#456: Eddie van der Walt on Gold and Bitcoin

Eddie van der Walt is a financial journalist at Bloomberg based in London, with a background in covering commodity markets, an awareness of currencies and expertise in precious metals trading. He previously was a Bitcoin skeptic, but recently converted to a Bitcoin believer. In this conversation, we discuss the macroeconomy, gold, bitcoin, market structure, what changed his mind about the digital currency, and a 2021 outlook. ======================= Choice is a new self-directed IRA product that I'm really excited about. If you are listening to this, you are likely part of the 7.1 million bitcoin owners who have retirement accounts with dollars in them, but not bitcoin. I was in that situation too. Now you can actually buy real Bitcoin in your retirement account. I'm talking about owning your private keys and using tax-advantaged dollars to do it too. Absolute game changer. https://www.retirewithchoice.com/pomp ======================= Want to sell your wonderful internet business? Tiny partners with founders to give them quick, straightforward exits that protect their team and culture. We’ll make an offer within a week, close the deal within a month, and keep your business operating for the long term. Get in touch at tinycapital.com, and we’ll let you know within a couple of days. https://www.tinycapital.com/

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Anthony Pompliano?

  What's up everyone, this is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Let's kick this thing off.

• 0:09Speaker 01

  Eddie VanderWold is a financial journalist at Bloomberg, based in London, with a background in covering commodity markets, an awareness of currencies, and expertise in precious metals trading. He previously was a Bitcoin skeptic, but recently converted to a Bitcoin believer. In this conversation, we discuss the macroeconomy, gold, Bitcoin, market structure, what changed his mind about the digital currency, and a 2021 outlook. I really enjoyed this conversation with Ed, and I hope you do as well. Before we get into this episode, though, I want to quickly talk about our sponsors. First up is BlockFi. BlockFi has three products: one, you can buy and sell crypto on their crypto exchange; two, you can deposit crypto

• 0:53Speaker 01

  and take out a US dollar loan against your crypto collateral; or three, you can earn up to 8.6% APY in an interest-bearing account. BlockFi also is coming out with a Bitcoin Rewards credit card in 2021. You'll use it just like a normal credit card, but you'll be able to earn Bitcoin back, rather than cash or airline models. I'm an investor, I sit on the board, and I'm a very happy user. If you get a BlockFi account, I think you will too. Go visit them at blockfi.com/pomp. Again, blockfi.com/pomp. Next up is Choice. Choice is a new self-directed IRA product that I'm really excited about. If you're listening to this, you are likely part of the 7.1 million Bitcoin owners who have retirement accounts with dollars in them, but not Bitcoin. I was in that situation,

• 1:38Speaker 01

  too. Now you can actually buy real Bitcoin in your retirement account, though. I'm talking about owning your private keys and using tax-advantaged dollars to do it, too. It's an absolute game changer. Choice, a self-directed IRA product that allows you to buy Bitcoin, hold your private keys, and use tax-advantaged dollars to do it. No longer do you have to ask, "How do I buy Bitcoin in my retirement account?" Use Choice. Go to retirewithchoice.com/pomp. Again, retirewithchoice.com/pomp.

• 2:10Speaker 01

  There's a really long waitlist, but if you use that link retirewithchoice.com/pop, you'll skip the entire waitlist and go right to the front. Lastly, is Tiny. Do you want to sell your wonderful internet business? You have to go talk to Tiny. I can't recommend them enough. Andrew Wilkerson's been on the podcast before and he's fantastic. Tiny partners with founders to give them quick, straightforward exits that protect their team and their culture. They'll make an offer within a week. They'll close the deal within a month and they'll keep your business operating for the long term. You can get in touch at tinycapital.com and they'll let you know within a couple of days their level of interest. The folks at Tiny, they've been founders. They are founders. They know the things you're dealing with.

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  They speak your language and they understand what you would be concerned about when you do a transaction. They've designed it so that it's painless and also it's a win-win for you and them. I can't recommend them enough. Go to tinycapital.com. Again, tinycapital.com if you are looking to sell your wonderful internet business. All right, let's get into this episode. Eddie, I hope you guys enjoy this one.

• 3:16Speaker 02

  Anthony Pompliano is a partner at Morgan Creek Digital. All opinions expressed by Pomp or his guests on this podcast are solely their opinions and do not reflect the opinions of Morgan Creek Digital or Morgan Creek Capital Management. You should not treat any opinion expressed by Pomp as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. This podcast is for informational purposes only.

• 3:41Speaker 01

  All right, guys. Bang, bang. I've got Ed here with me. Thank you so much for doing this, sir.

