Fidelity Investments’ Director of Global Macro, Jurrien Timmer, has recommended a 4:1 allocation ratio of gold to Bitcoin for store-of-value investors, citing a convergence in their risk-adjusted return metrics. Timmer’s recommendation comes as Bitcoin surged past the $100,000 mark, trading around $103,600 on May 16, while gold held firm at approximately $3,213 per ounce.
According to Timmer, the 52-week Sharpe ratio—a key measure of risk-adjusted performance—is showing signs of alignment between the two assets. Gold currently has a Sharpe ratio of 1.33, compared to Bitcoin’s -0.40. Though Bitcoin’s metric remains negative, the narrowing spread suggests its volatility-adjusted performance is improving. Timmer noted that when gold’s exposure is scaled to four times that of Bitcoin, the historical volatility and cumulative returns of the combined allocation closely resemble that of a balanced risk-return profile.
Timmer’s 4:1 heuristic is not about choosing one store of value over the other but rather integrating both to harness their complementary strengths. While gold has delivered 67 record closes since early 2024 and has gained roughly 33% year-to-date, Bitcoin is up about 25% from its April low near $76,000. The current environment—marked by inflation concerns and monetary tightening—supports both assets, though their price action can diverge significantly during risk-off episodes.
The proposed allocation strategy offers investors a practical framework to hedge inflation with gold while maintaining upside exposure to digital assets through Bitcoin. It also aims to temper Bitcoin's well-known drawdowns without significantly capping long-term growth potential.
Timmer cautioned that while Bitcoin’s improving Sharpe ratio is promising, it remains vulnerable to regulatory shocks and liquidity squeezes that could widen the gap once more. Nonetheless, should the trend continue, portfolio rebalancing toward Bitcoin could become a more popular tactical move among macro-focused investors.
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