 We have another presentation coming up with Mark Waalek. Mark is working for Incrementum AG from Liechtenstein, which is an asset management company. He's responsible for the portfolio management there and research. And since a long time, you're publishing a report called In Gold We Trust, which is like the annual Bible of the latest developments in gold. And you added the crypto research report. And you see it's quite a heavy piece of work. It is. You will talk about digital and physical gold and how these two play together. Yes. All right, please. Thanks, Moritz. Ladies and gentlemen, thanks for having this long endurance and waiting for the big finale, the grand finale. I hope I can meet the expectations. Yeah, Mark Waalek is my name. Together with Ronny, who's also here in the audience, we publish an annual publication, which is called the In Gold We Trust Report. We've been doing this for many years actually already since 2013 under the Incrementum brand. Ronny actually started it even earlier since 2007 under Erstebunk. And since we are such gold bugs, we actually were quite fortunate enough to also discover Bitcoin pretty soon. And contrary to other people from the gold space, we didn't like completely reject it. But I think from the economic point of view, we got it pretty fast, what it actually is about. It's about to potentially create a alternative non-inflationary monetary system. That's what I would say at least. And we've been covering it also in our reports. We've been looking at it privately, but now since now the newest developments from the regulatory side have made it possible for us. We are actually also have started a fund, investment fund, which also is looking at this topic. But I'm not going to talk so much about the fund or anything like that, but what I want to give you today is like a brief, some brief ideas, how potentially to combine these topics, physical gold and digital gold, and how one can actually do pretty simple, but I think smart investment strategies around these topics. And I hope you can take something away from this. So let's see if this works. Whoops. Okay, so this I just mentioned, next report is coming out on May 27th. And we are looking forward to it already. It's just a hell of a work. It's 350 pages it was last year. So I'm trying to convince Ronnie to make it a little bit more condensed this year, but it's always a good read, I think. So what I want to say generally, I want to give you a brief, I want to make the case very briefly for investments in both of these assets class. So what is the case for gold and what is the case for Bitcoin? We heard a lot about Bitcoins are gonna just perhaps spend a few more minutes on gold. What we all know is that this current expansion, I'm talking about the US economic expansion is by now, and this is outdated a little bit already, by now the longest in the history of the United States. So that's just I think something worth mentioning, but very interestingly is, and I think we are not exaggerating when we say it's fueled by a tsunami of debt. The public debt is, and also this figure is difficult to keep accurate by now because we are I think approaching 23.5 trillion already. So it's 23 trillion, the public debt and that doesn't include all the other liabilities of the United States. And I think what's remarkable about this is, this apparently very vibrant economy is now working with a deficit of five to six percent per annum. So usually you have actually, at least more or less a consolidated budget if you have really good economy, but they have huge deficit during a high economy and now since things are slowing down pretty rapidly, I think this development will be very interesting to see how this will develop. So I think the United States will have more and more increasing problem financing that deficits. So what should we do? Where should we invest? We have a huge I think asset bubble, one could say that. We definitely talk about that. Everything bubbles of financial assets have been performing extraordinary well. And so this would be in it of itself, I think a good starting point to think about gold. But what I also want to tell you is why investing gold? So this is something very basic, but a lot of the people, gold is a quite emotional topic, oftentimes among the asset management community. I think one should have a clear mind about what is conceptually the case for gold because the biggest problem and the biggest argument against gold is it's not paying any interest. And that's a true statement, gold does not pay interest. So why should I invest in a non-productive asset which doesn't pay interest? So I think one can only understand this if one understands the monetary system to some extent. So we have an inflationary monetary system which has an annual growth of fiat money which is far exceeds the annual growth of the global gold supply. So during the last century, we had an average 7.3% growth of fiat money. This is US dollar I'm talking about. And 1.52% growth of the gold supply. And even more recently, since 1971 till recently the average growth was again 1.5%. This is a very constant figure with gold, always plus minus 1.5% versus a whooping almost 10%. So this is I think the basic graph to understand why gold rises. Gold shouldn't get more valuable really if fiat money wouldn't be permanently inflated. So in reality, the way I see it and the way many people see it is actually it's a devaluation of fiat money relative to a more constant yardstick, a more constant measuring stick. And so I think actually also for getting some kind of a long-term performance estimate how much can gold perform, it's actually as simple as that is subtracting these two numbers. So the gold price in the long-term basically discounts the fiat money inflation. So we have 10% fiat money inflation, 1.5% gold inflation so you can perhaps roughly estimate a performance of 8.5% which actually matches historic numbers pretty well. So this is important to understand and that's why there is absolutely a case to also invest in a non-interest paying asset because it's appreciating with basically with the inflation. Generally speaking, but now we're talking a little bit perhaps about the situation right now. So what can be viewed and it also came up today in this conference already, central banks are increasing the allocations of gold pretty rapidly actually. This all started in 2008 so we were on a secular decline of gold reserves. I think for 26 consecutive years gold reserves were actually reduced from central banks and 2008 