• 3:46Speaker 03

  Hey, man. Thank you for having me on. I'm so excited. This is, this thing is an institution on the, on the, on Twitter. Everybody knows about this podcast. People were saying, you know, they can't believe that you're having me on. I was looking at your guests earlier. You've got such high quality of guests that you get on here. I'm hoping I don't lower the conversation too much.

• 4:03Anthony Pompliano?

  You're doing just fine. Let's jump right into your background. For those that don't know, kind of where did you grow up? What did you do before you got to Bloomberg?

• 4:10Speaker 03

  So, man, I grew up in South Africa. You can hear by the accent. I grew up a stone's throw away from the from the South African goldfields in in central South Africa. And I came, I mean, I kind of took the scenic route into into financial reporting. I was a photographer, so quite literally the scenic route. That's what I trained as. But I very quickly learned that I was into news photography and what I wanted to do was financial news, because financial news, in a sense, is the realist news that there is, right? Because I know a lot of people don't get that, and they will roll their eyes when I say that. But when you talk about finance, when you talk about markets, at the bottom of all of it

• 4:53Speaker 03

  is a number. And that number is real, right? Sometimes we get the number right, and sometimes we get the number wrong. But there is there is there is a mathematical undertone to the whole of markets. And that's what attracted me to it. So that's how I sort of stumbled my way into into finance, financial journalism.

• 5:12Anthony Pompliano?

  Absolutely. And when you first started, what were you covering? Were you covering kind of all commodities markets? How did you think about kind of your focus at the beginning?

• 5:21Speaker 03

  Yeah, so let me talk a little bit about the creation to that. So I was I was a reporter through 2000. I was I was covering I was covering, or rather, I was a photographer covering. In fact, I was covering celebrities. I was covering, I was doing paparazzi work at that time, right? I was chasing Kate Moss on a moped. And then, you know, but I was trying, I was all the while trying to make this progression into financial journalism. And basically, what happened is pre 2008, this is something that people forget, pre 2008, around about 2006, we had this massive run up in oil prices, right? Oil prices went to $100, $120 a barrel, something like that. And you could see the world economy being

• 6:06Speaker 03

  squeezed by that. Now, everybody talks about 2008, and we talk about the collapse of the housing market and all of those bubbles in the US. And I think those those things were important. But before that, the thing that triggered

• 6:19Speaker 03

  The collapse was a squeeze in consumer demand as a result of a pressure on well prices. So that got me into commodities market. So I was really interested in this space. And I got really lucky. Just after 2008, I started writing a blog on gold and I got this, I got an invite on to, or I joined a company called The Bullion Desk and I covered purely gold. And, you know, my South African background helped a little bit on that. And, you know, I'm a little bit anti-establishment anyway, right? So interested in the sort of, you know,

• 7:00Speaker 03

  in the underpinnings of the gold market. And yeah, that got me, that got me my break into there. And then from there on out to Bloomberg where I am now. And I covered, I've covered gold there now for about 12 years. But I also cover broader financial markets.

• 7:15Anthony Pompliano?

  Got it. And so you recently had this kind of mental shift, I'll call it, you may describe it some other way, where I don't think necessarily you were anti Bitcoin, but you just weren't as big of a believer in Bitcoin and kind of the future prospects of it. But that sounds like that shifted a little bit. So kind of talk us through like, what, how did you think about Bitcoin previously? And then what drove this changing of your mind?

• 7:37Speaker 03

  Yeah, so I think it was my roots, I started hearing about Bitcoin about 2012 because, you know, we had the first run up, we got Bitcoin was just approaching the gold price. And everybody was talking, is Bitcoin going to overtake gold? So that sort of brought it on to the front pages of financial newspapers for the first time, which brought it on to, you know, into my attention. And then I had a very close Irish friend who was working in the office. And the guy was talking about, you know, putting all of his pension money into Bitcoin. And, and I was a skeptic. I mean, look, but at that stage, if you weren't a little bit skeptical, I think you were irresponsible because it was an asset class

• 8:19Speaker 03

  that was vibrant, interesting. Nobody knew what it was. But, you know, we've seen some interesting, you know, the South Sea Bubble and all sorts of interesting schemes in the past. So at that stage, you are a little bit cautious about. So I remember if people asked me at that stage, I said, look, if I was to play Bitcoin, the way that I would do it is I put money that I'm not afraid to lose in it. And then when I double my money, I'll take it out, right? I'll take I'll take half of it out. So so what's staying in there is free capital that I can I can, you know, I can watch that accumulate with zero risk to myself. And, you know, as it were, this friend of mine who had his money in Bitcoin,

• 8:59Speaker 03

  he put it all in Mt. Gox, which went down, and he lost it all. So people forget that Bitcoin, Bitcoin as an entity has done spectacularly well over the last 12 years. But for individual investors, there were people that lost everything. So it was right to be cautious at the beginning.

