Buy This, Not That: Two Hot Assets… Two Hot Tickers

Shah Gilani|November 13, 2024

Two hot assets…

Two hot tickers…

But two wildly different gains… a whopping 132% versus 32% on the year.

That’s the kind of difference that can make or break your portfolio.

One just smashed trading records right after Election Day. It moved a staggering $4 billion in volume in a single session, followed by another billion dollars in just 20 minutes the next morning.

The post-election momentum is too strong to ignore.

That’s why it’s a BUY… and the other is NOT.

Get the details in my latest Buy This, Not That episode.

Click on the thumbnail to dive in.

TRANSCRIPT

Hi, everybody. Shah Gilani here with your weekly BTNT, as in “Buy This, Not That.”

Today, I’m going to talk about two iShares Trusts, two ETFs.

One of them is a gold trust. The other one is a Bitcoin trust.

Why am I comparing the two? Well, a lot of folks think of Bitcoin as a gold-style asset.

Whether or not that’s true, whether or not it has any intrinsic value, whether or not gold has any intrinsic value – that’s not what we’re here to talk about. I’m here to talk about which one you should buy and which one you shouldn’t. So let’s start with the traditional gold ETF, which is the iShares Gold Trust (IAU).

This trust came into being on January 21, 2005. So it’s been around a long time. Got about $32 billion – I’m going to call it $33 billion – in assets under management.

IAU holds gold bullion. So when you buy shares in IAU, the affiliated market makers who work for the sponsors have to make sure that there’s enough gold bullion in a custodian’s account held for the trust. So they actually buy and hold gold bullion against the shares that they create for the ETF. So IAU is backed by physical gold bullion held by a custodian, which is good.

It’s not backed by futures. It’s not tracking derivatives. It’s not tracking some combination of derivatives and futures and whatever else that they want to come up with. It’s actually tracking physical gold bullion and the price, which is what you want.

So IAU right now is trading around $49 today. (It’s Tuesday when I am recording this.)

If you want to own gold, IAU is a good ETF to own.

The other one is the iShares Bitcoin Trust (IBIT).

This trust, similar to IAU, the gold trust, holds physical Bitcoin.

It’s not based on underlying derivatives or futures.

It actually buys Bitcoin in the spot markets.

So it’s tracking the spot market price of Bitcoin, which is what you want. You don’t want an ETF that is constructed with derivatives and futures and some combination of debt and stuff like that. And believe me, investment bankers and these geniuses do a pretty good job of creating stuff that tracks, but nothing tracks an underlying like holding the underlying.

So IBIT holds spot Bitcoin, so they actually buy Bitcoin.

As far as owning Bitcoin, there’s nothing really easier right now than owning IBIT because you don’t have to take physical delivery of any Bitcoin. You don’t have to buy Bitcoin. You don’t have to store Bitcoin. You simply buy the ETF, which represents a price level of Bitcoin.

So if Bitcoin goes up 10%, then IBIT should go up 10%. Now, this is a new trust. The passage of the new Bitcoin trust came around in January. The inception date was January 5, 2024, and IBIT started trading shortly thereafter.

So it’s a brand-new trust. But that’s very exciting because Bitcoin has been on a tear, and the assets under management here are higher than assets under management that we see at IAU. So in other words, more money has flowed into IBIT than has moved into IAU, which started in 2005, in less than a year.

IBIT has assets under management north of $34 billion, greater assets under management than IAU. That’s a testament to how popular Bitcoin is and how popular this ETF has become.

Another issue – not an issue, but a cool fact – is that since January 12, the actual launch date, first launch and trading date of IBIT, Bitcoin itself is up 77%. IBIT is up 75%. So very closely tracking. You have some fees in there, and that maybe makes a bit of a difference. And also, the timing of buying the underlying, if the assets come in at the end of the day, they can’t necessarily buy it immediately, maybe have to take a little while. Price might move up. Things like that happen because that’s the nature of how these ETFs are constructed, how they are created.

So pretty cool tracking. I like that a lot.

We can see since inception just how close it’s tracking, and that goes back a little ways. But I wanted to track that to see what was Bitcoin actually doing and what the trust did up to a certain period of time. Now, Bitcoin has continued to move higher, and the trust has continued to move higher. IBIT has moved higher too, but pretty much in lockstep. So I really like that tracking. That’s important.

Cool fact: On Election Day Tuesday this year, IBIT set a record changing hands volume-wise – $4 billion worth of IBIT changed hands.

Wow. On Election Day. Another record they set the next day after the presidential election on Wednesday. In the first 20 minutes of trading, IBIT traded over $1 billion worth. That’s another record. So, obviously, a lot of interest in IBIT.

IBIT versus IAU.

And here, let’s go to the videotape as they used to say.

I’m going to pull it up.

Here’s the Bitcoin trust. Now as you can see, this is the iShares Bitcoin Trust, IBIT, trading at $50.75 up here. Again, this is Tuesday afternoon when I am recording this for you, and it’s up 0.18%. But look at this move, this parabolic move here since the election.

Now it’s been up significantly. So as far as Bitcoin trust this year, the low was January 23. Shortly after the trust came out, it was down at $22. This is going to haircut any of the decimals.

Twenty-two bucks. But the average in here, which is pretty cool, that if you look at the average in here, well, you know, the nice move up here, it’s really going to say about $41. So at $41, that means that without this parabolic move, this IBIT ETF was up pretty much close to 86% for a good part of the year. So you would have had fabulous gains.

And then, of course, bang, the election and everything just takes off. For the year, since inception, I should say, since the low, not since inception, for the year, from the low down here on January 23 to the high today, IBIT is up 132%. I think you want to buy it, people. Yes.

It’s giving you exposure to Bitcoin. Maybe you’re not a Bitcoin fan. Maybe you’d rather own gold. Maybe you want to own both.

But if you had a choice, I would vote with my own money for IBIT.

I like gold, and a tiny smattering of gold holdings. It was probably appropriate for most people, but gold doesn’t move the way Bitcoin does. And so if you want appreciation, yes, you’re taking risk with Bitcoin. No question.

But that’s why you put stops in, people. I would buy IBIT over IAU.

Now, this is a great-looking chart. IAU and gold have had a wonderful year.

Again, IAU had a terrific year, holds gold bullion. So I’m going to call the run up here 42% this year, OK? That’s to the high.

So from back here to the highs here, the intraday high here, that’s a 42% runup. Pales in comparison to the IBIT, which was 86%. That was the average until we got to the leapfrog higher. And then the year from the lows to, yes, to today’s closing price, IBIT up 132%.

As you can see, IAU fell here, fell 7%.

OK? So on the year, IAU is up 32%.

Right? So, yes, I’m going to say, I think it’s academic.

You buy IBIT, not IAU.

We’re not in it for slow and steady if you have two things you think are going to be slow and steady. If you think Bitcoin is a gold-type asset, it’s a story about being a proxy for gold… well, it’s not. It’s much better performing and will be likely a lot better performing than gold. So as far as Buy This, Not That, buy IBIT, not IAU.

Cheers. Catch you guys next week.