Regular readers will have heard about it by now…
The government is planning to replace the cash in your wallet with a new, digital-only dollar.
Legacy Research cofounder Doug Casey calls this digital currency “FedCoin.” That’s because the government will issue it, but it will be loosely based on cryptocurrencies such as bitcoin.
You’ll spend it from a wallet app on your smartphone. This is also where you’ll receive and store your FedCoins.
But don’t be fooled by the hype.
As we’ve been showing you in these pages, the Fed will still centrally control FedCoin. That means – unlike bitcoin, which is decentralized and scarce – the government can still issue money at will.
Also, each FedCoin transaction will leave a permanent digital record in a government database somewhere. The feds will collect, store, and parse the details of every transaction you make.
And as Doug and his chief analyst, Nick Giambruno, have been warning, it’s going to be a dual disaster – for your privacy and your wealth.
You’ll hear more from Nick about the feds’ War on Cash below.
You’ll also hear from Legacy’s globetrotting geologist and commodities investing expert, Dave Forest, about a precious metal he expects will join the gold and silver rally soon.
But first, let’s kick off with a question about FedCoin…
Reader question: FedCoin… I suppose in the end, we will have no choice but to sign up. I will hold out as long as I can. My real concern is, they can and will force FedCoin on us. So what does that do for those of us who can use gold and silver? Any idea on how they plan to control those transactions?
– Richard H.
We reached out to our go-to tech expert, Jeff Brown, for his insight.
As a member of the Chamber of Digital Commerce, he’s advised a group of U.S. senators on the new digital dollar.
He’s also traveled to Israel on a U.S. Certified Trade Mission on blockchain and digital payments.
That makes Jeff exactly the right guy to provide an answer…
Jeff’s answer: Hi, Richard. I think I can answer your question.
I’m on record saying that 2020 will be the year the world sees the first state-issued digital currency. But I’ll issue a warning along with that prediction: It likely won’t be from the United States.
In April, a Chinese government-owned bank called AgBank released a beta version of a smartphone app for China’s new central bank digital currency (CBDC).
A CBDC is similar to a cryptocurrency such as bitcoin with one major difference. Unlike bitcoin, this CBDC will not be decentralized. The Chinese government will control it.
AgBank is one of China’s four largest banks. So this is big deal. Clearly, China is close to launching its new, digital-only version of its currency, the renminbi.
If it’s a success, it will ignite a fire under the U.S. government to do the same…
Meanwhile, as I’ve been showing my readers, the coronavirus pandemic is acting as an accelerant for the rollout of CBDCs. As you may have personally experienced, some businesses are no longer accepting cash. They fear transacting with “dirty” physical money.
An early draft of the COVID-19 stimulus bill even included a proposal for a U.S. digital dollar. Lawmakers scrapped this provision in the final bill. But it shows how much traction this idea is getting.
The federal government could “airdrop” stimulus money into our digital wallets on our smartphones. It would just appear with the press of a button.
Compare that with the tedious task of making direct deposits and mailing physical checks that we saw earlier this year. Folks applying for PPP (Paycheck Protection Program) loans would also get their funds quicker.
But FedCoin would also give the federal government even tighter control over the U.S. dollar. Federal agencies would be able to track and tax every single transaction we make, because they’ll all be recorded digitally in a government database. The Internal Revenue Service (IRS) would have a field day.
As for your question, Richard, about gold and silver after FedCoin…
I don’t think the feds will ban gold or silver. It just wouldn’t make any sense. With paper and coins out of the way… and the only mainstream way to pay for transactions being the FedCoin… the government wouldn’t care if some of us hold gold and silver.
The big change will be the death of physical cash. When it starts the switchover to FedCoin, the government will stop printing dollar bills and minting coins. And it will remove whatever physical cash that’s left.
State-backed – and even company-backed – digital currencies are inevitable. But 99% of investors are so distracted by FedCoin that they’re missing the bigger picture.
When these new digital currencies arrive, it will raise the profile of one technology – blockchain. Investors who own a handful of best-in-breed blockchain stocks could see triple-digit returns in the years ahead.