• 9:21Speaker 03

  But over time, as Bitcoin progresses, you know, so I'm sitting here, 2012, we've got to run up, we get a collapse. I'm saying, I was fine. It's all over. This thing's going going away, right? It's it's dead now. Except it's not, right? We can we get up the the run up 2016, and the what was that, the second halving? And we get another, we get another run up in in in prices through 2016 through 2017, and then it crashes again. But now this time, it's gone a little bit more mainstream. I mean, at this point, my nephew's asking me about it. So it's gone a little bit more mainstream. People are aware of it. But again, if the bubble

• 10:03Speaker 03

  crashes, and and even early 2018, probably 2019, I'm I'm writing pieces saying, look, there is a risk of Bitcoin literally going to zero. And for me, the reason is that it's not about the model of Bitcoin, right? Bitcoin has proven that it is anti-fragile. It is proven that

• 10:26Speaker 03

  You know, if society collapses today, 20 years from, you know, a thousand years from now, archaeologists will dig up hard drives that will contain blockchains of some description, right? I think it is anti-fragile enough to really be sustainable. And I thought that even then. What I didn't know, what I wasn't sure of, and what made it a less viable mainstream investment for me was the fact that it was, what hadn't been proven is the demand side of it. The supply side was beautifully designed. The demand side, usually when you see a bubble

• 11:09Speaker 03

  and you see a collapse in an asset that derives its value purely from a network effect, you usually see a complete collapse in the underlying, right? It goes to the... Now, when I saw that happen the first time, I thought, okay, that's fine. The second time, okay, that's fine. When something that you do not expect happens three times in a row, you've got to start adjusting your assumptions. And that's where I am now, because now what has been proven to me is that the demand side for Bitcoin is as, maybe not as stable as the supply side. The supply side is durable. The demand side is quite durable. It has been

• 11:54Speaker 03

  for 12 years. It's proven that it can sustain several cycles. And I think that's why many financial analysts are addressing their view.

• 12:04Anthony Pompliano?

  Yep. In terms of Bitcoin today, obviously, a lot of people are comparing it to gold, right? And kind of this digital gold narrative. I think it's really interesting that you had this framework where it was like, look, the supply side is programmatic, it's transparent, it's kind of beautifully designed, as you described. The demand side was kind of the question. And so if we zoom out a little bit, we're obviously in a pandemic-induced kind of economic crisis, if you will. And there's been government intervention, there's been all sorts of interest rate manipulation and quantitative easing.

• 12:38Speaker 03

  Absolutely.

• 12:38Anthony Pompliano?

  Do you think that the confidence that you have in the demand is driven by that macro environment really pushing people to like inflation hedge assets? Or do you think it's something else that has kind of opened your eyes to where that demand is and will be in the future?

• 12:53Speaker 03

  Yeah, I think, I think, I think we're getting into that territory of, of, of, of sort of gold versus Bitcoin. And I think it is a very interesting question, right? Because Bitcoin has been set up to model gold on the supply side and at the same time has been, is a reaction to the fears about fiat currency. But there are big, big differences between gold and Bitcoin, right? The first, the first that I would highlight is, is that there are differences in how Bitcoin acts at the moment to how gold acts.

• 13:34Speaker 03

  So let's say, let's say I am a, I'm a, either a, you know, I'm a, I'm a professional investor or I'm investing my old money, right? I've got a portfolio of assets that I expect to act a certain way. And if I have gold in there now, it does a certain job. It has a certain volatility. It has a certain correlation to other assets. It, you know, it, it, it, it acts as a risk on, a rather risk off play. If I yank out the gold and I put in Bitcoin, Bitcoin does a completely different job. Bitcoin is much more volatile. It is much, it, it's correlation to other assets is a lot different and it's a lot more risk on

• 14:17Speaker 03

  than gold is. So, so just yanking out one and putting in the other one, I, even though the, the debate is set up that way, I don't think that's how most people, I don't, I, there are certainly some people, you know, we've both spoken to people on Twitter that have said this, right? I've sold all my gold and I've gone into Bitcoin. And I think that's fair enough. And, and, and this is probably people that, that owned quite substantial part of their holdings was in gold. So they had a certain expectation for it. And if you are, you are, you are awaiting the collapse of the dollar system, then that is something that makes sense. But if you are a pension fund manager, then that's not how you look

