Welcome to our regular Friday mailbag edition of The Daily Cut.
It’s where you submit your most burning questions to the Legacy Research team… and we publish the responses.
Legacy is the financial publishing business behind Teeka Tiwari, Jeff Brown, Dave Forest, Nick Giambruno, Jason Bodner, Dan Denning, Tom Dyson, Doug Casey, and Bill Bonner.
At the Cut, it’s our mission to make sure you never miss a big moneymaking… or wealth-protection… idea from the team. And bitcoin and gold are two of the biggest ideas we track for you…
Coming up in today’s dispatch, Casey Report chief analyst Nick Giambruno shows how bitcoin will usher in a revolution in human freedom.
And globetrotting gold investor Tom Dyson offers advice on buying physical gold to protect your wealth from rapidly inflating government-issued currencies.
But first, world-renowned crypto investor Teeka Tiwari tackles a concern about government interference in crypto markets…
Reader question: Teeka, I know you’ve mentioned before that the U.S. government won’t regulate the crypto markets.
But I saw on the news that [U.S. Treasury Secretary] Janet Yellen is seriously considering regulating the crypto markets. If that happens, crypto prices will drop hard. Please share your thoughts on this matter.
– Keith S.
Teeka’s response: Thanks for your question, Keith. Earlier this year, Yellen said most cryptos were used for illicit purposes.
This is nonsense. A recent report from blockchain analysis company Chainalysis showed that illicit payments account for less than half a percent of bitcoin (BTC) transactions. That’s about $10 billion. About $2 trillion a year – roughly 5% of all transactions – is laundered through government-issued fiat currencies.
Bitcoin has reached escape velocity. Now that Wall Street has figured out how to make money from bitcoin, it will work to protect it.
It looks as though this is already happening. The day after Yellen made those comments, she did a 180-degree turn. She said, “I think it’s important we consider the benefits of cryptocurrencies and other digital assets, and the potential they have to improve the efficiency of the financial system.”
This made my head spin. One day, she says the majority of bitcoin transactions are illicit. The next, she says we should consider the benefits of crypto.
How many phone calls from Wall Street bigwigs do you think she got after making those first comments?
BlackRock (BLK) is the world’s largest asset manager. It just approved two funds to start trading bitcoin futures. (Futures are derivatives markets where you can make deals to buy and sell assets at future dates.)
It’s telling its customers to buy bitcoin futures. Do you think it wants the U.S. Treasury Secretary saying negative things about bitcoin?
I’ll go on record now with a prediction… Wall Street’s most powerful players have found a way to profit from bitcoin. They’ll use all their financial resources and influence to protect crypto from heavy-handed regulations.
Next up, a related question for Nick Giambruno.
Nick first recommended bitcoin to paid-up Casey Report subscribers in June 2018. Since then, it’s up 754%.
Because no more than 21 million bitcoin will ever exist, he sees bitcoin as a way to escape inflation in government-issued currencies.
But with Wall Street now bringing the crypto into the mainstream, one reader wonders what it means that central banks are still so attached to gold, not bitcoin…
Reader question: Nick, I really enjoyed reading your comparison of gold and bitcoin in the April issue of The Casey Report. But there is more to the story…
Central banks do not own bitcoin, but they do own gold. And they are buying more gold. How do you think this impacts bitcoin’s future prospects versus gold?
– William S.
Nick’s response: First, let me say that central banking and fiat money exist to steal time and money from you… and redirect it to the politically connected.
Time and money represent life. So they are in fact stealing your life.
Any honest assessment of the situation reveals that fiat money and central banking are tyrannies of historic proportions – like feudalism and slavery.
Bitcoin is a hard-money monetary system that is available to anyone and controlled by nobody. By hard money I mean it’s hard to produce more of relative to its existing supply.
It has the potential to give monetary sovereignty to the individual and remove the need for central banks and their frauds. That’s no small accomplishment.
Bitcoin has the potential to usher in a revolution in money and human freedom.
It’s fantastic that central banks don’t fully understand, appreciate, or own bitcoin yet.
They have a dogmatic belief in their false Keynesian economic models. So they’re reluctant to consider anything that doesn’t fit in their worldview, like bitcoin.
Central banks embracing bitcoin would be like the pope renouncing Catholicism.
In other words, they’ll be the last people to buy bitcoin, and that’s a great thing. That means ordinary people have the chance to profit from the greatest monetary innovation in centuries before these criminals even realize what is going on.
At the Cut, we see both bitcoin and gold as ways to escape the mainstream financial system. But Legacy’s globetrotting goldbug, Tom Dyson, says “bitcoin will prove to be worthless.”
He reckons gold is a superior store of value because it has worth outside of its use as money.
Gold has practical uses, from jewelry, to technology, to dentistry. So Tom says it will always be in demand. That’s why folks trust it as payment.
But when it comes to buying the yellow metal, what’s the best strategy? Tom is on hand with his take…
Reader question: I have been visiting local coin dealers and calling places you have bought from in the past. I know you have said to get whatever gold has the lowest premiums, which would be bars, for sure. Do you look only at the lowest cost when buying gold?
Coins are more “expensive,” but they also are worth more because of rarity. And most consider coins more desirable, especially the pre-1933 coins. Do you also buy coins? Would you buy the Liberty Head coins that are pre-1933? How do you know if you are overpaying?
Tom’s response: I buy coins. I don’t own any gold bars. Most of my coins were minted in the U.S., and a big chunk of them are Liberty Heads, minted pre-1933. I do have some foreign coins, and some modern ones, too.
Coins are more desirable than bars and tend to trade at higher premiums. I suppose it’s because coins are more recognizable and, therefore, more marketable. But I’m torn about what advice to give you.
On the one hand, I don’t mind what form the metal comes in; I just want to get as much of the metal for my cash. On the other hand, I imagine coins will always trade at a premium to metal bars, and I’d recoup that premium whenever it came time to sell.
In other words, there’s no penalty for paying a premium because we will get back that premium when we sell. With this logic, we might as well buy coins.
I’ve recommended not paying more than a 4% premium over the gold weight for a gold product. I realize that’s getting more difficult by the day, particularly for gold coins. It seems like physical gold is disappearing from the market.
However, I just searched online for some reputable dealers, and I was able to find a few gold coins trading under a 4% premium. But only barely. Once the premiums go above 4% on coins, I’ll probably start buying gold bars.
That’s all for this week. If you have a question for anyone on the Legacy team, be sure to send it to feedback@legacyresearch.com.
Regards,
Chris Lowe
April 30, 2021
Barcelona, Spain