This Is Crypto's Time to Shine
Satoshi's baby is back in the spotlight... This is crypto's time to shine... Our crypto guy says 'it's not too late'... A currency and a technology... Eric Wade's brand-new crypto Masterclass...
Satoshi Nakamato – whoever he (or she, or they) is – conceived the idea of cryptocurrency during the last market 'crisis'...
You might know the story...
Amid the "Too Big to Fail" financial system meltdown, mortgage crisis, and our previous recession and Federal Reserve money-printing frenzy, a mysterious "white paper" about something called bitcoin appeared on the Internet.
It talked about the idea, creation, structure, and implementation of a decentralized, secure global currency – a cryptocurrency. It would have a limited supply, would not be owned by any one entity, and could be created by regular folks who had electricity and operate outside the banking system.
The whole idea was seemingly coming from a fringe corner of the Internet... The name of the inventor and writer of the white paper was a pseudonym. The true identity – or identities – of the creator still isn't known...
But the concept caught on fast among a small group of dedicated, early adopters and a few others who took a flyer when bitcoin traded for nearly nothing in U.S. dollars. These folks eventually became "Bitcoin millionaires" while a bunch of other bubble-chasers wondered what happened.
That's how good the idea of bitcoin and cryptocurrency was – and still is. The appetite was there. People just wanted something... different.
Today, it's happening again...
The fingerprint of today's crisis is different than it was a decade-plus ago...
The banks aren't failing, for instance. This time, we're dealing with a once-in-a-generation (hopefully) pandemic that has thrown off regular supply-and-demand expectations. And we're sitting at home amid government responses that have shut the economy down.
But even if the fingerprint of today's crisis is different, you could say we're still looking at the same finger...
The pandemic has simply exposed the existing warts and fragility of our financial system to a wider audience.
For the second time in a dozen years, the Fed is creating, lending, and buying at zero interest rates – unprecedented amounts of digital dollars, coincidentally – to cure our economy's ills...
To help us through what Fed Chairman Jerome Powell said on Sunday was more like a "natural disaster" than everything.
Should we just raise "free" money after every tornado or hurricane then, too?
Legendary investor Warren Buffett said a few weeks ago that he was jealous of U.S. Treasury Secretary's Steve Mnuchin's job and ability to "keep raising money at negative interest rates." And the Oracle of Omaha warned of "extreme consequences" if this keeps happening.
This story in itself is not new. As our Stansberry's Investment Advisory research team wrote in a recent special report...
Even without negative rates, inflation has ravaged the "mighty" U.S. dollar. Since 1913 (the year the Federal Reserve came into existence), the dollar has lost 96% of its purchasing power.
In other words, $1 in 1913 would only be worth the equivalent of around $0.04 today.
Even the dollar – the reserve currency of the world – isn't a good long-term store of value.
At the very least, our editors expect a devaluation of the U.S. dollar in the years ahead. That means "hard assets" like gold, or even art, will become more valuable even though they're just sitting there doing the same thing they did before.
There must be an alternative...
Stansberry Research editors have beat the drum about the problems in our financial system and our massive debt levels many times before...
Ultimately, as our founder Porter Stansberry has long believed, a "debt jubilee" might be the only way out – a way to "reset" everything.
But in the meantime, and perhaps in concert with that day, if deep down in your gut you know that something is wrong with our monetary policy and our financial system... there is something you can do about it right now.
There is an alternative. And in truth, this is a valuable exercise for anyone, at any time. I (Corey McLaughlin) am talking about investing in yourself...
And in the context of today's "unlimited QE" era – and the inflation that's likely to come from it – that means learning about the potential global, inflation-proof, administration-free currency of the future...
Anyone who knows history knows that currencies – Lydian Lions, seventh-century Chinese paper bills, Spanish dollars, and more – come and go...
Like our colleague Dan Ferris said in Friday's Digest, I'm not saying we're going from the dollar to a bitcoin world standard tomorrow, or maybe ever... But a place clearly exists for cryptocurrencies, and their underlying technology, in the world already.
