(Markets Insider) There’s been much debate about whether gold or Bitcoin (CCC:BTC-USD) is the better investment, but one firm argues that it should not be a question of which one. Wilshire Phoenix instead advises investors to include both Bitcoin and gold in their portfolio, although there have been signs that Bitcoin has been eating into demand for gold in recent months.

The firm recently launched a physical gold exchange-traded fund and has applied with the Securities and Exchange Commission to launch a Bitcoin product.

Gold Versus Bitcoin

Wilshire Phoenix co-founder Will Cai noted that Bitcoin and gold do share some similarities. In an email interview, he pointed out several reasons that investors should include gold in their portfolios.

“Gold is a special type of commodity as its price isn’t strongly determined by a producer/consumer relationship, typical of most other commodities (e.g., energy and agricultural products, industrial metals, etc.),” he said. “Gold’s scarcity and ease of storage make it a great store of value. Historically, gold has established itself as a medium of exchange as/like money.”

Cai noted that U.S. regulators have also defined Bitcoin as a commodity due to its function as a virtual currency and that both Bitcoin and gold are a “store of value and medium of exchange.” However, he argues that both asset types complement each other in an investor’s portfolio.

“To an investor, the most important aspect of gold and Bitcoin are their shared investment properties as diversifiers and hedgers within a portfolio of assets,” he said. “Both gold and Bitcoin have low correlations to other asset classes, thus can reduce a portfolio’s risk-to-return profile. Both are global assets priced in dollars, thus can be considered hedges to inflation.”

Why Bitcoin and Gold are Complements

Bitcoin’s similarities with gold make it easy for investors who already hold the yellow metal to start investing in the cryptocurrency because they already understand some of what it offers as an asset class.

“Too much discussion has centered on Bitcoin versus gold, but because of their shared properties, an investor should examine how Bitcoin can work alongside gold,” Cai said. “Even though Bitcoin is based on new technology, a gold investor will already be familiar with many of Bitcoin’s properties and can benefit from its potential upside. Similarly, for a Bitcoin investor, gold’s long proven history as a diversifier and hedger can also be useful.”

Interestingly, gold and Bitcoin are different enough that they provide diversification even from each other.

“Even with gold and Bitcoin’s shared properties, they have so far exhibited low price correlation,” Cai said. “This means that adding either to a portfolio of assets that currently includes the other would likely improve the portfolio’s risk-to-return profile.”

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