Unfortunately, the vast majority of the people in the U.S., and the world have no idea what is coming. The U.S. Dollar may be on it's last legs as the world’s Global Reserve Currency, but most are totally unaware as to where this interest rate spiral ends. There is no shortage of information online about the subject. All of these economic maladies placing the Yen, the Real and the Ruble will hit the global reserve currency last, and hardest. People run to the strongest ship in the ocean, only to find it has the same flawed design as all the rest. What do will you do in the Dollar’s last days? Should you run to Gold or Bitcoin for true economic salvation? Let’s look at this a bit more closely.
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For those still unaware, China and Russia are “burning the midnight oil” as we speak to accelerate the U.S. Dollar’s demise, in favor of a gold-backed global currency they’d control. Not that American economic policy and hubris isn’t the main factor in it. Savvy Eastern Bloc leadership has had enough of this Western economic tyranny, and is moving to not only end it but take advantage of it. Massive purchases in Gold bullion and natural resources, bilateral trade agreements, and new economic partnerships that 5-10 years ago would’ve been unthinkable and new financial infrastructures are now a daily occurrence.
China’s successful creation of the Asian International Investment Bank (AIIB) helped fund international infrastructure projects. Besides being another Chinese-backed international banking power, following their BRICS Development Bank initiative of last year, it has also attracted longtime American-“BFF” Great Britain as a founding member. Some Brits are eager to hedge their economic bets.
Gold has been the de facto economic standard since Adam met Eve. It’s as old as the hills, and to many just as valuable. Economic indexes are commonly built on a value relative to gold, and, of course, the U.S. Dollar last had real intrinsic value in 1971 when you could still trade dollars for Gold.
Gold may power governments, but can it power you?
Gold may power governments, but when is the last time you bought a week’s worth of groceries with Gold? A man’s gotta eat, no? We are talking about physical Gold, not any writs, proxies, shares, or representations thereof. Gold is the most valuable substance in the world, just based on its cache and global acceptance alone. People love it; governments love it. If you travel at all, you’ll notice that the local coinage in any country in the world either resembles gold, silver or a combination of the two. These precious metals represent value to all societies, and that has been ingrained in all of us. We have been conditioned, like dogs, to believe in these substances as being of high value. And it is true. Gold will become much, much more valuable ten years from now than it is today. Can you take advantage of that? Would you know how to buy gold bullion? Would you know a fake Gold coin from “The Real McCoy”?
Gold has seen more market collapse than Bitcoin has. Gold has gone from anywhere between a price of $1900 USD in 2011 to just over $1100 today. It is widely held by investors, economists, and market insiders that the Gold and Comex markets are largely controlled by “The banksters”. These would be your JP Morgan’s and Goldman Sachs' of the world. How many times have you heard over the past 5 years to “Buy Gold”? The more people are buying, the more prices are dropping? Yeah, something’s up with that.
So let’s assume Gold is a great investment at a “Buy” price because it is severely undervalued at market rates. I’d definitely agree with that assumption. Ok, so how does this help you? If you wanted to go and buy some gold, just how savvy would you need to be? The media loves to talk about Bitcoin scams and Bitcoin exchanges going under, and that’s all true. How many Gold scams are there?
Could you tell which is real and which is fake?
How many Gold coins have been sold on TV that turned out to be totally fake and worthless? Would you fall for the current scams of the ETF or the “Gold Certificate” going on right now? When the global fiat economy breaks down, do you really think anyone is going to honor a “Gold certificate”? You really think a broker, who himself has little or no gold, is going to get your physical gold and hand it over to you when this global 3-Card Monty game comes to an end? When an ounce is worth $10k? If you did get something physical, what are the chances it is the purity of Gold that you thought you bought? Could you tell?
Let’s say you are the savviest new Gold investor in the world. Let’s say you did all your online research and met a guy who knew a friend that has a broker who has a vault with the purest Gold Bullion you ever saw. And he’d sell it to you for market price, and you wouldn’t get some worthless IOU, but you could buy a couple of pounds of pure Gold. Now you have 64 Gold coins. Now, what?
It’s five years later, and you have no job, dollars are worthless, and all you have are these 64 coins which are worth a fortune. What can you do with them? You need food. Are you trading one coin worth thousands of dollars for food for the next week? These coins are not divisible, not widely accepted as cash value. Can you buy gas, electricity, oil? How would you go about it? Are you safe with these super valuable coins? Word won’t get out that you have these coins? Walking around with them is like walking around with a million dollars in a briefcase today.
You think the Police State is going to let you travel out of the country with this Gold on you? Really? And who says there won’t be more Gold confiscation going forward? Some say it’s secretly happening right now, as we speak. If that card were played before, it could be played again. The reasons are immaterial. The result is the same. It’s a transfer of wealth from you to the banks. With a stroke of a pen, that can become the law of your land.