• 14:55Speaker 03

  at, how you look at your assets. And I think there are other, there are other things that they have in common. There are other commonalities between, between gold and Bitcoin. Bitcoin, there's one thing people forget about gold is that the supply side is almost perfectly inelastic, right? If there's a spike in demand for gold,

• 15:24Speaker 03

  A little bit comes from the recycling market, but for the most part, the above-ground supply stays stable and what is there, what is out there, that doesn't change, which makes it quite a unique asset. But that's something that Bitcoin does as well. It's, you know, it's supply stays stable through spikes and that's why you see these big movements in price. The other, the other two things I'd like to highlight with that they have in common is that they're quite poor. The Bitcoin, the Bitcoin guys are going to hate me for this, but they are quite, they're not great units of exchange right at this moment. People don't tend to use them for transactions. We saw in 2017 that the network buckled under it.

• 16:08Speaker 03

  And the same for gold, you don't, you don't spend your gold, right? You use it as a store of wealth. The other main thing that they have in common is that both of them are big, big land goods, right? So a normal good, if the price of the underlying goes up, people buy less of it, yeah? A Veblen good, if the price of the underlying goes up, people get excited and they buy more, right? We see this in 2017 with Bitcoin. We see it in 2020 with gold. Price goes up, being on the front page, and the retail investor is suddenly saying, hey, look at gold, gold's going up and they start buying it.

• 16:53Speaker 03

  So, so, you know, I think that's, those are the things that they have in common. So, you know, that makes it, that makes it very interesting. But when we start talking about this idea of a store of wealth, which is the big selling point that I, that I hear being pushed for Bitcoin at the moment.

• 17:13Speaker 03

  What is, what is a store of wealth? Store of wealth is something that you buy with the expectation that it will keep its value in real terms, right? Before inflation, after inflation, it buys the same amount as it did yesterday. Nobody's making that argument about Bitcoin, right? People are saying Bitcoin is going up. Now, something that's going up in value. It's not a bad place to put your wealth. It's not a bad place to store your wealth. But that's not what we understand with a store of wealth, right? A store of wealth is something slightly different. You know this. I'm not telling you anything. But I just, I kind of want to explain where my thought process comes from, right? And how I see them.

• 17:58Speaker 03

  So where?

• 18:00Anthony Pompliano?

  Real quick, is it fair to say that your thought process here is gold is much more of a store of wealth type asset and Bitcoin is much more of a asymmetric type asset? Is that a fair characterization of kind of how you think about the two assets?

• 18:18Speaker 03

  Yeah, I think so. I think so. I think Bitcoin is. So your potential upside of Bitcoin is spectacular, which it is not in gold, right? In gold, gold's not a great store of wealth either because it fluctuates. Really treasury, you know, inflation adjusted treasuries is kind of the only thing out there. Or maybe oil. Oil is a better, you know, buy a barrel of oil and store it for five years. You will have a much better read on inflation generally. But I think

• 18:49Speaker 03

  I think the way that I think Bitcoin is

• 18:55Speaker 03

  Bitcoin is slightly different. Right now Bitcoin is a speculative play on the hope that it will someday be gold, on the hope that it will someday be. And I think that's valid. I think it's an important. But if you, if you're a fund manager or if you're buying shares for your own account or whatever, right? And you spot this new up and coming company, right? And you think this, I mean, they, you know, what's their market, you know, the annual turnover now is 100 million or something. And you're saying someday this company is going to kill Apple, right? Where does that fit in your portfolio? Do you sell all of your Apple shares and buy this company? You don't, do you?

• 19:40Speaker 03

  What you do is you go, you go sell some of these other venture cap speculative assets. And that's where it sits. And that's what I'm saying. I'm saying that in a well-designed portfolio. That, you know, with various caveats, if you are the person that has a long enough timeframe, blah, blah, blah. Both gold and Bitcoin has a space in your portfolio and they fit in very different places. They do very different things. You need to understand what both of them do. But right now, I didn't used to think so. Six months ago, a year ago, I did not think that Bitcoin was a viable asset for a retail, for a, for a, for a private investor approaching his pension.

• 20:22Speaker 03

  Today, I think 1%, 2%, 3%, why not? Right? I'll tell you what. I used to think that Bitcoin was like a lottery ticket. I could throw money in there and lose it all and the upside is potentially spectacular. Now, I don't, if, if I hear somebody's buying lottery tickets, I'd be like, what are you doing? Put your money in Bitcoin instead. Because, because if you're gonna, you know, that speculative money, that money that you're hoping is gonna pay off massive someday, that should really be encrypted.

