The Gold and Bitcoin Fund
As regular readers know, we are rather keen on bitcoin here at ListedReserve. The thesis is simply that so few things have known supply and provable scarcity. Some investors though are more comfortable with gold because it has tens of thousands of years of history and is a proven inflation hedge.
So, in a world first, we have launched the Gold and Bitcoin Fund. Primarily this is to serve investors who want the inflation hedge, want exposure to bitcoin but wish to limit volatility.
The fund has a Target Balance of 80% gold and 20% bitcoin and has an annual fee of 0.8%.
Email firstname.lastname@example.org for those who want the full deck or the Information Memorandum. As usual, past returns do not indicate guidance for the future.
The gold will reside at the Perth Mint in Western Australia and the bitcoin in the ListedReserve Bitcoin Fund which has its own proprietary security mechanisms, including multisignature wallets and cold storage.
Not 12 months ago, millennials were derided. They don’t work hard, they don’t save money, all they do is spend on coffee and avocados and trips to climate conferences.
Now fast forward a year and the boomers are in the firing line. Apparently they have overspent, lived beyond their means and left everyone else with the bill etc. It seems some cohort that must take the blame for whatever the current malaise, whether it is a shortage of green fruit or the deaths of half a million people around the world.
Perhaps there is another way to look at this though. Firstly, no generation ever has been left with a bigger bill than the boomers were after the second world war, when debt to GDP peaked at 119%. US Government debt is only now reaching those post WWII levels, currently 110%. It was coping with those debts that meant the end of the gold standard. Led by Richard Nixon, the world collectively defaulted and moved to an experiment with fiat money. The price of that adjustment was that during the 1970s our new least favourite cohort were paying interest on mortgages at rates approaching 20%, a rate that would instantly bankrupt most countries (and individuals) now.
That fiat experiment is now in its final throes. In the next decade or so money will change once more, some sleight of hand will mean default on debts and the world will move forward with a new money. Millenials will have the upper hand because they will be the dominant player in the world, they will be the workforce and the major cohort earning the ‘new money’.
The idea that future generations need to pay the bills of their predecessors is complete nonsense. They can just vote not to do so and nearly always do. When was the last time you went to a restaurant and randomly paid a strangers bill? Never. It never happens, it never has happened and I’m pretty sure it never will happen. The blame game is a complete waste of time. In the end, the workforce calls the shots because they are paying.
By 2025 that will be the millennial cohort, and they will not pay the bill. They are crushed by student debt, government debt and avocado debt. They will default, like their parents did. Then the game will continue.
To win the game though, you have to be in it. No hanging on the sidelines complaining. After all, nobody ever won the Melbourne Cup by sitting in the stands wishing they’d bought a horse.
Money is Free
Leading the charge toward inevitable debt default is Christine Lagarde of the ECB. As we know, she has an excellent CV in that regard, recently overseeing Argentina’s super obvious default and burning $65 billion of our money in the process.
Sadly, she has now brought her ‘skills’ to a much larger economy and flexed her muscles this week. It was an interesting deal:
- The ECB decided they must encourage banks to keep lending to the public
- Because what the public needs now is to take on more debt
- So they organised some cheap 3 year loans to banks
- €1.3 trillion of it actually.
- At rates as low as -1%
- 741 banks took up the offer
The real question is which banks didn’t take up the offer? Have money and get paid for having it.
If I was a bank I would borrow the maximum possible amount with a loan subsidised by the ECB. I would then immediately buy three year Italian bonds yielding 0.3%, knowing that the ECB is also buying them. Italy is the lynch pin of Europe now, when they go down, the ships goes with them, so we absolutely know everything will be done to stop that happening.
My margin on the deal is 1.3% per annum with some risk (the 1% I’m paid on my “loan” and the 0.3% yield). If I was worried about Italian debt I can buy credit default swaps for three years on Italian debt for less than my margin. Completely risk free profit.
This is why the system is corrupt. The window of free money is not open to you, only to some. If you pay people to take money and ask them to lend, they might lend. They might also make a mockery of your perverse incentives and simple enrich themselves at the expense of the European public. I have no idea which option the bankers of Europe will choose.
Rumours surfaced this week that PayPal is about to support cryptocurrency inside its applications.
The leading indicator is the jobs board on their website recruiting specific cryptocurrency related skills:
There are 325 million active PayPal users worldwide. They aren’t all going to buy bitcoin, but if this turns out to be true, they will all know what it is and they will all have the option when the time comes.
When are you going to buy your bitcoin, before the PayPal masses or after?
Finally, a book recommendation: Human Scale by Kirkpatrick Sale (2017).
You would no doubt be unable to watch television or even listen to the radio these days, so give this book a try. Full of interesting data about scale, I won’t ruin it other than share this story about private currencies.
“A number of small cities in Germany and Austria during the Great Depression abandoned their worthless national currencies in favour of their own local currencies, which immediately became accepted legal tender and were used for salaries, purchases and the like within their areas.
The town of Worgl, Austria, a community of 6000 people, moved from widespread unemployment to full employment in 3 months by using its own currency since local people could understand that it had the real value of a day’s work behind it and were willing to accept it as a means of exchange. Naturally when the practice began to spread and threaten central bank holdings the government moved against it, and ultimately the Austrian Supreme Court declared it illegal”