Let me make something clear at the outset of this article. I am a bitcoin supporter, I own bitcoin & the concept is brilliant & I have supported & observed it for years. Glad I got that out of the way.
Permit me to explain a truism which is more apparent to older people perhaps than the younger generation, a truism that must be the North Star or (Southern Cross) of your navigation through life’s journey. The state’s mission, all states, is total control of the population. It is vital to understand this to comprehend why & how seemingly vicious, cruel, absurd government action is global. In olden times despots, kings, emperors would steal from their citizens for unashamedly personal benefit, they were honest robber barons. They wanted bigger castles, better food & clothing more land. It was immoral but straight forward.
As I write Great Britain is under marshal law, parliament has been sidelined, principles of English Law, the Bill of Rights & Toleration Acts, freedom of association abandoned. Habeas corpus suspended for political prisoners. MSM & social media censorship, de facto if not de jure.
The modern rapacious state steals even more than its medieval predecessors but with the veneer of good intention. It claims to steal for the citizen’s benefit. As they take your money by coercion or physical force it claims it will somehow save you & your family from a fate worse than death. Climate change, faux pandemics, political power, criminal banking activity sponsored by the state. The catalyst is a fake democratic system or totalitarian regime, a politicised police force, sociopathic political class, perverted pseudo science & a heartbreakingly gullible poorly educated population.
I am a well known gold bug but I have never accepted being a supporter of crypto is in any way contradictory. They both facilitate holding a form of money outside the global fiat currency system which is doomed, so they are both good. I also hold silver for the same reason.
Let me first deal with the flaws in holding gold because many of them apply to bitcoin.
Central banks & governments are wedded to paper money because they can print it at will & maintain total control over its supply, of course now read digital for paper. This suits the ‘democratic’ political system where the tactics are to maintain a veneer of well-being on a 4/5 year cycle. Bread & circuses if you will. It is for this reason Nixon took America off the gold standard. Since that fateful day in 1971 the purchasing power of the dollar has fallen 95%. Where did the missing money go? Out of the pockets of ordinary people into assets owned by the already wealthy. Yet it is a decade or so before people realise it, even then like watching a professional magician they are not sure how the trick was done.
Give anybody a money printing machine & they will abuse it. Give it to a politician doubly so. Add to that a bureaucracy, main stream media, academic establishment, retail banking chiefs & gullible electorate who have no concept of what money is or how it works & you have chaos in spades coming down the track.
Gold bugs & crypto currency enthusiasts though do understand only too well. Hence the evangelism in both camps.
Let me deal first with gold, bear in mind I am not a golf club punter pontificating in the bar. I have been a professional investment manager for over 35 years, I have also been a member of the European Parliamentary Economic & Monetary Affairs Committee for five years so I know how the political game is played. In short I have been both game keeper & poacher.
Gold then, what’s good?
It has been internationally accepted money for five thousand years. That’s the kind of provenance a professional looks for. Gold purchasing power remains constant. In Britain a gold sovereign will buy you exactly what it would buy you one hundred years ago, maybe bed & breakfast in London but ponder this it would buy you bed & breakfast today in any capital in the world, in specie. It is international money. The definition of money is that it must be acceptable & trusted by most providers of goods & services, a store of wealth for future transactions, sometimes referred to as time preference.
So far so good.
But we know central bankers & their political masters hate gold. Indeed they hate anything they can’t control, the self employed, small businesses, gun ownership, unrestricted travel, freedom of association, the list is endless.
Gold at $1850 per ounce is way undervalued given the amount of global national debt, collapsing economies & political unrest. Although fiat currencies have fallen against gold 80% this century alone consider how much it should be valued against an intrinsically worthless paper dollar bill being printed maniacally by deranged bankers & governments.
So how do governments suppress the price, what tricks do the use?
They allow their regulatory lackeys, the SEC is a prime offender to allow trade of promissory notes for gold on international exchanges so the price is not controlled by people like me who buy & sell specie but fake paper notes not backed by gold sold to gullible investors by banks. The price is manipulated & massive profits are made by selling gold which they don’t have. The estimate of gold paper to gold specie is reckoned to be circa 800:1
My gold sovereigns are in a family vault in London. With a complicated system of access & security. So they can’t be stolen. Or can they? Of course the biggest robber barons are banks & politicians. If they want your gold they can take it by force. The French government did this in 1720 & Roosevelt in the early 1930s when he stole gold from American citizens, National Socialist Germany confiscated gold in the same decade, the biggest heists in modern history.
In Britain gold purchases over £10k have to be logged & reported to the State authority. Records are kept for six years, perhaps longer. So they can’t physically get my gold, it is secure, not in a bank vault which they virtually own but a private vault. What good is this to me if I am arrested until I hand over the key? The Julian Assange case has proved transatlantic big state collusion can conspire to suspend Habeas corpus whenever they choose.
So owning gold is a very strong step to protect your wealth but it is not foolproof.
I turn to bitcoin.
Bitcoin enjoys many of the advantages of gold, in some ways better but in some ways not. As a professional investor I do urge those less experienced to remember the golden rule of diversification. One asset class is a dangerous game to play. I am light on equities now but heavy on precious metals & real estate.