There's an appetite today for crypto, just like there was 12 years ago. And it's bigger now...
Today, bitcoin's market cap is about $177 billion. That's greater than the amount of all the money transferred on PayPal's (PYPL) popular money-sharing platform, Venmo, in a year.
And as Eric Wade, editor of our Crypto Capital service, explained to his subscribers in an update on March 20...
I've said before that we haven't seen the type of economy, the type of market, the type of circumstances that bitcoin was built to solve, but we are at its doorstep.
He said the Fed's policies are only accelerating things, much like the pandemic has done with a lot of trends in our world.
Eric then ran some simple math, based on the finite amount of bitcoin that can ever be created (21 million) and the current amount of bitcoin that exists in the world (18.4 million). What if just some of the trillions of money printed by the Fed ends up in bitcoin?
There's no guarantee that it will, according to Eric, just as much as there's no guarantee it will end up in anything else. However, as he continued...
If $100 billion of that stimulus money flows into bitcoin, then bitcoin will immediately double.
That's 10% of $1 trillion and 2% of $5 trillion. So there's an argument there that the larger the stimulus there is, then the better chance that some of it will find its way into bitcoin.
This is cryptocurrency's time to shine.
You can think of bitcoin as 'digital gold'...
That's because one of the fundamentals of bitcoin is that Satoshi designed its code so well that people and their computers could only "mine" a finite amount of it.
Dan did a fantastic job laying out the case for owning gold in the years ahead on Friday. And he also trumpeted bitcoin as the "world's hardest asset"...
It isn't anybody's liability, like all the central bank-controlled fiat currencies. Those currencies can be printed in infinite amounts. But bitcoin is much different...
It's mined into existence by computer programmers. And once 21 million bitcoin exist in the world, the programmers will never be able to create another one. It's in the computer code.
Governments can't print it. And new bitcoin are created at a slower and slower rate over time.
Right now, we have around 18.4 million bitcoin in the world. And unless the bitcoin network protocol changes, it'll take until around the year 2140 to mine the remaining 2.6 million.
And, inherent programming structure aside, importantly... the "crypto world" is maturing fast.
Wall Street is catching on... We mentioned in the May 11 Digest that hedge-fund titan Paul Tudor Jones just put a percentage of his client's money into crypto as an inflation hedge... And credit-card giant Visa (V) recently launched a crypto rewards card.
But there's way more to the crypto revolution than those relatively small developments...
Eric likes to say that crypto is a 'currency and a technology'...
And this is a powerful realization, he says...
I can still remember the very day someone explained to me that bitcoin was like a technology and a currency mixed into one, but it wasn't really owned by any government or any one company.
And I quickly realized that something with those kinds of powers in one place at the same time, technology and current aspects was probably going to be one of the largest wealth generators for individuals ever invented. And it's really playing out to be that way.
Even if bitcoin never becomes a world standard, the underlying blockchain technology that powers it will work its way into our financial system "whether people adopt them or not," Eric says.
Blockchain technology, in a very basic explanation, is sort of like a public, secure, massively shared Google document. No one seems to dispute that there's a growing market for something like that.
Marc Andreessen, the co-founder of the Netscape web browser and Silicon Valley venture capital firm Andreessen Horowitz, famously said in 2011 that "software is eating the world." Today, he says the blockchain technology behind bitcoin is "the most important technology since the Internet."
And a guy like Eric – who has been following the space for years and was on the front edge of several other technological breakouts – knows exactly which companies, cryptos, and parts of this world that investors like you and I should know about... and invest in. As he says...
To make a fortune you need to know how blockchain will disrupt our economy.
With cryptos, you only need to put a small stake of money to work to make a potentially lucrative return. But we know a lot of confusion remains about exactly what's going on... or even if it's all just a "scam." We know there's a lot of unfamiliarity and fear among investors who feel like "it's too late" or "I'll never learn what I need to" or "I can't trust that."
