Gold traded above $3,000 an ounce for the first time ever this week – having gained about 16% since the start of the year. Bitcoin, though, hasn’t had the same luck: it’s down about 12%. So really, no one could blame you if you’re thinking about abandoning digital gold altogether, in favor of real gold. That said, I’ve crunched the numbers, and as it turns out, owning both is likely your best approach over time. Let me show you what I mean.

Gold and bitcoin are both scarce commodities – and that short supply helps drive their value. The World Gold Council estimates that 216,265 tons of gold have been mined throughout history, with another 64,000 remaining in the ground as economically viable reserves. That means about 77% of the planet’s known gold has already been extracted. Bitcoin’s scarcity is even more severe: it has a fixed supply of 21 million coins, with 95% already minted by miners.

Compare that to actual, broad money – meaning, traditional currencies. For the US, M2 is the best measure for that: it tracks the total amount of dollars in circulation, plus cash held in checking, savings, and money market deposit accounts. Over the years, the US M2 money supply has been growing steadily (chart below) – and it’s a similar story with other currencies like the British pound, the euro, or the Japanese yen.

The US M2 money supply includes cash, deposits, and liquid savings in the US economy. Chart made with TradingView. Source: US Federal Reserve.

But while both gold and bitcoin are scarce, you might want to own them for different reasons. Gold is a time-tested hedge against inflation and market downturns, often outperforming other assets during recessions or financial crises. Bitcoin, on the other hand, comes with higher risk but has traditionally delivered much stronger returns in bull markets.

Holding both could be the sweet spot: gold comes with more stability, while bitcoin offers more growth.

Before I crunch the numbers, let me drop the usual caveat about back-testing: it can only tell you how an investment has performed in the past – meaning, it can’t predict the future. That said, I’ve chosen a back-testing period that excludes bitcoin’s higher growth “early years” to keep the results more realistic.

The chart below compares a $10,000 investment in four portfolios from January 1st, 2018, until February 28th, 2025:

• 100% bitcoin (blue)
• 100% gold (er, gold)
• 80% bitcoin, 20% gold (gray)
• 70% gold, 30% bitcoin (green)

For the mixed portfolios, I’ve assumed a yearly rebalancing – or reset – back to the original weightings. So, if bitcoin outpaced gold one year, you’d sell some bitcoin and buy some gold to get back to the original portfolio split (e.g., 70% gold and 30% bitcoin). This helps iron out the volatility and stops you from being too top-heavy in one investment for too long.

Value of $10,000 invested, over time. Data from Portfolio Visualizer, based on monthly returns. Source: Finimize.

Owning bitcoin alone would’ve made you the most money over the seven years – but not by a lot. The pure bitcoin portfolio ended up at $59,601, while the 70% gold, 30% bitcoin mix reached $52,499 – with a much smoother ride. This becomes a lot more evident when you look at the same chart in the logarithmic scale below. Put simply, a log scale chart makes it easier to compare the rate of movement over time by factoring in percentage changes rather than price movements. The numbers are the same in either chart – it’s just easier to see the full picture.

Value of $10,000 invested. Data from Portfolio Visualizer, based on monthly returns. Source: Finimize.

Now, this next table drills into the performance numbers in more detail. As you can see, the mixed portfolios saw a lot less volatility than the bitcoin-solo one. The yearly standard deviation (how much the investments deviated from their usual growth path) of the 70:30 portfolio was much lower (27.5%) than bitcoin’s 71.6%. But the compound annual growth rate (CAGR) for the 70:30 was only slightly lower (26%) than bitcoin’s 28.3%.

And that also shows up clearly in the Sharpe Ratios (essentially, return over risk), with the 70:30 at 0.89 vs bitcoin’s 0.66. But if you wanted the most bang for your risk buck, the 80% gold and 20% bitcoin had the highest Sharpe Ratio (0.94) – despite having a slightly lower CAGR of 22%.

Data from Portfolio Visualizer, based on monthly returns. Source: Finimize.

Again, past results say nothing about future performance. But judging by these numbers, bitcoiners and gold bugs should be on the same team.