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Gold Versus Bitcoin

Posted November 21, 2017 at 7:00PM

Mexico City faded in the haze of the setting sun as I looked past the sheet glass on the 23rd floor. We sat on the patio, well above the dust and people, cars and cops with their military weapons and armored vests. The cervezas were cold, and the series of five-star Mexican dishes were as good as it gets.

I was lucky to be sitting at the table with some captains of industry — Canadian oil CEOs and Mexico gold magnates.

“America’s gone mad,” said the old patriarch with a grin, a man who made a fortune when Mexico denationalized its gold mines in the 1980s.  

“It’s social media,” said another man at the table. “Society has gone schizophrenic. It jumps from one cause to the exact opposite in a manner of weeks. Fools shout into the maelstrom with no respect and no consequences.”

“We are going tribal,” I replied. “There are factions within factions… groups, endlessly split, dissected, and chopped. There is no center left to hold.”

“What is left to hold Americans together? There isn’t even football. In Mexico, we love football more than the Americans!”

And so it was true. The Raiders were playing the Patriots in the upcoming weekend, and the city was alive in anticipation.

NFL helmets lined the main street, Paseo de la Reforma, in Mexico City

chief1

We know it rings true. The elites in the United States are on a quest of self-destruction, the approval ratings for Congress are at all-time lows, and the media polls even worse. The Democrats have abandoned the workingman, and the Republicans have abandoned fiscal restraint.

The new tax cuts ensure a $30 trillion debt in 10 years. Our foreign wars have been going on for 16 years. Wages have stagnated, inequality has grown, and monopolies like Google and Amazon continue to expand in power and presence.

On the global front, what looked like a trend towards free market democracy starting in 1990 has run its course. From Putin in Russia to Erdogan in Turkey and even Xi in China, strongmen have gained power.

In times of trouble, when the hangman comes knocking, those with some wealth look for a place to hide their money. Since ancient times, folks would bury their valuables, silverware, and jewels in the backyard.

Today, they seek out other means: Treasuries, gold, or even Bitcoin. But what if, like those wealthy citizens now held captive in Saudi Arabia, it is your own government that seeks to rob you?

Many people have been turning to Bitcoin to hide their loot. The recent run-up over $8,000 is being blamed on the coup in Zimbabwe.

Don’t get me wrong; I feel neither love nor hate for Bitcoin, though I am thankful it exists. My readers in Bubble and Bust Report have made a lot of money, having got in at $449 back in May of 2016.  

Today one Bitcoin will cost you $8,220. This gives BBR readers a whopping gain of 1,630% in a little over a year.

But here’s the thing: As this research from Convoy Investment shows, Bitcoin is the second-biggest bubble in human history. And heck, it may go on to set the record.  

chief2

But it doesn't really matter to us. We’ve already sold half our position and will let the remainder ride until the trend breaks, at which point I will sell into what will likely be a devastating drop.

Bitcoin might be a fine speculation, but it is far from a safe haven. The question you have to ask yourself is what happens when Bitcoin finds its greatest fool and starts to tumble? Where does the money go when the bubble pops and that $135 billion in market cap flees?

There are only a few investments left in the world that are undervalued: gold, oil, and emerging markets.

As you can see by this chart, gold has broken out of its triangle formation and is in a bullish uptrend.

Gold has been consolidating for the past seven years. No one wants gold, just like no one wanted Bitcoin a year and a half ago.

chief3

One of these days — it might be next week or it might be two years from now — Bitcoin, like Lehman Brothers or AOL, will ring the bell at the top of this cycle. It will be then that you will want something to bury in your yard like gold.

After the crash in 2009, several gold companies went up more than 3,000%. The next crash is coming, and you want to be in position when it shows up.

All the best,

Christian DeHaemer Signature

Christian DeHaemer

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Since 1995, Christian DeHaemer has specialized in frontier market opportunities. He has traveled extensively and invested in places as varied as Cuba, Mongolia, and Kenya. Chris believes the best way to make money is to get there first with the most. Christian is the founder of Crisis & Opportunity and Managing Director of Wealth Daily. He is also a contributor for Energy & Capital. For more on Christian, see his editor's page.

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