Dear Goldbugs....

Dear Goldbugs,

Having been a rank-and-file member of the Goldbug community for nearly 40 years, it is with a heavy heart that Bag announces today he is turning in his membership card, effective immediately. Please do not misunderstand; Bag has no intention of selling his existing Gold stash. This letter is only an acknowledgment that the world around us is changing. Bag is aware change is never easy and frequently uncomfortable, but it is often for the better. So, we intend to roll with those changes.

Bagholder’s entrance into the Goldbug community began decades ago when he ran across a long-form essay titled “Anatomy of the State” by Murray Rothbard. It was so well reasoned that Bag was compelled to seek out some of his other missives. The one that really set the hook was “The Mystery of Banking” in which Murray lays bare the fact Central Banks are an extension of the State, specifically created to enrich the haves while keeping the have-nots impoverished. According to Murray, they have multiple tools at their disposal that they use to accomplish this pernicious goal….

The first is control of the money printer - while you and I have to work for money, they can just hit “print.” Their second tool is control of both the “price” of money (aka the interest rate) and access to credit - just try to get a mortgage without prostrating yourself before the Man. The last tool at their disposal is an educational system intentionally designed to keep the general public grossly uninformed about basic economics. Even those who decide to get advanced degrees in economics are deliberately misled and kept in the dark. Rather than learn the ideas of any of the brightest free-market economists of the last 100 years, like Murray Rothbard, Thomas Sowell, Friedrich Hayek, or Ludwig Von Mises; MBA students are fed a steady diet of nonsensical John Maynard Keynes’s monetary theory to get their degree. For those interested in just how misguided and insanely stupid the curriculum is for an MBA - click here.

Bag was initially drawn to the Goldbug community because when considering the two primary tasks “Money” is designed to perform - namely, store of value AND medium of exchange - Gold was superior to the Government’s FIAT paper currency in every way. One of the few things Keynesian economists and their intellectual superiors - the Austrian Economists - would universally agree on is that “Money” has to be Scarce, Durable, Stable, Fungible, and Portable. Let us consider those properties, one at a time, as it relates to:

Gold V. FIAT.

Scarcity ….. Advantage Gold: It is far more scarce than any FIAT paper, simply because it cannot be printed at will. In parlance with our time, gold is the OG “proof of work” asset.

Durability ….. Advantage Gold: all the gold ever mined, even that in the days of Cleopatra is still around in some form today, while most FIAT paper currencies rarely last more than a few generations.

Stability ….. Advantage Gold: a hundred years ago, an ounce of Gold and a US $20 bill had the same purchasing power, but today, they are not even close. An ounce of Gold is closing in on $3000. As for the $20 bill, I’m pretty sure you can still get a Happy Meal.

Fungibility …. Advantage Gold: an ounce of Gold is easily recognizable. It is the same in the US as in Russia, China, and Brazil. As for FIAT, would you even recognize a genuine Russian Rouble, Chinese Yuan, or a Brazillian Real?

Portability …. Advantage Gold: Five million in Gold would easily fit in a shoebox-size container, while five million in cash would fill a refrigerator.

In every single “Money” metric, Gold is superior to FIAT. Bag recognized this decades ago and, as a result, spent the last thirty-plus years saving in Gold. It turned out to be an okay move, as gold in the 1990s was just under $300, while today, it is just under $3000 - about a 10-bagger. A 10x return might sound good, but Bag would argue the only thing storing his wealth in Gold accomplished was to maintain his purchasing power. Is there any noticeable difference between what a dollar could purchase in 1990 and what $10 purchases today? Not much, especially when you factor in the Capital gains tax that comes with that 10-bagger. Still, if your goal is to maintain the purchasing power of your savings, Gold is a no-brainer compared to any FIAT paper.

Make no mistake, the ever-increasing rate at which our central bankers continue to print new currency units leaves Bag extremely bullish on the prospects for Gold going forward. But Bag is not interested in maintaining purchasing power; he is looking to GROW his purchasing power. To that end, for the first time in history, there is a decidedly faster horse than Gold in the race to outrun FIAT inflation. That horse goes by the name of Bitcoin. Let’s again consider the properties a sound money should exhibit - but this time, as it relates to:

Gold V. Bitcoin:

Scarcity ….. Advantage Bitcoin: Thanks to mining, gold supply inflates by about 2% per year, while the Bitcoin supply is capped for ETERNITY.

Durability ….. Advantage Bitcoin: Admittedly, Gold has a much longer history - but Bitcoin requires far less effort, risk, and expense to both store and maintain.

Stability ….. Advantage Bitcoin: The CAGR (compounded annual growth rate) of Gold in the last 15 years is 7.3%, slightly higher than Inflation. The CAGR of Bitcoin in those same 15 years is 104%. In terms of purchasing power, Gold is stable, but Bitcoin is growing at 14x the rate of Gold.

Fungibility ….. Advantage Bitcoin: Every Bitcoin and each ounce of Gold are the same as the next, but Bitcoin allows anyone with the internet to authenticate it themselves, while Gold requires trust in a third-party assayer.

Portability ….. Advantage Bitcoin: You can send millions of dollars in Bitcoin worldwide in minutes at virtually no cost - try getting on an airplane with a shoebox full of gold.

Any objective consideration of the above-listed properties that sound money should possess makes clear that Bitcoin is better than Gold as both a store of value and a means of exchange. If we are being intellectually honest, until something comes along that is superior to Bitcoin in terms of the properties above, Bitcoin will continue to outperform all other assets as a store of value because it is the closest thing we have to perfect money.

As a dealer in precious metals for decades, Bag personally knows quite a few Goldbugs. It is no coincidence how most of the pushback he gets when trying to “orange pill” them never centers around the properties of sound money as it should. Instead, Bag gets the same few rudimentary arguments repeatedly:

1. “I can hold a Kruggerrand in my hand, I can’t do the same with Bitcoin.” ….

   Yeah, that’s true. But Bitcoin can be held in your head—how is that not better?

2. “Government & Banks will never allow it to succeed.” ….

The truth is, they don’t have a choice, as nothing stops this train. Gman knows this, and so do the Banks. Tax it, regulate it, profit from it, - sure - but stop it? No chance… Banks are lobbying to become the biggest custodians of Bitcoin, while our very own government, and others around the world are building a strategic Bitcoin reserve. Now is the time to front-run.

3. “Government will just make their own digital currency.” ....

Maybe, but what they can’t do is create another fully transparent DECENTRALIZED network. Decentralization is what makes the Bitcoin network unique, irreplicable, and priceless. Anyone who believes there will be another decentralized network of any kind in our lifetime is woefully underestimating what it would require. Truthfully, it would be far easier to create the next retail network and crush Amazon in the process.

Bag would be the first to acknowledge, as a group, nobody comprehends the inherent problems with FIAT government paper as well as the Gold community. That understanding put them into Gold in the first place, as it was the best available - 20th century - solution to the systematic debasement of our FIAT currency by the paper aristocracy. The thing is, this is the 21st century, and we, as a society, are moving into the digital age. Anything and Everything of value is being digitalized. Cameras, Maps, Art, Relationships, Libraries, Entertainment, Shopping Malls, etc …. To think the digitalization of assets like Gold isn’t inevitable is living in complete and utter Denial. As I said above, the world is changing. You can either opt to move with it, learn about it, and profit from it - or you can work faster, longer, and harder for less and less.

Stated another way, in more blunt terms:

You can either take the Orange pill today, or continue to suffer daily, the FIAT suppository.

BOHICA …