Gold bugs and Bitcoin maxis: THIS is your common enemy

I can’t believe we’re in June already. Winter may have officially started but I suppose some of you may have felt it arrive earlier. It certainly did in the New South Wales Southern Highlands where I live. The general rule is that the cold sets in around Anzac Day. Works like a charm.

So May came and went. There were many financial pundits and economic experts who were calling for the markets to collapse and a global depression would set in because of the US tariffs.

Perhaps they’re right. Maybe things are really bad.

Meanwhile, the financial markets ended last month strong. The NASDAQ Index [NASQ] rose by almost 10%, the S&P 500 [SPI] rose by a little over 6%, and our own ASX 200 Composite Index [ASX:XJO] was up by 3.7%.

So the broader markets increased. That must mean the market is in risk-on mode, so gold should be the one to pull back, right?

Well, it did, only slightly from US$3,308 at the end of April to US$3,287 at the end of May. Boo-hoo.

Now if you own Bitcoin [BTC], you might be sniggering at the gold bugs, given Bitcoin rose by just over 10% from US$94,181 to US$104,034.

#hfsp (Have fun staying poor)

I’m joking…

Gold bugs and Bitcoin maxis rivalry is misguided

I’m not sure whether the gold vs Bitcoin rivalry has eased off. I still remember that for several years, the two camps were exchanging ridicules and insults. The gold bugs accused Bitcoin maximalists (maxis) of chasing the modern tulip craze. The Bitcoin maxis mocked gold bugs for being outdated and that they will remain poor for their antiquated thinking.

Even within the Fat Tail family, one esteemed colleague (who I will not name) passionately derided Bitcoin as worthless as doggy doo. I offered to set him up with our resident crypto expert, Ryan Dinse, for a moderated debate, but he didn’t think it was worth his time.

This rivalry has long made me reflect on how the passions are misdirected. Gold bugs and Bitcoin maxis shouldn’t be unloading their disdain for each other.

Their aversion should be to their common enemy, fiat currency.

There is an irony: both gold and Bitcoin are beneficiaries of fiat’s failings.

Revealing the real villain

While our financial and business pundits talk day in, day out about the latest goings-on with the tariff wars, economic forecasts, market movements, and how our policymakers are trying to hold everything together, I feel they miss what really matters for the ordinary John and Jane.

How do we make ends meet and overcome the challenges of rising living costs and unaffordable housing?

No, don’t tell me that the Labor Party will solve these for us, or that if the Coalition won, we’d be in a better place. They’ve been swapping places for decades and society became more burdened by debt, while household savings fell.

Those who understand the monetary system have worked out the source of the problem – fiat currencies and deficit spending. Almost every currency in the world is falling in value because governments spend more than they receive in the long-term. The global Wuhan virus outbreak and the subsequent stimulus only made this problem worse.

Since the start of 2020, the price of gold has at least doubled in every national currency. No exceptions. In US dollar terms, gold increased from US$1,520 an ounce to around US$3,350 now.

Meanwhile, Bitcoin increased by no less than 13-fold, rising from just under US$7,000 to over US$100,000 today.

Did an ounce of gold or a Bitcoin change during this time?

No, but fiat currencies lost value as trillions were created to paper over our economic woes.

Those who earned and saved in currencies suffered during this time. It was literally impossible to see your wages more than double in five years, unless you opened an OnlyFans account.

You would have to use your currencies to buy assets that generated value like bonds, companies, and real estate.

Or buy monetary assets with a limited supply – like gold or Bitcoin.

Physical or digital money – Take your pick

I know some of you will declare me a monetary heretic for calling Bitcoin a monetary asset, especially when I’m a well-known gold enthusiast.

But hear me out.

Like it or not, the blockchain system is here to stay. Bitcoin was the original creation. It does satisfy the criteria for money, despite it not having physical form. The supply of Bitcoin is limited and until now, proven itself to be immune from manipulation to make it otherwise.

Gold measures up well against the trend in the cost of living. It has kept up with property prices, food, essential services, and other necessities:

You can find more information about the Gold-Equivalent Calculator at the GoldHub Australia website.

Meanwhile, Bitcoin’s performance in the last five years blew gold out of the water, though not without heart-stopping rallies and collapses:

Perhaps you might not like the wild swings of Bitcoin or the concept of storing your wealth in digital bytes. That’s ok.

Let me conclude with this takeaway: whether you like or dislike gold or Bitcoin is irrelevant. Same with whether gold bugs and Bitcoin maxis are wacky and disconnected with reality.

Their common foe is the fiat currency. Those who control or benefit from the fiat currency system hate both and want you to stay in their monetary prison. You work harder to save and own less.

Gold and Bitcoin can free you from that.

Will you make the first step?

To take your journey with gold, click here and learn more about how to build your precious metals portfolio now.

Or learn about how to start your crypto wallet and learn to buy and sell cryptocurrencies by clicking here.

You can always stay with the fiat currency system. In that case, you risk staying poor and not having much fun.

On that note, I’ll sign off. Have a good week! Keep warm.

God bless,

Brian Chu,
Editor, Gold Stock Pro and The Australian Gold Report

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