From Hedge to Strategy: Gold’s New Role, Bitcoin’s Rise in Portfolios

Gold is considered a tactical long-term asset, but Bitcoin is currently undervalued. ReSolve Asset Management‘s portfolio manager, Richard Latimer, notes that gold’s current price consolidation is expected after its early-year surge. Despite strategically remaining bullish on gold for its structural bull market, ReSolve has become tactically neutral in the short term, having taken profits and reduced positions as prices became parabolic.

Latimer highlights that significant pullbacks are common during long-term gold bull markets, citing historical examples. He emphasizes gold’s evolving role in portfolios, shifting from a geopolitical hedge to a strategic component, particularly after Western governments froze Russian reserves in 2022, a “Rubicon moment” for central banks. Simultaneously, ReSolve is increasingly optimistic about Bitcoin as part of its alternative currency strategy, offering a combined gold-Bitcoin product. Their allocation is now two-thirds gold and one-third Bitcoin, with increased Bitcoin exposure as its volatility stabilized.

ReSolve’s models successfully navigated Bitcoin’s recent downturn and are rebuilding positions. Despite Bitcoin’s volatility, Latimer sees its growing importance in diversified portfolios due to its low long-term correlation with gold and stocks.

Both gold and Bitcoin are supported by ongoing fiscal deficits, geopolitical fragmentation, and currency devaluation concerns. Latimer warns that the global economy is entering a “paradigm shift era” marked by increased geopolitical tensions, persistent inflation, and economic inequality, suggesting these are unprecedented times.