This article contains commentary which reflects the author's opinion
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When I think of Crypto, I think of that 1980’s song “Where do I go?” I went to some of the best non-Ivy schools in the world as I learned about conflict, business, and finance. I also went to some of the worst. These schools brought me up on the traditional belief: “Buy the hedge in time of uncertainty.” I still believe this is true.
What is a Hedge?
A hedge is a way of making sure your bet has the best chance of winning. In a casino, you have the insurance bet, which is a sucker bet. In stocks and investment, you have your hedge. For most of human history, the hedge has always been precious metals and gems. These shiny objects always seem to have value, so people bought them when the currency was in a problem state.
Recently, some people have looked to government bonds or long term stocks for a hedge. Odds are, no matter how bad things get GM, Ford, Wells Fargo, and other stocks that rarely ever move more than a percentage point will still be around. Government bonds are another story. When you are looking at currency problems in your country, inflation will generally erase any interest you earn on your bonds.
The New Hedge
With the craziness of the Biden administration, which seems to be making the wrong choice on almost every issue, we have a challenge. Bonds seem to be worth about as much as a Jen Psaki press conference, because you will be circling back to less than you put into it after the inflation. Global confidence in gold is at an all time low (along with silver) because firms around the world have been selling interest in gold that does not exist (or rather they sell interest to multiple people). This means if you are a “I will always have gold” person, when you try to get your gold (unless you are buying actual, physical gold) you may not get it. If you are buying the physical gold, your shipping, coin, or slip up charge and storage will eat up most of your investment.
If you are just looking to hold your wealth, or lose as little as possible. The big firms are still a good bet. They likely will not move much, and if they do lose money- it will likely be less than other more volatile stocks, but your movement is going to be pinned to the dollar. This means you should likely just have your money under the mattress. So to quote the song “Where do I go?”
Many people are turning to crypto currency as a hedge against inflation. When the currency decreases in-value (inflation), then the crypto charges more in the trades. The free market is still the best defense against inflation because it can react to it in real time. When you are looking at crypto (which bloomed in value to more than the U.S. dollar for the first time in history this weekend), you need to understand what you are dealing in.
Crypto is Hope
Crypto markets are hope based markets. Well, accept the new Chinese crypto which is based on slavery, exploitation, and imperialism. Most Western and Eastern cryptos are built on the idea that space and the internet will make society better. Elon Musk’s tweet on SpaceX accepting Doge coin should have put the coin through the roof. It did not because too many traditional firms are holding the currency like a traditional stock. Crypto is currency, if you are not moving with it (or sitting there holding it), you are not living in the Crypto world.
Every minute of every day, individual crypto currencies are moving up or down – just like stocks. However, you can buy them much faster than you can stocks (assuming you are not sitting on the $25,000 for a day trader account). This means you can react to changes. So many people are just looking at Bitcoin, Etherium, and Doge, but there are dozens of coins you can triangulate. Once you do this you can move quite quickly.
Because crypto is built on hope, we can have a very large movement within the individual coins. Yes, they can be volatile. Their charts are hard to read. The value jumps 20% in either direction on a given day. People do not know where it came from or where it is going. Ladies and gentlemen, this is why crypto is so good for the little guy – the big corporations and banks do not have control of it yet. This is the chance to get in on railroads with Carnegie, Banks with Mellon and Rockefeller, and real estate with Vanderbilt. Fortunes will be made or lost on the crypto markets – the questions is whether yours will be among them.
This article is a news article. Get your financial advice from a real financial advisor. This article is not financial advice. Don’t be a ponce, do your own research.