What’s my point? That Gold is a bad investment? No. The point is unless you are a central bank; Gold is terrible as money. It is not built to be a global currency at the present time. It is not very divisible in practical terms. It is volatile in price. It is not safe to move as a physical asset and is not widely accepted in the real world. It is more of a liability than an asset, as a form of currency. Great long-term economic investment, but not great as usable money.
Bitcoin has plenty of downsides
Bitcoin has a lot of downsides to it. You can’t hold it, so you are trained, like a dog, or like Warren Buffet, to think it is not real. Or that it has no value because you cannot see it or hold it in your hands. Aren’t the moist valuable things in life free, intangible, or without physical properties? Love, willpower, faith, health, innovative ideas that have shaped the future of man, like The Internet? Bitcoin enters the stage here.
It is not easily obtained in any real quantity, but this it shares with Gold in that it is precious and is not available on every street corner, like a fiat currency. What it does not share with Gold is that it is highly divisible, down to the Satoshi (a millionth of a Bitcoin or BTC). As far as security, Bitcoins are as secure as you make them. If you use fairly basic multi-sig security methods, you’ll grow old with your Bitcoins. A thief in the street would never know if you have no bitcoins or one thousand. An online hacker may need to not just beat your security measures, but another person may have to sign onto a new transaction. How will he beat that?
It can be moved anywhere in the world with just your mind. Set up a brain wallet, and a nasty Gestapo agent won’t be any the wiser of your intrepid wealth in the digital realm, as you enjoy what’s left of your freedom abroad. Try sending your bitcoin to a remote location in an Indonesian forest, which would take seconds, then try the same thing with your 32 Gold coins. You might notice an inherent value proposition there.
Also unlike Gold, the Bitcoin supply is, in fact, limited and finite. It is set to reap immediate benefits going forward when it comes to supply and demand, the most basic sound money concept. No worries about mere fiat currency principles like inflation or deflation. You can chart the amount of digital currency in circulation at any time in the future. No bearded elite men who are totally unaccountable to the public or even their government because they are private subcontractors who operate above the law are manipulating your Bitcoin value and supply. Everything is left up to the market. Miners win when they play by the rules of the protocol, and don’t try to corrupt it. That’s a train to nowhere. The system works and has many, many more practical applications as money that we haven’t even tapped into yet.
Worldwide, more people have cell phones than toothbrushes. Now, any cellphone can transfer Bitcoin via SMS text, making Bitcoin truly global. Is Bitcoin better than Gold? As an investment, maybe not, but with a caveat. There is so much we don’t about Bitcoin yet. What technology and applications that are yet undiscovered. Just how far will its economic impact be felt? How many of the world’s 5-6 billion unbanked population will Bitcoin affect, either directly or indirectly? Bitcoin can be sent by SMS text message, so you don’t even need an Internet connection, computer, or smartphone. They just make the task easier.
Bitcoin has established itself as a global brand, protocol, and technology. It has established itself as something governments, and the media can’t wish away through propaganda. It has established itself as a medium of global exchange of unlimited potential, unlike the commodity of the banking elite, Gold.
Gold does what Gold does, and nothing does that better. It represents value and cachet. That alone can power a global economy, directly. And your government and your girlfriend love it for that. Bitcoin, over the next decade, will probably end up doing everything else you’ll need. From sharing your wealth anytime, anywhere, to taking your wealth with you with peace of mind, to buying your daily necessities. One is valuable for all times, and one adds value at all times.
If you can get both, it would be wise to do so. In the pursuit to find a superior form of money, this is not much of a contest. Gold isn’t going to outsmart anybody. It doesn’t learn new tricks or become more versatile with a new app. Bitcoin has talents no precious metal or fiat currency can every dream of having on their own.
In this economic war of attrition, where economies like Greece, Cyprus, Argentina, Venezuela and Zimbabwe collapse into ruin, expect Gold and Bitcoin to stand tall. Expect Gold and Bitcoin to not only survive, as the ashes of these ancient economic models come crashing down around them, but they will thrive.
Maybe the fiat world will learn from Iceland
Maybe the world can learn from Iceland how to forge national sound money principles that will benefit them for many years. They have suffered economic turmoil almost to the scale of those above but have rebounded incredibly well due to superior policy and leadership. Don’t count on the world learning from their success, but they should be commended for their wise investments. Nations-states really don’t like playing fiscal copycat, unless forced to do so at the barrel of a gun. Iceland is a great story and should be scaled up to larger economies, but that's not how the era of central banking works. It makes too much sense.
It shouldn’t be hard to see that both Gold or Bitcoin will be great long-term investments. Gold because of it’s cachet and brand name as a valuable commodity. Bitcoin because of it’s finite supply and ability to increase its own value within its own technological advances. Many thousands of jobs and businesses will be made directly and indirectly based on Bitcoin technology over the next several years worldwide. You give the incumbent Gold a natural advantage with it’s established infrastructure and market recognition, spanning thousands of years.
Which one wins as a currency substitute, however, after the Dollar and other fiat currencies exit the global economic stage? That’s easy. Bitcoin wins by a technological knockout.