obviously a very important year in financial history marked this point, this change in this dynamic and it is very much fueled by rest of the world. Summed up here different groups of countries so actually the developed markets haven't increased their gold allocations hugely yet but also some indications show us that more and more developed central banks from so-called developed countries are starting to think about or even increasing the allocations but most of this part was basically increased by Russia, China, Turkey, India. So a lot of these countries started to increase their gold reserves and there is no end in sight. Just a small graphically display, I really like that but it's a few years old so I actually scribbled around here so we actually can perhaps zoom into this. So these are the stacks of the central banks if you really like put all the golds in highly densely formed bars together you see a few people down there standing around it's really, actually it doesn't take up a lot of space it's a really valuable metal. Russia, China you see these red lines which I try to scribble around here have increased, have actually doubled their gold reserves in not even five years so this is really a remarkable development. Russia is buying I think 12 to 15 tons each month regardless of the price so they are doing a cost average program into gold quite smart I think. So China is not as transparent as Russia so the official number is close to 2,000 tons but still increasing the gold reserves rapidly so I think just from monitoring this development I think it's quite interesting to see okay central bankers are probably most of the time not stupid people they are preparing for something and this is not the conspiracy theory that's also based on their own statements so for instance Hungary increased their gold reserves recently in Poland and even the central bank of Netherlands recently put out a statement why they are doing that because of gold being basically the ultimate currency it doesn't have any counterparty risk and it is basically a hedge for potential reform of the monetary system. So we heard a lot about the stock-to-flow ratio and we actually have been writing about the stock-to-flow ratio for many, many years long before it became cool so it became cool pretty fast last year since this model came up which I'm also interested in but generally speaking I tried to what we put on this graph is I wanted to show this a little bit in a different way just from a stock-to-flow ratio perspective and this is often brought up from the Bitcoin side as argument being a superior money a more harder money than gold the stock-to-flow ratio increasingly falls what I put on here is basically the total, the development of the total supply of gold so that's the right hand scale so we currently are close to 200,000 tons of gold which have been produced since the history of humanity and something close to 19 million can that be? Bitcoins on the Bitcoin side so the golden line, the gold supply rises very constantly this is the 1.5% which I referred to previously the Bitcoin line rises more and more flatter so this is the falling stock-to-flow ratio which is depicted in a little bit of a different way both are very hard monies but this is basically the difference between gold and Bitcoin on an absolute amount scale and I think it's a good argument for in favor of Bitcoin but it shouldn't be the only argument so there are a lot of difference and I will just briefly touch a few of them but I think this is important to keep in mind talking about Bitcoin now shortly so I think we had also a lot of interesting opinions regarding Bitcoin, will it be money? Is it already money? Has it got some characteristics of money already or in the future? I don't know but I'm going to be more conservative and I'm going to stick to the traditional digital gold argument I think that's a good argument because we can so far already see Bitcoin is being used as a store of value it's maybe a very speculative store of value but if it is a global store of value if it is the global digital gold I think this has a natural tendency to become a monopoly so what actually I think from an investment point of view has to make sure that one invests in the digital gold basically so why is this version of Bitcoin so interesting? I think this is a very interesting question to think about there are probably different answers and I know there are different opinions but I guess on this conference I'm pretty safe to make the argument for the traditional Bitcoin but I think that the strongest argument in my view is basically security call it censorship resistance call it decentralization call it hash rate whatever you want but Bitcoin is the strongest network by far of them all so that makes the big case for Bitcoin being the digital gold I think that's an important point and we also had this already during this conference you can make a fork but the fork won't be safe that's basically pretty much in a nutshell putting things into perspective so we have a huge asset I'd say over valuation at least perhaps asset bubble so these different areas represent different asset classes and I'm sure this is too small to read but just to put things into perspective gold is down here silver is down there and Bitcoin is down here this is a tiny, tiny slice of global assets so the potential here is clearly high obviously especially for Bitcoin this is basically a different way to show the proportion of Bitcoin and gold gold obviously is also a moving target market capitalization recently exceeded 10 trillion dollars whereas Bitcoin still is around about 0.15 trillion dollars so you barely can see the Bitcoin market cap on this graph so if Bitcoin does become digital gold or some kind of a version of a digital gold there is an extreme optionality in Bitcoin I think this argument is well known, is well explored but I think it is very sound and that's why I want to emphasize this here as well so one has two different assets obviously whereas one is very well established and one has also talking about gold now a volatility which is about roughly 15 to 20 if you take volatility in terms of standard deviation Bitcoin on the other hand has a much higher volatility but it has a huge optionality so gonna talk about the characteristics in one second still so this potentially could be the path to digital gold I'm not talking about even about Bitcoin being a money global money but the path to digital gold is extremely valuable so this slide I shared I took from Plan B from this model