Over and over again I am finding that
so-called financial experts are trying to work out what to do
next because all hell is about to be let loose.
On the one hand we have the distinct possibility that the USA
will slide into chaos and even civil war. Over the past three
months we have seen the effective disappearance of the rule of
law in that country. Unless that situation is rectified, and
rectified very quickly, it is perfectly possible that the USA
will turn into a no-go area. What will really happen is
China is hell bent on ruling the planet. It's excursions into
other territories as well as the South China Sea are
well-known (and do have a listen to my update of the old Tom
Lehrer song "Who's Next", you might find it amusing, or
frightening, depending on your point of view). Here's
The situation has already been called a Cold War. If that
escalates, once again, who knows where that will ultimately
lead, especially if some idiot goes nuclear.
So, right from the start you have the top two economies on the
planet approaching meltdown.
Now just look across to Europe, where the whole continent is
at sixes and sevens. I am getting dizzy just flicking through
the online channels with the latest news of arguments,
cock-ups, and social and economic chaos.
And I haven't even mentioned global debt levels. Put bluntly,
the planet is in a mess.
Even the roll-out of covid-19 vaccines is not going quite as
wonderfully as advertised. As of the beginning of this month
(March 2021) here is the bad news from the USA.
"966 deaths have been reported after the patients received the
two vaccines in the U.S. And thatís in addition to 749
life-threatening events, 2,280 hospitalizations, and more than
4,000 emergency room visits reported."
Excuse me but these figures are not trivial. Anyone have any
stats on what is going on in Europe and the UK?
I don't want to extend the doom and gloom, but that is the
background for the current panic about how to come through
this. Where does one hide? How does one keep one's wealth if
one has any? Alternatively, how, in the face of such a mess,
does one invest for the future, and despite the bad news, we
have to assume there will be a future, even if a couple of
nuclear devices do get thrown around?
Several things are important. The main thrust of the latest
industrial revolution is that the world is going digital at a
considerable rate of knots. That means, if there are several
routes forward, in all probability the best route to take is
the digital route.
Let me just hit you with one more awful thought. If, and it is
a big if, the next world war does go nuclear it would be
foolish not to take seriously Einstein's thought on such an
eventuality. "If the next war is fought with nuclear weapons,
the one after that will be fought with sticks and stones."
I've put that in quotation marks, but I have to admit that I
dont have access to the original, so I may well have
paraphrased it. But I guess you get the message. A nuclear war
will stop digitisation in its tracks, and all predictions will
count for nothing.
Okay, let's put that aside. Let's assume things get bad but
not a complete write-off. What's the best way to cope?
You will want some form of money that can't be controlled by
the government. Digital currencies are on their way. Some time
within the next five years such government controlled
currencies will be in existence, and over that period cash
will be phased out. That means you will lose all freedom and
secrecy about how much money you have, and how you use it.
That means you need to be able to take yourself off-grid if
necessary. How can you do that?
First, you need control over your home, plus a good patch of
land. If I needed to I could reduce my financial dealings with
other people to less than £100 a week. And if I really wanted
to I could halve that without too much distress. How about
Survival is going to be difficult for those of you living in a
two bed apartment sixteen floors up a high rise, especially if
you have kids. You have my deepest sympathy. I have to take
the view that investing in any kind of high rise not a good
idea. Centre city living is also going to take a hit.
That's the most important issue, survival. The second is a
store of wealth. Land? Art? Gold?
I came across an interesting blog entry earlier this week. It
was by the Winklevoss twins. I was not so keen on them,
knowing that they helped found Facebook, but I read on with
increasing interest. The blog is a very useful roadmap, very
I have taken their attempt to value bitcoin as a very useful
indicator of where things might be going. Want to know how to
value this extraordinary commodity? This is the best way I
have yet seen. Let's see where it leads. The maths come out
Back last summer when the blog was written one bitcoin was
worth around $20,000. An ounce of gold was worth pretty much
the same, but the total value of all the mined gold was about
$9 trillion. You will note that the idea was to value bitcoin
at least as similar to gold. In fact, there are copious
reasons why it should be more valuable, but let's for the
moment assume that bitcoin can reasonably catch up with gold,
and even slightly surpass gold's value. That means that a rise
of 50x is perfectly reasonable. That would take the value of
all the existing bitcoins to about the same price as all the
gold, and put one bitcoin's value at a million dollars.
My own belief is that bitcoin at $100,000 sometime this year
is almost a certainty, and I would not be surprised to see
twice that. I also think that a million dollars a coin is
perfectly possible within the next five years. That isn't a
prediction, predicting the future is, as I always say, a mug's
game. What I am saying is that such a valuation is perfectly
possible and reasonable.
Maybe you are a bit worried about buying something that has
already gone parabolic, and is already hugely expensive. I
dont blame you. I stopped buying bitcoin when it hit $2,000.
(What an idiot I was!) And I was very unsure of myself when I
bought some when the price was $9,000. Luckily I no longer
need to buy bitcoin, but if you are not investing in some form
of crypto, and not investing in blockchain companies, then you
are missing the boat.
Those of you who have been following my writings for some time
will recall that I first suggested buying bitcoin for your
pension way back in 2015 when the price was around $280.
There are, of course, other ways to get in on the bitcoin
ride. Whether I do any blogs on the subject depends on how
many people are interested. Let me know.