• 20:57Anthony Pompliano?

  Yeah, I, I love the framework that you use. Let's talk about kind of the macro environment moving into 2021 and kind of the outlook for both gold and Bitcoin. How do you view, maybe, let's say, the Federal Reserve and other central banks around the world? Are they going to keep printing money and injecting liquidity? And how do these inflation hedge assets work?

• 21:14Speaker 03

  Oh, man, like they've got a choice, right? I mean, you know, they, they've, they've not got a choice. There is no way that, that, that the central banks are able to let the companies fail that are ready to fail at this point, right? There's no way that, that the central banks could just say, look, we, so, I don't think there's any question about it. The, the Eurozone, it feels trapped. It feels trapped in negative rates. I don't see where they're coming out. But, you know, at the same time, have you looked at a, at a long-term chart of 30-year Treasury yields,

• 21:58Speaker 03

  right? The, the, the progression since the 1970s, yields have been falling and falling and falling. Ray Dalio is another guy that's big on gold, big on Bitcoin these days, big on Bitcoin, but I mean, he's changed his mind. And I think the reason is that they are realizing that yields can only go so low, right?

• 22:26Speaker 03

  And quantitative easing is a trap that people can't get out of. It's a really, it's a hard one. So the macro environment is difficult. I do think that going into 2021, you know, we're at the bottom of an economic cycle. We must be because you can't, you can't imagine a bigger economic contraction than the one we had. And what do you, what's historically, what's been the best thing mainstream asset to buy at the bottom of economic cycle is stocks. There's always been stocks, right? You buy stocks at the bottom of the cycle. You wait until we get late cycle and then you get into your bonds. I mean, if you are somebody with perfect foresight and blah, blah. But that's difficult.

• 23:10Speaker 03

  So I think, I think in the near term macro cycle, yeah, I think we spend, we spend higher from here on out. But I, but I do think that the central banks have put them, they've, they've given themselves an interesting trap. Now inflation, which you brought up, whether the, whether the market based measures and the, and the official CPI, you know, inflation readings, whether those are correct. That's an, that's an entirely different, different question, right? I mean, things like house prices are not included in there. And I don't know about you, but my accommodation is my biggest monthly expense.

• 23:52Speaker 03

  So leaving that out of the equation is, makes no sense. But we're at an interesting point. There's, there's, what's the old saying, you know, buy when there's blood in the streets. It's a bit crude, it's a bit crude. It feels a bit crude today especially, but, but I, but I do think that right now, this is the moment that the future Ray Dalios, the future hedge fund superstars, the future.

• 24:22Speaker 03

  Billionaires by that point, probably trillionaires, you know, that generation is being created today. The guys who make the good calls today, they are the ones that we're going to be talking about 10 years and 20 years from now.

• 24:40Anthony Pompliano?

  I couldn't agree more. It's really funny. I just went and looked at a friend of mine or somebody I know on Twitter, Charlie Bilello, I think is how you pronounce it, posted this chart and it was basically the 10 year returns of different asset classes. You mentioned about stocks, the US small cap stocks basically returned. It was like 10.9% compounded annually for the last decade. The US large caps compounded at about 13% and then the NASDAQ 100 compounded at 20%, right, for a whole decade. So all three of those sound pretty good. But then when you look at Bitcoin, Bitcoin was compounding at over 200% annually for a decade. And so I think that it's really interesting when you start to kind of compare, you know,

• 25:24Anthony Pompliano?

  equity like returns, but basically on steroids with something like gold, which only compounded at about 2.2% annually. Right. And so it's kind of this idea of how much of past performance will we see in future performance? Right. And how indicative is that versus kind of the belief that, hey, the quote unquote returns in US dollar value have already been captured by those that were early and basically from here on out, you know, it just goes flat. I tend to think that's not going to happen, but definitely an argument that some people are making.

• 25:58Speaker 03

  Yeah. And I think, I think that's why, that's why the wider investment community is picking up on this. We at Bloomberg, we are definitely covering more Bitcoin a lot more because our readership want it, right? The investment funds, they are starting to realize that it's never going to go away. They're looking at these returns. They are salivating because they, you know, they can't have only bonds at this stage. You're saying, I'm getting zero yield. How, where am I expecting those yields to fall to? So I'm looking for alternative assets. And they are looking to gold and they are looking to Bitcoin and they are looking to venture cap and SPACs and all sorts of, you know. But I can I ask you a question?

• 26:41Anthony Pompliano?

  Sure.

• 26:42Speaker 03

  You know, the debate, the debate about the Bitcoin versus blockchain, right? So, so should I be in blockchain companies as opposed to in Bitcoin? Where do you stand on that? Do you think that Bitcoin is the ultimate use case?

