Do Not Sell Your Gold For Bitcoin, Do Diversify

Bitcoin for me is a not a replacement for hard assets. Same should be said for any of the cryptos, they are not a replacement, they are something different altogether. I believe they should have their place in everyone’s portfolio as a new and potentially extremely profitable diversification out of fiat money. I did not sell any gold or silver related instruments to buy my bitcoin with. I used fiat money that I thought was in need of a better home than sitting in a bank collecting close to zero interest and slowly losing purchasing power every year.

Of of the people I know, most have of their assets in fiat money and related instruments. Even the mutual funds offered by many companies in retirement plans have very little diversification within them. If you have money in one of these plans, please take the time and look at the top ten holdings of your choices. Often they have essentially the same stocks in them and offer little if any real diversification. They also are usually in heavily dollar based instruments such as banking stocks and offer no safety from a dollar correction in if/when the dollar starts retreating in earnest.

If the intent is to diversify, then I believe cryptocurrencies should be added along with other strategies in a way to protect yourself from an increasingly unpredictable world. I think if the cryptos achieve full potential, that it is not necessary to bet the farm to achieve what could be lifestyle changing gains. Betting the farm into any one asset class is a way to change your lifestyle, possibly finding yourself living on the street one day and should always be avoided, no matter what the perceived potential.

There is an article out their claiming to know that bitcoin is a ‘New World Order Scam’. I will not honor it with a link, but you can Google it for yourself if you want to read it. I am a skeptic by nature. I have already considered the possibility that some of the cryptos will be co-opted and pumped and then dumped. Additionally, it makes me nervous to understand that many of the exchanges many not actually have the actual coins that people think they own. This is not much different than the people that think they own gold or silver on the Comex, when it is just a promise to deliver gold and silver, something far different and beyond the scope of this article. Suffice it to say, those contracts always have a force majeure clause which allows them to deliver fiat instead of gold in times of extreme stress in the markets. I suspect exchanges are no better or may just close in times of extreme stress.

I think hard assets in your own personal control are a must own in today’s world. I think cryptos are the same, but make sure you have them off the exchanges and on to a hard or paper wallet controlled by you. For your own personal plan, a strategy of diversification into truly differing asset classes beyond the usual 60/40 stock/bond plan should be pursued and put in place as soon as possible. If you are not sure how to do this, start with a nice base position of the metals and branch out from there. Yes, owning some of the usual instruments is wise, but there are other things like the cryptos that are never professionally recommended. I am considering for myself branching into very high quality farmland I could lease out as another idea.

Have some conviction for your strategy, choose wisely, and think outside the box. If you think this is totally beyond your capabilities, find one of the rare professionals that can help you to do this. This type of thinking will often put you at odds with the normal strategies conceived on Wall Street which is exactly what I am trying to achieve for myself.

MOTOWNGOLD!

My disclaimer, The above references are an opinion and for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.