I’ve outlined my favorite blockchain investments in a free presentation. You can watch it right here.
FedCoin has gotten a lot of readers thinking. But not all of them can see cash disappearing overnight…
Reader question: I think you are on the money. A new, digital-only dollar is coming. Besides holding gold and bitcoin, I’m wondering whether keeping a little cash aside could come in handy. Obviously, it will get banned from use on the open market. But will there be a black market for U.S. dollars? Interested in your thoughts.
– Yvette M.
For an answer, we reached out to Casey Report chief analyst Nick Giambruno.
Nick’s been tracking the feds’ attempts to erode your privacy… and control your financial life… with FedCoin.
He’s also behind the viral video about the switch to this new currency and what it means for folks with U.S. dollar savings.
Nick’s answer: We don’t know exactly when the government could ban cash. It could be gradual, or we could wake up one morning to find new rules and restrictions, as happened in India a few years ago.
Keeping some physical cash is certainly prudent, especially for monthly spending money.
On the topic of whether a black market will develop for cash, it depends on whether there will be demand for it. If there’s demand, there will be a market for it.
Incidentally, I am not a fan of the term “black market.” People use the term negatively. If anything, you should view government restrictions such as banning cash negatively… not attempts to bypass these restrictions.
A black market is just the name some people give to a free market. Next time you see the phrase “black market” in the mainstream financial media, substitute it with “free market.” It will help you think more clearly.
As the feds digitally print dollars at an unprecedented rate, gold and silver are soaring. It’s one of the big profit themes we’ve been tracking for you in these pages.
But gold and silver aren’t the only precious metals worth keeping an eye on…
Reader question: I have not seen platinum mentioned in any of your newsletters for a while. I know that gold and silver are the juicy news right now, but what do you think of platinum? Is it still a good long-term investment due to its scarcity?
– Karen B.
For an answer, we turned to Dave Forest. He’s Legacy’s globetrotting “rock hound” (geologist) and commodities investing expert.
Dave heads up our International Speculator advisory. And he’s recently given his paid-up subscribers the chance to lock in gains of 401%… 459%… and 552% on best-in-breed gold mining stocks.
So he’s the perfect guy to answer Karen’s question…
Dave’s answer: Platinum has indeed lagged the recent run in precious metals. Ever since the Volkswagen emissions-faking scandal, people have been worried that diesel engines are in decline. The main use of platinum is in catalytic converters that clean diesel exhaust.
But platinum is also an investment metal. In places like Japan, platinum bars are popular as a way to protect wealth.
I expect that investment side of platinum could propel the metal higher. But there’s an even bigger reason to like platinum: falling mine production.
South Africa produces about 70% of the world’s platinum. That country is having all kinds of problems: old mines, underinvestment, social and political unrest, and most recently, a significant outbreak of COVID-19 in the platinum mining districts.
If South African production falls because of this, the world has few alternatives. The other producers of note are Russia and Zimbabwe. Not great options for backup.
Hold on to your hats… This could get interesting very quickly.
We’ll wrap up today with a message from one of our international subscribers. It’s a question we get from time to time from folks who read us around the world.
Reader question: I’m a South African citizen, based in South Africa. Kindly furnish information on how I can purchase U.S. shares you recommended.
– Sivan P.
Chris’ answer: Thanks for your message, Sivan. If you want to invest in the U.S. stock market from South Africa, you need a brokerage account with a South African firm that has a partnership with a U.S. broker.
Banks with that include PSG and EasyEquities.
Additionally, some U.S. brokers – such as Charles Schwab and Interactive Brokers – have specific accounts for international customers.
So there’s nothing holding you back!
That’s it for this week’s mailbag. Thanks to everyone who wrote in… and everyone who’s reading along with us each week.
It’s always interesting to get your great feedback… and we look forward to more.
Keep it coming – along with your questions for the Legacy team –at [email protected].
Regards,
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Chris Lowe
August 7, 2020
Bray, Ireland