• 26:57Anthony Pompliano?

  Yeah, well, so I think there's a little bit of a nuance to this conversation. So there's Bitcoin, there's what I'll call blockchain or protocol based product services. And then there's the infrastructure companies, right? And so where I've chosen to invest capital and raised money into funds and went and deployed, you know, over $100 million is this idea of putting a very material percentage, double digit percentage into Bitcoin specifically, and then taking the balance of those funds and investing in the equity of the infrastructure companies, right?

• 27:33Speaker 03

  Right.

• 27:34Anthony Pompliano?

  You can think of it as investing in exchanges like Coinbase or a kind of financial product companies like BlockFi, kind of payment processors like Zap with their product Strike, those types of businesses, right? But again, the idea here is you want to basically get exposure to an entire ecosystem. And so having direct exposure to Bitcoin.

• 27:56Speaker 03

  Right.

• 27:57Anthony Pompliano?

  The way that I think of Bitcoin, and basically we talked about it to, you know, we've got public pensions that are LPs in our fund and kind of very conservative type investors, was look, yes, you can go speculate on the price of an asset, a currency rate like Bitcoin, but that would be like speculating on the price of the US dollar, the euro, the yen, whatever. But the way I view it is those investors are actually getting exposure to Bitcoin, the payment system. And if you think of, you know, the annualized or annual transaction volume on the Bitcoin network, it was more than PayPal Venmo or Apple Pay did last year, right? So last year Bitcoin was used more from a transaction volume standpoint than those three products.

• 28:40Anthony Pompliano?

  Now, if I want to own PayPal, right, the payment system, I go buy PayPal stock, right? If I want to own Amazon AWS, I go buy Amazon stock or Facebook. Social graph, I go buy Facebook stock. But if I want to own the Bitcoin network, there's no stock to go buy. There's no centralized kind of organization. And so instead, what I've got to do is I got to buy Bitcoin, the asset. Because as demand increases, the price of that individual asset will rise, right? So there's some causation there. And so I think that becomes a really interesting kind of new framework. When you get into these like decentralized products or decentralized organizations. And so Bitcoin by far is the winner. No one's going to compete with Bitcoin. I think when it comes to kind of decentralized and separation of state and money.

• 29:24Anthony Pompliano?

  And I think that's going to be the foregone, you know, conclusion or winner there. Now, there's taking those same principles of decentralization. I think you're going to see decentralization across the spectrum. What scares me a little bit in kind of, you know, DeFi and some of this other stuff. There's a lot of financial engineering going on. And so it remains to be seen how sustainable are the current iterations? Some of them will succeed. Some of them will fall to the wayside, just like you saw, you know, many other market cycles. So it'll be interesting to kind of see how this plays out. But I think my highest conviction, you know, idea is really Bitcoin. And so I've chosen to put, you know, majority of my net worth there and also invest a lot on behalf of our investors as well.

• 30:08Speaker 03

  I'll tell you this, the idea, we didn't really talk about the network effect. The network effect, I mean, that is effectively what I was talking about. The, the, the demand side of Bitcoin is, to me is the, is the network effect. And there's this saying in the Bitcoin community that it happens slowly and then all at once. And it, it was a bit like that for me because my, my initial turning point was when I went to a, I was invited to speak at a conference on Bitcoin in Malta. Malta Delta, right? Spoken Malta Delta and I went out there and the, I met CZ at Binance. And I met, I met Nick Zarbo, but I didn't meet him there. I met him somewhere else.

• 30:53Speaker 03

  Anyway, the point is I sat. I sat in that room with the people and I was like, the amount of human ingenuity that is being poured into this, it's clearly, clearly, these people are staking their lives on it, right? Their careers, their livelihoods, it's a high conviction trade for these people. And I was like, clearly, they are seeing something that I am not. This missing in at this stage feels foolish. And then shortly after that, we had the collapse in prices, I think. I might have got the timeline slightly wrong there, but you know, so if somebody, I know what the internet's like, and somebody's gonna check me up, like, oh, Malta was before

• 31:32Speaker 03

  or after the crash, or something, you know, it's like, but, but, but, and I think that's where I am now. I think, I think Bitcoin, if you allocate to this space, Bitcoin is by far the frontrunner. It's the strongest. It's got the network. Getting it, being overtaken is gonna be really hard. So I think for most people, whatever they decide to allocate, the majority should be Bitcoin. And the rest should be split between whether it's your front runner coins, or whether it is, you know, with a massive caveat that this is not financial advice. And you've got to first decide whether Bitcoin is right for you,

• 32:14Speaker 03

  for your portfolio, what your, you know, how much money you have, and when you're retiring, and all of those things. But yeah, no, I think we see eye to eye. So this is, this has been really useful to me.

