The Rise of Cryptocurrencies:

Another Reason to Buy Gold 

Longtime readers know that I own gold. I bought it not as an investment per se, but as a hedge against some extreme financial catastrophe, such as hyperinflation or (its cousin) the collapse of the US dollar.

In such a scenario, gold – and particularly a stash of gold bullion coins – provides some advantages:

* It’s real. Like real estate, gold is tangible wealth. As such, it tends to rise when inflation rises, which is something that’s not true for many financial assets.

* It’s private. For the most part, you can buy, hold, or sell gold without anyone knowing about it.

* It’s portable. You can carry $20,000 worth of gold in your pocket, or $1 million in a carry-on bag.

* It’s universally valued. There is always a ready market for gold in every city on earth.

Now there is another reason to buy gold: the rise of Bitcoin.

I asked Tom Dyson to explain:

In the not-too-distant future, Tom says, digital wallets will become universal – perhaps as universal as cellphones. “In effect, we will all become our own banks.” And as I’ve argued in previous discussions of cryptocurrencies, it’s highly likely that the Federal Reserve and other central banks will want to administer these systems. Tom believes they will make it happen by “launching some sort of wallet app for our mobile phones.”

Why would the Federal Reserve want to do this?

Simple, Tom says. “The Fed must inflate or die. But it’s struggling to create inflation at the moment. Interest rates are at zero. And the Fed has already promised to keep them there indefinitely. It can’t force Congress to keep printing and spending.

“A digital cash system would free the Federal Reserve of existing obstacles in the way of inflating the supply. In moving towards a digital dollar, the Fed would be escaping from the downward trajectory of the existing dollar, which it knows is doomed. This doesn’t bode well for retirement funds, college savings, business endeavors, or any other financial plans we may have.”

His solution? Buy gold.

If you don’t have a stash of gold already and are wondering if you should buy now, check out the essays I’ve written about the subject here, here, and here.