said. "The reason being … Bitcoin is the new kid on the block … and it's shown a proof of concept."
After correcting from a record of nearly $70,000 in 2021 to under $30,000, there is a lot of upside potential in Bitcoin.
For a full breakdown of how Hendry would invest $1 million, watch the video above.
Bitcoin below $30k vs. Gold below $2k
For Hendry, it all comes down to market capitalization. He compared Bitcoin's total market cap of $500 billion to gold's market capitalization of $12.6 trillion, stating that Bitcoin has a much higher chance to triple in price than gold.
"Can gold triple in price? Let's say gold is at $2,000. Can gold trade at $6,000? I don't know. I can't imagine. At $6,000, gold would [have a] $30-$50 trillion [market cap]. So gold would be valued more than all United States equities. And that's a really hard one for me to imagine," he noted. "Whereas if Bitcoin tripled, it'd be the size of one large U.S. stock — it'd be the size of Meta. That can happen."
Even if Bitcoin's market cap reaches $1.5 trillion, it is still a fairly "small" market, Hendry said.
For Bitcoin to triple, all it needs is the right catalyst, which could be the approval of several spot Bitcoin ETFs, Hendry pointed out, including BlackRock's application.
"The house always wins — BlackRock always wins. They see a gigantic opportunity to launch ETFs. And so the more that Bitcoin can go from half a trillion dollars to one trillion, to two trillion, to three trillion, the more that the system of Wall Street, the casino, will make money. If you're taking a bet … as an investor, I want to say, I've got BlackRock, I've got Fidelity, Wall Street has got my back. They want Bitcoin to be higher," he explained.
Hendry highlighted that he is against allocating more than 20-25% of his portfolio to equities. Watch the video above to get his outlook on the U.S. stock market and how to play it this year.
Henry also weighed on whether more investors will opt for Bitcoin and gold as hedges against risks such as growing geopolitical tensions and new fears surrounding central bank digital currencies (CBDCs).
When addressing the accelerating de-dollarization trend, with the BRICS summit kicking off in South Africa this week, Hendry criticized those blindly believing the narrative.
For more on why Hendry believes de-dollarization is "detached from economic logic and reason," watch the video above.
To get a list of Hendry's top three people when it comes to understanding money, watch the video above.