To those points...
Let us introduce you to our first-ever cryptocurrency 'Masterclass'...
Eric is the host, and you can click here to begin. It's free for everyone to watch.
For starters, Eric says it's certainly not too late to "get in." The mere fact that so much is still unknown in the general public about cryptocurrencies is evidence enough that "mass adoption" still isn't in our immediate future.
That means it's the perfect time for smart investors to learn all they can about the space, from the history... to the terms and the various coins, apps, regulatory considerations... to exactly how to buy your first bitcoin.
In the Masterclass, Eric explains all of that. And he connects the dots between economics, business, bitcoin, and blockchain in an easy-to-digest way.
He'll bust all the crypto myths that are out there, answer the questions that are likely on your mind, and show you how best to invest in this world today.
It's an exciting presentation and worth the time. Even if you don't put a single dime into a cryptocurrency investment, we suggest you watch Eric's class to learn something new.
Again, you can click right here to watch.
New 52-week highs (as of 5/18/20): Sprott Physical Gold and Silver Trust (CEF), Cognex (CGNX), Emergent BioSolutions (EBS), JD.com (JD), KraneShares MSCI All China Health Care Fund (KURE), Lonza (LZAGY), NetEase (NTES), Intellia Therapeutics (NTLA), New Pacific Metals (NUPMF), Nvidia (NVDA), Flutter Entertainment (PDYPY), Sprott Physical Gold Trust (PHYS), Polymetal International (POLY.L), Sea Limited (SE), Sabina Gold & Silver (SGSVF), SilverCrest Metals (SILV), Scotts Miracle-Gro (SMG), Spotify Technology (SPOT), Trulieve Cannabis (TCNNF), and Victoria Gold (VITFF).
In today's mailbag, feedback from a doctor about yesterday's Digest. As always, send your questions, comments, and concerns to feedback@stansberryresearch.com.
Also, please be sure to read on to the end of today's Digest for a special guest essay from Tom Dyson, editor of the daily Postcards From the Fringe e-letter. Longtime Stansberry Research subscribers might recognize Tom's name from the years he spent with our company. These days, he has a bullish take on gold that we believe is worth sharing with you. It's what we'd want if our roles were reversed. So we hope you'll enjoy it.
"I am a retired surgeon and not a certified 'expert' on virology or epidemiology beyond what is taught to every doctor in medical school.
"My view on this is that every epidemic is going to run its natural course regardless of any draconian measures mandated by governments to change that course. Common sense personal precautions based on what is actually known about the specific cause of the epidemic or pandemic should be taken. Known people diagnosed with the disease must be quarantined. Vulnerable people must be protected from exposure.
"Assuming everyone 'may be infected and an asymptomatic carrier' and therefore should be quarantined from 'non-essential' work and inevitably severely affecting the national or global economy is patently ridiculous. It has no medical or scientific basis... the vast majority are not infected nor asymptomatic carriers.
"We have politicians passing the leadership 'buck' to scientists who have no expertise in the complexities and responsibility of leading a nation.
"This serves two purposes for our politicians: 1) it absolves them of all accountability if they follow the experts' advice in matters outside of the disease itself (therapy, vaccination, self-protection) and 2) it gives them unimaginable power beyond which the Constitution or other laws have been given them by the people in our constitutional republic. Ultimately it is the 'herd' immunity which ends epidemics/pandemics except in only relatively small outbreaks." – Paid-up subscriber Bernard B.
All the best,
Corey McLaughlin
Baltimore, Maryland
May 19, 2020
I Haven't Felt This Strongly About an Investment in Almost a Decade
The place where you made your stand never mattered. Only that you were there... and still on your feet. – Stephen King
I put my entire life savings into gold two years ago.
Not because I thought gold was going to rise. But because I thought stocks would fall, priced in gold, by more than 80%. And I wanted to buy those 80%-off stocks, whenever that may be.