this well-known model by now so these price swings are very wild so this is a logarithmic scale and the path to digital gold is extremely volatile it has been so far and in my mind there is no reason to believe it will become significantly less volatile in the next months and in the next years so this again actually I think is more evidence for the asymmetry of Bitcoin so you see the monthly returns of gold which are pretty narrow and you see the monthly returns of Bitcoins which are skewed to the right which is important point which shows this asymmetry again in an empiric form so one has one asymmetric asset and one more or less symmetric asset one low volatility asset and one high volatility asset so the great challenge and now it gets interesting in my mind the great challenge is if you wanna invest in Bitcoin how do you go about it? So people are smiling already guys tweets I wish I had kept my 1,700 Bitcoins at 6 cent instead of selling them at 30 cents now they are $8 this is a funny story but that's actually one of the better stories because this guy came out with a profit I'm of the opinion that most of the people actually who started investing in cryptos didn't get out with a profit why? One of the reasons is because it's highly volatile and because of this it has extreme behavioral finance traps coming with it so the great challenge is when to buy and when to sell so Bitcoins volatility is a curse who would agree with this statement? Some of you, okay Bitcoin volatility is a blessing more agreement okay, that's good, that's very good because that's one fundamental message what I want to deliver to you today Bitcoin volatility is a blessing at least it can be a blessing if one does some very simple and prudent investment strategies which I'm now going to talk about so one can obviously combine different assets but since we have similar assets we've been looking at combining gold physical gold and digital gold what's, oops okay, something with a format didn't work out here doesn't matter what this is is this classic capital asset pricing model and diversification if you have like different assets your volatility is reduced and you can actually increase your return so what we did is we ran through this is obviously a historic calculation but we ran through all the potential different portfolios starting from 1% Bitcoin 99% gold and going to 99% Bitcoin 1% gold and since these two assets so far are not correlated one has diversification benefits so this is something everybody from the asset management industry knows that's nothing hugely new so far so now it's getting interesting what can you do if you decide to combine Bitcoin with another asset and the buzzword here is rebalancing so what is rebalancing I'm putting this this blunt statement out here HODL is not the best investment strategy so I really do think this especially from a risk adjusted return perspective what happens I am not the guy telling you that I know if Bitcoin is going to rise or fall I just don't know but what I am very convinced of is it will stay volatile and this volatility this blessing I want to use and it's actually pretty simple how one can actually use it so one thing is I'm not talking about this on the slide but one very easy thing is dollar cost averaging so if you dollar cost average then you use the volatility because you save the same amount of dollars each month and you get basically a better price entry price than you would have gotten if you put all your money at once into those assets but if you if you have a lump sum to invest when do you invest your lump sum? nobody can answer you this question theorem so I think this is always a good thing to basically diversify your entry point via time but once you diversify two assets a low volatility asset like gold with a high volatility asset like Bitcoin and do a permanent disciplined rebalancing strategy this leads you to basically permanently sell Bitcoin once it rises too sharply and rebalance into the low volatility asset which is gold and you you reinvest once the Bitcoin price falls so you on average you permanently are increasing you actually always having a better entry point so you permanently working on averaging in and averaging out from basically just by using the volatility so in this case this is a random approach one can do it with different figures it basically always works but in this case the strategic allocation would be 25% this is on the left scale of Bitcoin and 75% gold and a sale is triggered if the portfolio weight of crypto of Bitcoin exceeds 40% and a buy is triggered if the weight of crypto is smaller than 10% so this is mainly triggered by the volatility of Bitcoin it's also to a small extent triggered by the volatility of gold of course because gold also has movements but really not mentionable almost relative to Bitcoin volatility so what happens is if Bitcoin rallies your allocation automatically increases and you sell it at a specific trigger in this case once you have 40% so basically you could say whenever Bitcoin doubles in price the profits and reinvesting gold whenever it falls 50% I take some of the gold and put it back into Bitcoin and it is really that easy it works brilliantly so that is something everybody can actually do by himself I am personally doubtful that a lot of people will do it themselves because my experience people really always have the tendency to start trading and it is really often quite difficult to actually sell into strengths because when is the strengths strengths is when everybody is talking about it strengths is when people get greedy strengths is when you have great news around and then you think well now that I don't know what has to happen China has allowed Bitcoin as official currency I don't think that will happen so soon but whatever happens and just is now discussed will probably lead you to not do the sale right now you probably want to stay in the market a little bit longer so it is really difficult to do it but one can do it one can do it by oneself so I would propose anybody who wants to invest a part of their money to do a very disciplined rebalancing strategy definitely doesn't have to be with gold I think it is very suitable with gold can be with with fiat or with bonds if you really want to invest in bonds whatever whatever you think is not so risky you know and so we did really we crunched the numbers we did all combinations we did different rebalancing triggers and it really is a systemic increase so what this is is the sharp ratio of all different portfolio combinations