Gold & Silver vs. Cryptos - an anecdote about hedging against fiat

4년 전

Having always been interested in economics, I have long been looking for a proper hedge against the USD. This goes back before the 2008 recession and the wall street bailout, which of course caused tons of fiat to be printed. I was prepared for the worst at the time and had most of my net worth in Korean Won in 2008-2009. I was getting information from the likes of Ron Paul, Peter Schiff, and others who believed the end was near. At first, they seemed to be correct. My retirement account lost about 60% of its value (in USD) in a matter of months. Home prices dropped sharply. Rents went up, and fast. Every day I was reading about foreclosures, layoffs, retailers closing stores, and in New York City I was seeing a much younger homeless population. The quality of life that Americans were accustomed to seemed to be slipping away. Seeing a 24 year old kid beg for change in the subway is a shock even to a native New Yorker.

While this was happening something strange was also going on: People were still buying things that they didn't need... which absolutely blew my mind.

This continued for years and years and years after the bailout. People kept buying things. Phones, clothes, tablets, sneakers, and drones. Adults were blowing money on toys for themselves- toys that were going to ultimately end up in storage or landfills. To give you an idea of how ridiculous the wasteful spending was during the recession: At one point to earn extra cash, I was working for a fireworks company and we got hired to do a 7 minute fireworks show for $12,000. That's over $1,500 a minute. Disposable income during a recession? You bet. To the average person, there was no recession going to get in the way of being a consumer. After a while I was convinced that there was not really as big a recession as the precious metal experts predicted. The economy seemed to bottom out around 2011-2012 and begin a recovery. Around this time, I lost interest in finding that ultimate hedge against the dollar and became distracted with other things - earning money.

I started my career as a teacher in 2011 and had saved a bit of money. I lived pretty much as a minimalist. I'd rather have my money than a bunch of stuff that I don't really need. I never got into buying toys for myself like I saw other people doing. What I did buy was a rental property in Florida at the end of 2013. The previous owner was foreclosed on by the bank and I got a pretty good deal. I was proud of my purchase and I don't think the thought of buying gold or silver crossed my mind for months or even years. I even had a chance to buy 3 bitcoin for $240 in a poker game and passed up on it. My retirement account was thriving and didn't even know what a bitcoin was. At least 3-4 other times, someone offered to sell me bitcoins over the years, but I wasn't interested in learning about what they were or how they worked. I had just gotten a smart phone and was still figuring how that technology worked.

Fast forward to 2017. I'm late to the party as far as cryptos are concerned. I had stacked some silver and sold some and then stacked some more. I also toyed with the idea of putting a few ounces of gold into my IRA to diversify but didn't pull the trigger. About 6 months ago, I bought some alt coins (ripple, safex, civic) but never did much research. I was just dabbling and I still hadn't properly educated myself about blockchain technology. I treated them like penny stocks and thought maybe I could double my money and pull it out. I was still saving my precious USD. In a savings account. With a bank.

If only I realized a year ago that the true value in these coins is that they are a legitimate hedge against the USD and other fiats. As the USD loses value slowly against precious metals, it is getting absolutely buried against cryptos. You don't need a chart to know what bitcoin did in 2017 against the USD. I personally didn't start converting my savings into cryptos until October 2017. And at that time I was only converting a small amount at a time. Even though my current crypto portfolio is a bit more robust than it was 3 short months ago, I do think I should have been hedging several months prior. Currently my savings, poker bankroll, and current cash flow are being converted incrementally into gold, silver, and 12-15 cryptos that I think will have some utility in the next couple of years.

Needless to say, the majority of that conversion is going into cryptos. My crypto research is ongoing. The information is being absorbed and processed as fast as possible, and hopefully it is happening fast enough. I am the type who needs information to make financial decisions. I need to know what I'm buying with my hard earned money. After all, I don't want to gamble my USD away. I simply want to exchange some of them for something that might be worth more in the future. I try to leave the emotional aspect out of it so that my decisions are sound. But like I said earlier, I'm late to the party.

I can't help but wonder what my portfolio would look like today if instead of watching Ron Paul and Peter Schiff on youtube, I happened to catch a few videos of Andreas Antonopoulos, Vitalik Buterin, or John McAfee. Maybe I would have bought those 3 bitcoins at $80 each back before I even had a smartphone or a computer. Maybe I would have started converting USD into cryptos instead of buying my rental property. Perhaps I wouldn't be incessantly checking my blockfolio app, even in the middle of the night. Maybe I wouldn't have wrote a $14,000 check last year to pay off the last of my student loans. Maybe this post would be a whole lot shorter. Thank you for reading. =o)

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Cryptocurrency and Blockchain will revolutionize our society and I love it!

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