The Klarenbach Report, Apr 16

Hedges against inflation are essential for investors to preserve their purchasing power and protect the real value of their investments. Gold and Bitcoin are popular options for hedging against inflation, as they typically maintain their value over time and provide diversification benefits.

To allocate capital between Gold and Bitcoin using trend-following principles and the Bitcoin/Gold Ratio, investors can follow these steps:

1. Identify trends: Analyze historical price data for Gold and Bitcoin to observe patterns and trends over different time frames. 2. Determine relative strength: Calculate the Bitcoin/Gold Ratio to compare the performance of Bitcoin and Gold. A rising ratio indicates Bitcoin outperforming Gold, while a falling ratio suggests Gold outperforming Bitcoin. This can help investors determine which asset might yield higher returns.

3. Apply trend following principles: Allocate capital based on the identified trends and the relative strength of the assets. If the Bitcoin/Gold Ratio is rising and the trend is positive for Bitcoin, consider allocating more capital to Bitcoin. Conversely, if the ratio is falling and the trend favours Gold, allocate more capital to Gold.

4. Diversify and rebalance: Regularly review and adjust your portfolio to ensure it aligns with your investment objectives and risk tolerance. Diversification across different assets and sectors can help mitigate risks and maximize potential returns. Rebalance your portfolio to maintain the desired allocation between Bitcoin and Gold.

5. Monitor and adjust: Continuously monitor the performance of your investments and overall market conditions. Be prepared to adjust your allocation strategy as trends and market dynamics change, potentially increasing or decreasing exposure to either Bitcoin or Gold.

By applying trend-following principles and using the Bitcoin/Gold Ratio as a guide, investors can allocate capital between Gold and Bitcoin to hedge against inflation while potentially maximizing returns. However, it’s important to consider individual risk tolerance and investment objectives before making any investment decisions, as past performance is not indicative of future results.

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