Bill Blog | February 4, 2022
Who will become the champion, the store of value in a growing unstable debt-based financial world? Some highly recognized financial people hate Bitcoin/crypto and have proclaimed it would go to zero for years. Some billionaires have flip-flopped and are now actively involved and investors. Sadly, these prophets of doom have missed huge profits and discouraged millions from avoiding crypto like the plague. Why? Due to tunnel vision (usually stock portfolio managers), regulation issues (valid) and unwillingness to learn about this exciting innovation. Again, a few gold-bugs disdain crypto with little valid research or intelligent dialogue. Both views, in my opinion, are invalid. So let me make a critical point right up front: most people should own gold/silver and a small amount of crypto, but for very different reasons. I will explain why shortly.
I began learning about crypto in 2014, and I didn’t understand it at all. It was not until 2017 when a light bulb came on in my mind how powerful this new technology was. I spent a couple of months doing research listening to many experts. I took a course before putting a single dollar into crypto. I needed to understand at least the basics and the risks. There are many risks, but that does not mean you should not speculate with some capital. After a couple of hundred hours of research, I decided to put limited capital into the cryptocurrency market. I have shared in the past that I did incredibly well that year trading and securing profits. By the end of December 2017, the crypto winter would begin and last for over two years. I exited the market entirely and revisited it in 2020, and once again set a limited amount of capital to this speculative market. Again in 2021, I had another great year recovering my capital and making good profits.
In contrast, I have owned gold and silver for over a decade. So I want to give credit to Mike Maloney for the outstanding job in educating ordinary people worldwide on how the monetary system works and the importance of precious metals to preserve your wealth. Dozens of other financial experts have also played a significant role in my educational process. I have said the main reason people do not invest in gold/silver is a lack of knowledge. You should not invest in any asset class without understanding the risks and why you are doing it. So, let me share why I have both precious metals and a select basket of cryptocurrencies. Again, for two very different reasons.
We will start with cryptocurrencies.
- Cryptocurrencies are great speculations that have created immense wealth not seen since the Dutch tulip bubble of the 1630s or the Dot.com bubble! Those who don’t get greedy and take profits when they are there.
- HODL (hang on for dear life) is a strategy, your purchase some Bitcoin or Ethereum and put it on a hard wallet like Ledger, then in a safe and forget about it for a decade. If you are still alive in a decade and have not forgotten your password, you may be super-wealthy, or it has gone to zero.
- Ignore over 99% of crypto projects or meme coins unless you are a seasoned trader and can quickly get in and out with a profit.
- Do your due diligence on 10 to 20 coins and start with just a few. Never use leverage!
- Bitcoin, and no other crypto, can be seen as a store of value as they are too volatile at this point, except for a few stable coins linked to hard assets. Bitcoin is NOT digital gold, as some claim. At least not yet. Check out www.lode.one backed by physical gold and silver. Full disclosure, I have been involved in the project since 2017 and meet with the founders and follow the project closely.
- We are still very early in this speculation opportunity Bitcoin (BTC) only came on the scene in 2009 and Ethereum (ETH) in 2015. These are the two leading projects for very different reasons. Now we have Defi, NFT’s, Metaverse, DAO’s and a whole raft of potential game-changing protects. So much to learn!
- A few projects have serious cash flow/profits and have developed into real-world adoption and application. After researching and finding these elite projects, you may want to speculate on a handful of these with your risk capital.
- There have been ten 50% or more drops in Bitcoin (the leader). What the leader does, the market follows. Crypto may not be your asset class if you cannot stomach extreme volatility. Conversely, volatility can create immense wealth but with very high risk.
- It is not uncommon to make hundreds or thousands of percent gains a year in this market. You can receive life-changing profits if you develop a sound trading plan. The key is to execute the plan with discipline and adjust it when necessary.
- Lastly, cryptocurrencies are highly correlated to the stock market, mainly during a correction or crash. I have warned several times that the stock market is highly overvalued and volatile, so this may not be the time to jump into crypto. So be patient, do your homework, and if we see Bitcoin drop below 20K, I would consider taking a position. Every crypto asset (the best in class ones and the junk) will be on sale at incredible discounts; consider taking a small position in a few quality projects.
- I offer 3-hour crypto consult if you would like to learn all the basics. I charge $125 per hour. I can do this through Zoom or in person.
Let’s talk gold.
- Gold is a store of value with 5000 years of track record. It has never gone to zero and never will (except, of course, during the zombie apocalypse. Sorry, I could not help myself). Gold is scarce, beautiful, expensive to find and take from the ground.
- World history and empires have been shaped and financed by he who holds the most gold.
- Hard assets have always measured true wealth. Historically, 100% of all paper fiat currencies have failed! Over 100 fiat currencies have failed in just the last 100 years.
- All major central banks have been net buyers for the last seven years. Why? In a credit or financial crisis, they want real wealth to sustain their institutions. You may want to consider following suit and follow big money.
- Gold is a safe-haven asset when there is turmoil in the world. Important question. Is our world becoming more stable or unstable? I have never seen such extreme corruption, incompetence, uncompassionate and cowardice of leaders as we see today in many countries worldwide. Canada is at the head of the class. Countries fall apart when people lose confidence in leadership and once-trusted institutions. History does repeat, just with different actors on the stage. After doing your due diligence, I strongly suggest you have a sizable position in gold and some silver. If you need guidance, please reach out to me. Trouble is in the air!
- Gold is highly liquid when it is the right time to sell a portion of your wealth and go into other high-quality, undervalued hard assets.
- Gold can be stored in world-class vaults at a very reasonable price, ensuring safety. Fully audited, segregated, allocated and insured with a mean guard with big guns!
- Gold acts as an insurance policy against the stupidity of central banks and politicians who are destroying our purchasing power by devaluing our currency. Just as a note, Trudeau has printed more money in the last year and a half, exceeding all previous Prime Ministers in Canada 155 years of history. Insanity! I am not just picking on Trudeau though what he has done is unconscionable, and sadly most Premiers have followed suit. We need integral leaders who understand economics, sound money, and shrink-size government. It has indeed got out of control!
- Some people think gold is expensive at $1800, but not so. Gold was around $250 per ounce in 2000, and if you adjust it to real-world inflation, it should be well over $3500 per ounce today. Gold is on sale right now. Gold has averaged an 11% return over the last 22 years, and silver around 9% in Canadian dollars. If you think gold is too expensive, try silver, the most undervalued precious metal on the planet.
- Check out the https://usdebtclock.org/ in the far right column 3/4 down the clock showing the value of gold and silver based on US dollars printed. Gold’s real value: $21,900 per ounce. Silver: $2900 per ounce.
- With all the money printing, gold and silver have outpaced inflation for 22 years.
As always, please do your research before you invest in any asset. If you go to my website: www.fivefoldfinacial.ca at the bottom of the homepage, you can download Mike Maloney’s NY best seller book for free, “GUIDE TO INVESTING IN GOLD AND SILVER” PROTECT YOUR FINANCIAL FUTURE. The book is an excellent overview of precious metals history and explains the do’s and don’ts and why you may want to consider owning gold and silver.
All the best in 2022,
Bill Westmacott, Owner