Why Pandl Calls Gold and Bitcoin Buys Here

**Steven Ehrlich** (0:00)
I want to just touch a little more on Bitcoin and gold, though, and sort of how they performed during the Iran War.
I mean, gold, I think, just finished its worst quarter, or it's about to finish its worst quarter in years. I mean, Bitcoin was up, I think, for a decent amount in the beginning of the war, but that may have had more to do with Bitcoin being just oversold at the beginning and gold being overbought and kind of a reversion to the mean. But prices are struggling, and I think the World Gold Council just came out with a report pointing out how more and more central banks are repatriating their gold out of London and New York, which seems to suggest perhaps the need for a secure store of value. And if that's true, Bitcoin is much more easily transferable than gold. I know they're not the same assets at this point in time, but how do you make sense of their performances during the crisis and kind of where we stand now?

**Zach Pandl** (0:57)
I don't think you can make sense of the price performance without talking about speculation in this case. Both of these assets are, in my view, cornerstone assets of the global financial system, extremely important assets and should be held in most types of diversified portfolios, physical gold and digital Bitcoin.
But when you're looking at the short term price behavior, especially in the last few months, to me, it is striking that the degree of speculative or momentum type of flows, return-chasing flows, how prominent that has been. The gold mega trend really started in 2022, something we've talked about in the past to Steve with Russia's invasion of Ukraine and the sanctions applied to Russia's central bank. That really triggered a new era of central bank, gold accumulation, and got prices to maybe 4,000 or something like that. But then from 4,000 to 5,500, I think maybe that was a lot of return-chasing and speculative retail activity that got us to those very high levels. My sense is what's happened recently is that's just coming out of the market a bit, that the speculative intensity has shifted away from precious metals, maybe to some degree to some other things. Of course, like the chip and semis space of the market, that's been incredibly hot in equities at the moment, perpetual futures and the pre-IPO trades. I think some of it can only be explained by the coming and going of speculative activity. Both gold and bitcoin, to me, have very strong fundamental foundations.
That has to do with this deficit and debt imbalance that's not going to go anywhere for a long period of time. I would encourage investors that have longer time horizons to look at these types of markets, look at these types of drawdowns when retail speculative activity has been washed out. Maybe it's the time to be looking at allocating to both of these assets. I personally think that gold and bitcoin both look pretty good here, and a lot of that speculative access has come out at this point.

**Steven Ehrlich** (3:24)
All right, so we're just about out of time, but I do want to just give you a chance to talk about any other assets, charts that you're paying attention to. I know Uniswap's getting a lot of attention because of, which bank was it, Standard Chartered, that basically tends to have a buy rating on it.
What are you going to be looking for as we move into the second half of the year?

**Zach Pandl** (3:50)
Well, let me talk about a kind of umbrella topic that covers that, as well as a few other things, which is revenue. Revenue and earnings for crypto protocols and the value that that can accrue to tokens.
That, I think, is very central to the investor focus at the moment. And regulatory clarity has been a big piece of that. A new regulatory environment that has allowed these protocol teams to change their structure, to create new structures, and then to talk about what they're doing and the revenue-produced protocols in a new way. That's been a kind of a breath of fresh air and certainly a big change. And I think Hyperliquid specifically has been an important part of that story. So many of our touch points may not be crypto-native investors, but they're looking at the industry for compelling ideas. And Hyperliquid is this very clear use case of blockchains for a piece of financial technology. It produces a lot of revenue. It drives that revenue back to token holders. And so very clear revenue story. So you mentioned Uniswap. We recently did a similar type of report using classic discounted cash flow valuation analysis to put a price target on Aave token. Hyperliquid has been at the center. I think in the context of Clarity Act, tokenized assets, stable coins, there's going to be a huge focus on where are the revenue producing projects in crypto? How do you value those tokens? And is this the right time to buy the dip?