• 32:25Anthony Pompliano?

  Absolutely. Let's look at kind of 2021 and beyond. What do you think happens to gold? And what do you think happens to Bitcoin?

• 32:32Speaker 03

  Ah, gold is, gold, gold's gonna have a tough time, I feel like.

• 32:36Anthony Pompliano?

  You think so?

• 32:37Speaker 03

  I think so. I think, I think gold had such a fantastic run up. And, you know, you could see it squeeze. I started turning, because I'm not, you know, I tend bullish, the run up in gold's probably been my best financial call ever. I'm so, so happy with what happened there. I called gold long. I was short gold, I was short gold going, going into late 2018. And then there was this bit of a short squeeze on COMEX, and I saw this is happening. And then people thought, you know, you had the inversion of the yield curve, and you had, then eventually the coronavirus, which was a trigger that nobody was expecting.

• 33:23Speaker 03

  But I kept my long call all the way through 2000 and at that point I started becoming a bit more skeptical. And I'll tell you why. There are more forces at play in the gold market than purely

• 33:38Speaker 03

  financial, you know, the whole fiat debate. There are other forces at play and one of those forces is that idea that we were talking about earlier. The Veblen good, the when it goes up, it goes up a lot because people get excited. But people bought into ETFs, ETFs built up three and a half thousand tons of gold. That's as much as a year's worth of mine supply, significantly higher than was the case post 2008, 2011. And if you look at ETFs. So most financial assets, right, when you see a drawdown in them, you see, you see, right? It's like they call it a random walk, right?

• 34:21Speaker 03

  You see one update, one massive down day, two updates, massive down day, whatever.

• 34:28Speaker 03

  That's not true in ETFs, ETFs. They, you get directional flow in ETFs. If one day was up, statistically, the next day is more likely to be an update than than a down day. Right? So that makes gold a trending asset. And that flow has turned lower. We see the 50 day moving average on the price turning lower, we're seeing the 100 day turning lower. I don't know, I've, I'm not winning many friends either in the Bitcoin market or in the gold market today. But I feel like, I feel like gold, you know, gold's going to test the low 1700s and maybe 15.

• 35:08Anthony Pompliano?

  Yeah, I tend to think that gold is not going to have as great of a run as Bitcoin, obviously. But I also tend to think that people are underestimating this idea that an entire generation of people are basically dropping gold and going to buy Bitcoin. Whether they should or not is up for debate, but they're going to do it. They're starting to do it. And, and I also think what becomes really interesting is this. Idea that you know Bitcoins market cap today at 350 billion, give or take and gold sitting at eight, nine trillion, those are going to flip and not necessarily just because Bitcoin is going to appreciate a bunch and kind of eclipse gold's market cap. But I also think gold is going to help it out by having a contraction in that market cap, you know, over some period of time.

• 35:52Anthony Pompliano?

  And it might not be significant, but but I definitely do think we're going to see that capital shift. And it's just the classic, you know, when when an idea's time has come, there's not going to be any stopping it. And I think that it's just captured the mind of an entire generation.

• 36:06Speaker 03

  Never fight youth because they're going to outlive you. Yeah. Never, you know, that's honestly, that's my philosophy now. I'm like, if the young people are going to do something, I mean, I'm going to be old and dead and they're still going to be doing it and telling them not to do it's pointless. So I honestly, I think so. I think I think you're right. I think eventually something like Bitcoin becomes the store of value for the internet generation or the, you know, the but but but all of our assets are digital. Why should our stores of wealth and Bitcoin has proven that it is not going away. So yeah, I'm completely on board with that idea.

• 36:51Anthony Pompliano?

  I couldn't believe any more than than you. All right, let's get into the kind of final questions. I asked the same two questions to everyone before I wrap up and then you'll get to ask me one question to end it. The first is, what's the most important book that you've ever read?

• 37:06Speaker 03

  Gosh, Jonathan Livingston Seagull.

• 37:10Anthony Pompliano?

  Why that one?

• 37:11Speaker 03

  So, so the book comes in two parts. People, it was a book that I read when I was 18 and it was it was it changed my life, right? The book comes in two parts. The first, the first half says that.