In late 2018, stocks suddenly got marked down 15% (priced in gold). And I thought, "This is happening now." So I bet even more on stocks falling...
The last time I got this feeling was in 2011, when I found bitcoin. I was in some Internet forum for geeks and someone mentioned it. I looked it up. And the moment I saw what it was, I knew. I just knew.
It cost $6 at the time. There was only one place to buy it – a website in Japan called Mt. Gox. And it was a brute to get a hold of...
I had to open an account with a PayPal-type service to transfer the money. Then, I had to jump through hoops like sending faxes, passport copies, and bank details. The whole thing seemed like a scam.
But I wired $5,000. Which was a lot of money for a guy, with three babies, who was still trying to make it in the world.
Then, I wired another $5,000. And another. Then, bitcoin jumped higher. And I thought, "This is happening." So I wired another $10,000, which was enough.
I withdrew all my bitcoin – I had 3,330 of them – and transferred them to thumb drives via an Internet airlock I set up using Linux, so they couldn't be intercepted by online thieves.
Next, I made duplicates of the thumb drives, in case they broke, got corrupted, or burned in a fire. I encrypted them. And then, I hid them in two secret locations.
Meanwhile, I'm a big mouth about this sort of thing. I told anyone who'd listen to buy bitcoin. I even started giving them away.
I gave one to anyone who came to my office, including Bill Bonner – I gave him a physical version of bitcoin called Casascius. And I gave them to my friends, Michael Checkan – co-founder of Asset Strategies International – and Swen Lorenz, an investment blogger.
I must have recommended it publicly, although I don't remember doing so, because Chris Weber – who pens the Chris Weber Education blog – forwarded me a note from one of his readers recently:
Chris,
I found this post from Tom Dyson on Facebook a few days ago... (I'm not FB "friends" with him, but I do read anything he posts as he pointed out bitcoin when it was like $15 or something crazy cheap...)
"With the Rupee near all-time lows against the dollar, India feels very cheap to us. We've been here a week already and we've only spent $180.
"Our hotel is $14 a night. Our meals are $3. Tuk Tuk rides are less than a dollar. A big bottle of water is 15 cents and a freshly squeezed juice or smoothie is 50 cents.
"Here we are in Jaisalmer, the city-inside-a-castle in the far northwest of India near the border with Pakistan..."
As an investor, THIS is what I love reading... and it instantly makes me want to drop everything I'm doing, travel to India, and see for myself! On one side of the world (USA), you've got a 9% default rate on subprime car loans. And on the other, you've apparently got a genuine bargain... so fascinating!
I also went shopping on the darknet, and I sent packages of cannabis lollipops and Rice Krispies Treats to friends all over the world, paid for with bitcoin.
You know what happened next. The price went crazy, and my investment turned into $1 million. And I thought, "That's enough. I'm out." So I sold all my bitcoin. After taxes, bitcoin volatility, and Mt. Gox's insolvency, I ended up with about a $500,000 profit... and a lot of pot lollipops.
I should have held on. The bitcoin I had would be worth tens of millions of dollars today...
Which brings me back to stocks falling in terms of gold. It's a little different, but I got the same feeling about it as I had with bitcoin.
I put an irresponsibly large investment into it. I told my brothers and my parents to sell their index funds and buy gold. Then I started writing about it in my Postcards From the Fringe e-letter...
As I write, the Dow-to-Gold ratio – which tracks the Dow Jones stocks as priced in gold – is around 14. I won't sell my gold until it falls below 5.
Regards,
Tom Dyson
Editor, Postcards From the Fringe
P.S. I have so much conviction in this strategy that I've invested nearly $1 million of my own money. This is the type of wealth-building opportunity that only comes around once a generation...
And if you're as serious about it as I am, there's much more to it than just buying gold bullion. Tomorrow night, I'm sharing the details in an urgent briefing. Reserve your spot right here.