I remember when I bought my first ounce of physical gold bullion.
Tiny as a button. Protected in plastic. Surprisingly heavy for such a small item.
It wasn’t enough.
I soon bought a 4-ounce coin and loved the weight of it in my hand. The equity markets had let me down. The government had let me down. So I took things into my own hands. The long-road of gold (and silver) stacking. The volatility. The price fluctuations.
This is my story.
First, I just have to say this:
I applaud the hearty debate between physical money and digital money. I hope the debate rages on until the price suppression of precious metals(PM) end and the fiat derivatives bubble explodes.
This will be a quick read with my current thoughts on how all this compares with cryptocurrency.
Let’s dive in.
Reason 1: Greed is Good
Look. I invest because I want to profit. Obvious right? No guilt trip about accumulating wealth over my lifetime. I work hard. I like to play hard. I like to invest smartly. I want a comfortable future.
When I first heard about cryptocurrency, it smacked of a fad. I have to admit (and it’s happened a few times in my life) that I have been proven wrong. Whether it’s a good investment to make based on my beliefs about fiat currency vs real money is another question.
For now, it seems the cryptocurrency market is here to stay and its growing fast.
Reason 2: Government is Bad
Let’s qualify that a little bit. Call me Conservative or call me Libertarian, I believe in limited government. Today’s bloat of the Welfare State is way out of hand.
Pensions will hit a crisis. The printing press of fiat money has created a debt bubble now far beyond the credit crunch of 2007.
Empires throughout history implode when The State fraudulently debases the value of their currency.
The government should have one main focus. To serve and protect the individual rights, property, and interests of We The People. This should not include being the sole monopoly on money creation. Money should be based on market dynamics.
You’re either with me on that one or you’re not. Either way, governments and central banks control the money supply. And I don’t believe for one second they are doing a good, honest or fair job.
So I had to hedge. I started accumulating precious metals.
I think a fundamental question that fellow gold investors must do some deep soul searching is this:
Do Governments like bitcoin?
If you don’t already know, bitcoin is a fully decentralized, open-source computer algorithm, that operates on thousands of independent servers all around the world. And the algorithm has created a finite supply of 21 million bitcoins in total.
It’s not government monopoly money. Governments can attempt partial regulation, but not anywhere near their ability to regulate national printed traditional currencies.
Governments do not like bitcoin at all. They can only attempt to maintain fiscal relevance in the new blockchain economy by creating national state cryptocurrencies. Russia, Japan, and others are already talking about it.
Reason 3: Precious Metals are Real Money
I hold the belief that physical commodities are genuine assets and useful for the exchange of value through storage, accumulation, and trade. That, in a nutshell, is money.
And you can’t get anything more historically significant as ‘real money’ than gold and silver.
Real money is not paper bills printed by central banks or national governments.
If you’re a gold investor you already know that fiat currencies are more like promissory notes than actual real money. Britain used to be ‘Pounds Sterling’. That is, a weight of sterling silver. The US Dollar had a gold standard.
Today, by owning physical precious metals I hedge against continued inflation and the coming economic pancake collapse that could devastate the economy for years.
What about crypto? Can a bitcoin be considered ‘real money’?
Well, is it divisible, fungible, transportable, tradeable?
It’s a distributed ledger system that enables global transactions with maximum security between parties.
Reason 4: Fiat Currencies are Fake Money
As if I need to explain to a fellow gold investor why paper bills with famous heads printed on them do not really represent real money.
Take a look at what happened in Zimbabwe due to inflation, when a wheelbarrow of notes was needed to buy milk.
Or what’s happening now in Venezuela, where the inflation rate is in triple digits.
All due to government intervention.
Are cryptocurrencies fake?
Well, many of them are, yes. Like ‘OneCoin’ which is nothing more than a basic computer database and an MLM type Ponzi scheme.
Others are simply projects that will never gain traction in the market. Because the value of any form of currency (whether it be shells, cigarettes, promissory notes or encrypted computer blockchains) depends on its utility.
Scarce, transferable, widely used.
Some cryptocurrency attempts simply won’t be widely used as they have no practical utility.
It’s just like any company listed on the stock market. Some succeed, many fail. This requires fundamental analysis of each company and their approach to using blockchain technology and cryptocurrency. Subject for another time.
Reason 5: Price Suppression Is Rampant
Come on. Does that even need explaining anymore?
The likes of ZeroHedge, CaseyResearch, GATA, and others have covered it for years.
“Price suppression at the Comex.”
The gold price fix has been published by mainstream news.
The real story though is the extent that genuine price discovery would almost instantly push gold and silver up to. Plenty of speculation on prices but $10,000 gold and $600 silver makes total sense to me, if not more.
So who can suppress the price of bitcoin?
Only those who actually own enough of it in the first place. Remember: no one can ‘print’ bitcoin out of thin air. It has to be generated through the bitcoin protocol based on complex computer calculations and encryption code.
It’s not like the FED in the US which literally types some numbers into a database to ‘create money’.
And that’s the power of bitcoin. It’s based on distributed rules of the computer algorithm, rather than Elitist policymakers who get to decide how much to debase a national currency that day.
While gold and silver could be suppressed. You can already see what’s beginning to happen to the price curve of bitcoin which cannot be suppressed. And there are many more years of rebalancing the global economy with a lot of that money due to squeeze into the small cryptocurrency markets with true price discovery and market trading.
Reason 6: Price Suppression Will End
But the gold advisors have said ‘soon’ for years. I’m not buying it anymore.
Accounting tricks can probably keep precious metals prices down for many more years to come. It’s not worth the wait for most of us who are growing at least a few grey hairs and want to profit from our foresight sooner rather than later.
Reason 7: The Future Of Gold Is Bright
Sure. One day. Gold will moon. Silver will moon.
The price charts will be astonishing.
I’m still holding a large portion of my assets in precious metals. A perfect hedge against the economy, politics, and even this new trend of cryptocurrency.
I look forward to the day when I see that historic price rise. The months when that price keeps on climbing up and up. The sudden price correction to hundreds of potentially thousands of dollars per ounce higher for gold.
But I remember the reason I invested in the first place.
If the government can control fiat, use accounting tricks, re-balance an un-balanceable budget, and kick the can down the road year after year, they essentially control and use gold and silver as part of their control grid.
That’s why cryptocurrencies make sense. As a hedge even against the hedge of continued Precious Metal price suppression.
Just look at the price of bitcoin. It’s doing what gold should do. Why? Because it’s free. It’s decentralized. Sure it will be regulated in different ways. But why miss out on the opportunity of hundreds, even thousands, of percentage gain and a diversified portfolio for the modern times of computers.
It was around the stock market bubble of the early 2000s that I doubled down my investments into gold and silver.
My equity investments had taken another big hit.
The economy looked to be on shaky ground. In fact, it always had as long as I can remember. And it has done ever since.
Today I’m very happy to balance my portfolio between precious metals and cryptocurrencies.
Both are hedges against the government. Both will do very well indeed, I’m sure.
The timing for PM price appreciation is… who knows.
The timing for cryptocurrency price appreciation is right now and I expect it to continue for the next few years, at least.
It’s hard to sell gold holdings that you may have held for so long, waiting, waiting, waiting… but it’s easy once you get familiar enough with cryptocurrency and convinced of the viability of blockchain based technology — especially when you see all those profits available simply by diversifying into a few of the leading cryptocurrencies like Bitcoin, Ether, and Litecoin.
Like I said earlier. Greed is good. And we deserve a better life than the one the governments have provided for us.
If it is to be, it’s up to me.