• 37:26Speaker 03

  The purpose of life is to seek perfection. And the second half is that the perfect thing to search for is love or to perfectly love. A lot, yeah, and so funny. I was playing tennis with my kids the other day. And I started raining. And there was a homeless guy sitting on a bit of shelter and we went and, you know, found shelter with this homeless guy and he had this book. It was like two weeks ago. He had this Jonathan Livingston Seeger lying there and I was like, it was just such a flashback to this moment when I read it in my youth. Anyway, thanks for that question. I really enjoyed answering it.

• 38:06Anthony Pompliano?

  I love that story. Aliens, are you a believer or a non-believer?

• 38:12Speaker 03

  Wow.

• 38:17Speaker 03

  Aliens among us? No, but the universe is so big. How can you not? If there's not something out there, by God, are we special, right? You know?

• 38:27Anthony Pompliano?

  That tends to be my thought process.

• 38:29Speaker 03

  Yeah. Did you see Elon Musk's tweet the other day about the great filter? Right? That really got me thinking. Anyway, I loved it. Yeah, that's, there's got to be life out there.

• 38:42Anthony Pompliano?

  For sure. You could ask me one question to finish up. What do you got for me?

• 38:47Speaker 03

  If you couldn't invest in cryptocurrencies, where would you put your money?

• 38:51Anthony Pompliano?

  So my whole investment philosophy is basically go to the edges of society and find the contrarian ideas that are going to become consensus ideas. And so pretty much I hold very few traditional assets. I own no public stocks other than GBTC in a retirement account. I hold a little bit of real estate, but nothing that's really, you know, significant. Pretty much everything is in Bitcoin and in early-stage startups. And I think the thought process, somebody who's a very well-known angel investor once told me, he said, look, 80% of his net worth is in early-stage startups. And the way he thinks about it is he's basically went out and found the most creative, smartest, ambitious teams that he possibly could. And he's given them money and tasked them with growing his wealth. And so I tend to think that that philosophy.

• 39:35Anthony Pompliano?

  aligns a lot with me. And it's just this idea of looking for highly asymmetric type payoffs, right? I'm a young guy, I can take the risk and I tend to think that's a pretty strong way to invest. So it'd either be just more early stage startup investing, or maybe I'd focus on a specific sector that's contrarian today, but likely to become consensus over time.

• 39:56Speaker 03

  Can I ask you another question? Can I cheat? Okay, so, so listen, basically, I look at your media platform and your presence, and I'm slightly awestruck by the fact that you were able to build up this, you know, because you have a loyal, informed, intelligent audience that are, that are, you know, highly engaged, and you did it without the backing of

• 40:27Speaker 03

  a media name, which, you know, it's, it's one thing to, to, to, to get a couple, you know, a few Twitter followers, if you, if you've got the backing of the BBC or Bloomberg or whatever, it's another thing to do it all off your own back. What's the secret of your success, man?

• 40:40Anthony Pompliano?

  Yeah, I don't know necessarily if there's some secret, right? It's just years and years of doing the same thing consistently. And I also think the, the one thing that helps me is, you know, there's a lot of people who create content on the internet. There's very few people who also at the same time are investing, you know, hundreds of millions of dollars into companies and cryptocurrencies, etc. And so I always tell people like it's, if you're just creating content on the internet, you've got no substance to back it up, then basically you're no different than the talking head on television, right? Because they're doing the same thing. They're sharing their opinion, they're creating content, but they've no kind of skin in the game. I think for me, having that substance and skin in the game, and then having, you know, some pretty early success there where a couple of companies I invested in very early in their lifecycle end

• 41:24Anthony Pompliano?

  up being worth over a billion dollars and, and kind of all of that lends legitimacy to what I think. Now, again, I'm wrong all the time, right? Just like everybody else. But I do think that that stuff kind of helps. And it replaces the need to have the backing of a media organization because you basically have the backing of, you know, kind of the investment activities. And so,

• 41:42Speaker 03

  Right, right.

• 41:43Anthony Pompliano?

  You know, I'm figuring it out alongside everybody else, but so far, so good.

• 41:48Speaker 03

  Yeah, well, you're doing it faster than most, I think.

• 41:51Anthony Pompliano?

  Thank you so much. Where can we send people to find you on the internet or find more of your work?

• 41:56Speaker 03

  Hey man, just being on here is fantastic for me. They can find me on Twitter, I'm at Ed Van De Walt. It's not the easiest surname to remember, but I'm Ed Van De Walt. If they want to look me up. Yeah, that'd be great. Thank you.

• 42:11Anthony Pompliano?

  Listen, thank you for taking the time to do this. I'm excited that we've got you on the Bitcoin train now. So keep up, keep up the good work. We'll have to do this again in the future.

• 42:22Speaker 03

  Thank you.