Bitcoin cannot be degraded by central banks, it is a finite resource, an enormous strength. Gold of course is mined but the ratio of mined gold to existing gold supply & historic population growth is minimal.
Gold like bitcoin must be held in specie or it is pointless, any counterparty risk renders the concept useless. But bitcoin as with gold is vulnerable in many of the same ways.
Hold your bitcoin in your own wallet as with gold in your own vault. But a totalitarian state can access your bank account & trace a potential bitcoin sale or purchase. The suspension of Habeas corpus is with us now. The main principle of British & American law is the presumption of innocence already abandoned by the IRS & HMRC it is non existent under Corpus Juris, (The European system). So state theft by intimidation is relatively straight forward.
Let us look at price manipulation. The tools of state & market corruption are being used to suppress gold. A regulatory endorsed paper book on crypto currency is simple & investors are easily mislead.
Let me set the scene. The investor goes in to see his bank financial adviser, ‘I want to get some bitcoin in my portfolio I heard about it at the pub’
‘No problem sir, would you also like exposure to other exciting crypto currencies? There are plenty of options, we have a crypto fund which our experts trade on a daily basis to get maximum exposure with the least trouble & a view to smoothing the dips & spikes in crypto prices’.
‘sounds good to me, I don’t really fully understand crypto’
‘No problem Sir, leave that to the experts. How much did you want to invest?’
‘ten thousand pounds’
‘I will credit your portfolio Sir, there is a ten day cooling off period or we could switch cash in your portfolio, we could do the transaction immediately’
See how easy this would be for a lay investor? No bitcoin has been purchased at all of course, just a promissory note the same as a gold ETF. The price is no longer driven by trade in specie, but eventually by banks making a book. For a veneer of respectability the fund would probably hold a percentage in specie say a fractional reserve of 10%. Not an issue today perhaps, but when international bitcoin trading hits $5 trillion?
Now consider mischief by the states & their central banks working together. They want to suppress all crypto currency but their own. This maintains the status quo. Here the enemy of bitcoin comes to the fore. Money to be a store of value or medium of exchange must be generally acceptable in exchange for goods & services. We know the gold coin is acceptable globally, although some governments ban its import. But what if all international central banks made bitcoin acceptance illegal under legal tender laws, a fairly safe assumption. The financial footprint of the central banks is awesome to behold.
No goods or services of any value could be bought in their zone, certainly not big ticket items. The only alternative then is to exchange bitcoin for state crypto currency at best at a price set by the central bank international consortium. Far fetched? No, Roosevelt did exactly this, then recalibrated gold in an act of appalling cynicism.
Gold is still vulnerable but gold is internationally accepted as money & billions of people hold it in some form. With crypto an electronic counterparty accepter is necessary, bitcoiner to bitcoiner, no not a third party but you get the idea. Incidentally my wife sold one of her books to an American buyer last month who offered a silver eagle in payment which she immediately accepted. A silver eagle will buy you a book in two hundred years time.
Central banks themselves as a financial confederation could control cryptocurrencies by massive coordinated purchasing or sale plans, perhaps making bitcoin too volatile for mass appeal, bear in mind the conservatism of the average saver. China’s gold purchases over recent decades could eventually cripple the petro dollar if China believes it to be a good strategic move.
Now in the long term fiat is doomed & world finance will change dramatically. The powers that be globally understand this hence the experimental political control of lockdown. Reset or the new normal, build back better is simply strategic planning for the super wealthy to establish permanent physical control of electorates without politics. Power today does not reside with our elected representatives nor has it for a generation. Rothschild explained one hundred years ago he who controls the money controls the power. Whom do you imagine wields the most global influence, Boris Johnson or Bill Gates?
The globalist takeover can only be short term, the human spirit is too strong but the life cycle of totalitarian modern empires can still be a generation or three. The Soviet Union & European union are examples. Even the heavily centralised administration of the United States quite contrary to its original constitution is currently jeopardised.
I watched long term bitcoin guru Max Keiser last week being interviewed about his personal holdings
Paraphrasing the question ‘you have loads of it Max, what are you going to do with it?’
Paraphrasing the answer
‘er… I don’t really know’
What do you do with it if you can’t buy stuff directly with it? Trading it is fine, fun & profit making.
But until the pub, corner shop, hairdresser or car show room accept it it has to be transferred to something they will.
So bitcoin passes the test as a store of wealth but not yet as a generally accepted exchange for goods & services. When that day comes it ticks all the boxes.
Will that day ever come?
It could. The advancement of bitcoin can never come politically because it would mean a political/banking system ceding power to the people. But it could come from the other two major powers on the planet. An alliance of international big business & the world’s consumers.
Perhaps if every leading popular entrepreneur in every country endorsed it? Elon Musk has hinted he could be an advocate. Tim Martin of Wetherspoon in Britain another, what of Ryan Air boss O’Leary? Imagine Jaguar Land Rover accepting bitcoin directly for luxury car purpose. Richard Branson selling transatlantic tickets for Virgin Airways.
Central banks & politicians would be powerless to resist. Aux Armes Citoyens formez vos bataillon, let non political leaders step up.
Buying bitcoin is only the first step, there is much yet to do.
The Goodnight Vienna Audio file