Gold & Bitcoin: reflections on wealth preservation

Gold is ramping up! It's been for ever that I'm watching gold's move. I even bough some PAXG a while ago, which ended up converted into bicycle parts {priorities}. With Gold's movement a few questions arise: Is it going to outperform Bitcoin? Or better... are people even buying real gold? Today's post is a reflection on gold and wealth preservation in times of chaos.

Photo by Dmitry Demidko on Unsplash

In terms of intrinsic fundamentals, gold is the ancient ancestor of Bitcoin. Before Gold, humans had to barter and deal with the problems associated (e.g. the double coincident of wants). That is to say, gold is a unit of account, a medium of exchange, portable, durable, divisible, and a store of value over long periods of time. Bitcoin, in my point of view, also carries these intrinsic values.

However, are people buying and storing [themselves] their gold? And in times of tyranny is it seizure-resistant?

The answer to the first question is no. Mainstream investors generally buy ETFs, which is a form of paper gold held by a sub-custodian fund — who will not redeem your paper for physical gold. Unless the investor buys physical gold (in form of bullion, jewelry, etc), the gold is not his. Some go as far as saying paper gold is a total fraud.

Chris Powell, Secretary of the Gold Anti-Trust Action Committee says that 80% of the gold owned in the world doesn’t exist. If he is right — it is the biggest case of fraud in the history. Source: Piotr Bania

Reflection: If your country goes through sanctions like in Russia and you [peasants like me] are holding paper gold, you are f@#$ed. If every mega-investor goes to Comex to redeem their gold, they are also f@#$ed. Just a few people hold physical gold and it's generally not huge sums.

Meanwhile, the answer to the second question is subjective and implies more questions: Are you able to hide a generous amount of gold? What if you need to flea the country, can you carry it?

Some historical facts to make you reflect

On April 5, 1933, US President Franklin D. Roosevelt signed the Executive Order 6102 "forbidding the hoarding of gold coin, gold bullion, and gold certificates within the continental United States."

Executive Order 6102 required all persons to deliver on or before May 1, 1933, all but a small amount of gold coin, gold bullion, and gold certificates owned by them to the Federal Reserve — Wikipedia.

In exchange, of course, the mafia Federal Reserve would compensate the citizens with colorful paper notes on a rate of $20.67 per troy ounce. But, hey! It gets worse. The Emergency Banking Act of March 9, 1933, issued that the violation of the order was punishable by a fine up to $10,000 (equivalent to $200,000 in 2020), up to ten years in prison, or both.

Now, I understand the bureaucrats can issue an order of same magnitude to Bitcoin — it might come earlier than we imagine. It's up to the public to decide to comply or not. And if going for the second option, which is more seizure-resistant? Some bullion or a flash disk?

Conclusion

I don't want to make a case for Gold vs. Bitcoin, although this post might look like it. With gold ramping up, many investors might jump on the train without reflecting on the issues before-mentioned. Paper gold, futures, PAXG and any other non-physical form of gold is just too risky when dealing with sanctions and a potential collapse of the financial system (not to say they'd become useless). Let alone if you have to run away like our fellow Ukrainians. It all boils down to which resource is best to survive if things go terribly wrong. Place your bets.

Remember: your wealth is your future.

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