The first time I ever thought about currency was while reading a book called How an Economy Grows and Why It Doesn’t by the late Irwin Schiff. That was when currency became a fundamental issue for me.
The book is about a society of cavemen, where one of them discovers how to make a net. The caveman that makes the net goes from catching one fish a day to catching two a day, in doing this, he creates a wonderful new concept called savings. This new concept essentially establishes what we call capital, and the reaction to capital called capitalism.
A hundred years’ pass, and we see the community of cavemen evolving into a modern economy with banking, politicians, and markets, along with something new: currency notes, all backed by fish (which in this world can somehow be salted and stay good forever). However, the fish economy crashes and (in an effort to attack fractional reserve banking) eventually moves into a fiat currency model where the notes become worthless, due to rogue lending.
The examples laid out in the book convinced my 14-year-old self that I wanted a gold standard, and I continued to support gold as an investment until I encountered Bitcoin; that’s when gold got its ass royally kicked.
I want to get a few things out of the way: let me just say what this article is not going touch on.
- I’m not going to talk about how fractional reserve banking is a wonderful thing and Irwin Schiff is wrong.
- I’m not going to talk about why the gold standard is probably a dumb idea. (If you want to learn more about it, here is a video on the topic.)
- I’m not going to call Peter Schiff a gold salesman pitching fake economic collapse theories to sell gold coins online (what, I just did? whoops).
Instead, I’m going to just say one thing – gold is not a very good investment – but Bitcoin is!
I’ll keep this article short and to the point, but keep reading my articles if you want me to rip into Schiff.
I would never invest in gold.
I’m just going to be honest on how I invest my money, and how that is working out for me.
I start by ensuring that 10% of whatever I make (whether from returns on investment, or income from projects) goes immediately into savings, savings that I never touch.
From there, I get my Warren Buffett on, in that, I only like to invest in stocks I know and trust.
The stock I own the most of, is McDonald’s: due to my opinion that their climbing sales, strong real estate holdings, and plans for expansion in China (as well as other parts of Asia) make them basically an unbeatable company.
They had one quarterly loss in their history (2002) and recovered incredibly from that, growing the company more than at any other point in its history.
The dividends are decent, and it has overall been a strong performer in the last five years.
The next in line is Apple (for obvious reasons), followed by stock in Coca Cola, IBM, Walmart, Google, Pepsi (I hate Pepsi but have to do it) and of course, just to carbon copy Mr. Buffet, straight Berkshire stock.
I also have a liberal collection of stocks I invest in such as Netflix and Tesla. I view Tesla Motors as potentially the next Apple, and Netflix as potentially the largest Disney buyout ever.
Unlike the reasons to invest in gold, I invest in those stocks because of their product and brand, I see [future] growth and a value in each company. Gold however, is invested in because people believe the scam artists on TV telling them to, which attracts a bunch of large name investors speculating on how much the rednecks bought.
– An item which does nothing.
– An item which can’t evolve or turn into anything new.
– An item where nearly all value is based on speculation of value.
– An item that doesn’t produce any dividends at all.
How on Earth is it any better than Bitcoin?
Bitcoin is basically the same as gold; aside from it lacking the power to be given in necklace form as an apology for having an affair, or getting drunk out of your mind on New Year’s and cursing out everyone in front of your friends.
However, while not pretty, bitcoin is valuable because it has an actual use – the black market!
At pretty much any point in history, you will find currency and see it’s necessity – it just becomes a thing! The barter system was confusing, and failed.
People then used gold, due to it being rare, easy to cut, and shiny.
Hell, go to prison and you’ll see how cigarettes are basically legal tender there.
Economies make currency, and bitcoin is the ONLY currency for the age of the black market and the “deep net.”
Want to gamble? Bitcoin! Want to buy drugs? Bitcoin! Want a machine gun? Bitcoin! Getting divorced and need to hide wealth? Bitcoin! Want to go fund ISIS, because society made you crazy? Bitcoin!
For all of this and much more… We have Bitcoin!
The greatest part of it all is that Bitcoin has a ceiling that it has not even hit the dime on.
And I say dime, because if it hits the magic number of 10%, Bitcoin will probably be worth $10 – 30,000 a coin.
10% of drug sales… 10% of illegal gambling… 10% of wealth being hidden… 10% of anything illegal at all and bitcoin will be promised a centi-billion-dollar market cap, instead of the meagre $8-15 billion it floats at now. It has a future and value gold can never have.
So, are you a libertarian investor with some extra pocket cash? Well… Don’t go buy bitcoin or gold!
In all seriousness, I’m saying this from my experience following markets for almost a decade and bitcoin for half a decade, just don’t buy it.
If a person is making under $40,000 a year and struggling financially, take any extra money being made and go buy clear “blue-chip” stocks, a straight buy on the S&P500 or something like that.
However, if someone has investment cash, where they can stomach some risk, go buy Bitcoin rather than gold!
PS – If you buy penny stocks, you’re probably an idiot.
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