basically a structural increase of your sharp ratios and this works generally the better the higher you have these rebalancing bands so if you give Bitcoin more lee way to move then you have actually you can increase your sharp ratio even higher the problem in my view from an asset management point of view at least is if you have a portfolio in an extreme version you have 0 to 100 percent Bitcoin it is difficult to know what kind of volatility you are talking about so that is why we are actually looking at this version which I just showed you 25 percent, 75 percent and maximum 40 and minimum 10 so you roughly know in what kind of a category of volatility you always are but just from the statistics point of view you would actually have to even increase these bands to optimize it so this is something everybody can do by oneself the rebalancing strategy on top and this is more or less the final part I am going to tell you here but since I think a few perhaps more sophisticated or professional investors are in this room I am going to touch it briefly on top and this is really I am fascinated about this on top you can basically use option writing strategy to create income you actually can use volatility to create cash if you have this kind of cash flow if you have this kind of portfolio how do you do that so in this case let's stick to this case you have 25 percent Bitcoin you have 75 percent gold you can write options because since January I think 13th there is an option market on the Bitcoin future although but still economically it's just the same you can write a call option for the case that your exposure actually does rise and for the case that you actually want to reduce your exposure so you write a call you receive a premium and if you are exercised in the call it's exactly what you want to do anyway because you want to reduce your exposure into strength and you know roughly where the trigger will be and that's why you can pick a strike price when you have reached your trigger allocation of Bitcoin and the same you can do on the downside if you want to have to increase your exposure you write the put and what's so charming and what's so fascinating for me as an asset manager with this simple add-on strategy is the premiums for these options are just really attractive really attractive obviously because Bitcoin is such a high volatility asset so you can really receive a lot of money selling basically insurance that's what it is you're selling insurance you're selling call options which would be a highly risky thing to do if you wouldn't have the underlying what you do have the underlying and you want to make the trade you want to reduce into strength and you want to buy into weakness so you use the volatility on a different level on top of it and you can create depending on the strategy how you calibrate it you can create double digit cash flows if you do this in a structural way so this is also I think something which is very interesting it has its limits it has its limits from a capacity point of view because the option market currently is very young so it's not hugely liquid yet so one can do this only with a limited amount of assets under management so this is a little bit of a hedge fund strategy at the end of the day a very conservative hedge fund strategy which uses volatility from the option markets so this is all I'm going to tell you about this option strategy because I don't want to go too much into detail but I just wanted to perhaps pick your brains with this and share my enthusiasm for this strategy so I'm getting to my conclusions which are gold is the store value with the longest track record and long-term protection against the dilution of fiat money I think this is something which is very clear bitcoin is a highly speculative digital store value with an attractive asymmetric optional and I would say binary payout profile I mean by binary I do think there are risks involved systematic risks involved in bitcoin I would not 100% rule out the possibility that bitcoin goes to zero it could happen I don't think it's a high probability but it is I would rule out the possibility that gold goes to zero so it is a different asset but it is highly asymmetric and the upside is huge the combination of gold and cryptocurrencies results in an excellent risk return ratio and it very importantly protects against the psychologically timing errors which I think are always involved in high volatility assets volatility can be used to the investors advantage via a rule-based rebalancing strategy I hope I brought that point to you and professional investors can take advantage of high volatility and create regular cash flows by systematic option writing by systematic option writing so these points I hope I could deliver and hope to answer more questions now or later but thanks for your time and thanks for this conference thank you do we have questions from the audience because I would like, I have a question and actually is there, is this a bitcoin only or you said it's a crypto fund so do you add other altcoins for with interesting profiles or whatever well in our investment strategy we explicitly do not only talk about bitcoin why do we do that I don't think that bitcoin can be challenged personally but I also don't want to rule it out 100% so what we do is we look at basically the market cap the liquidity and so on of store of value in coins and if some potential competitor could, should come up we then take that into the portfolio if it gets a significant market cap but right now we don't see that at all so currently this is bitcoin only very good and from the custody point of view where do you trade and where your custody, your gold and your bitcoin custody is possible in Liechtenstein via cold storage and we also use futures though and able to be implementing the option strategies so mostly cold storage a little bit of derivatives very good and is there a certain limit to the fund size or yes it's difficult to estimate I mean currently I'd say 100 million or so so it's really not huge but as things are so dynamic obviously if markets get more liquid which I would expect the limit would also increase so you're raising up to 100 million at the moment and then you're looking well I mean people have to get accustomed I think the traditional investors have to get accustomed to this asset class I think this is a good strategy to enter this asset class if you haven't been in there yet so 100 million is a nice target but it's not not around the doors to be it so okay perfect any more questions okay