DRIGGS, IDAHO – It’s time for another mailbag edition, where I answer your most pressing questions for the week.
Below, we talk about bitcoin’s role as money… where I stand on oil tanker stocks, which l recommended earlier this year… tips for first-time gold buyers… and finally, political dissent in Turkey, after I wrote that you can live like a king there with your dollars…
Reader comment: Tom, I have read your articles so far about bitcoin. I’m curious to know your thoughts, since bitcoin has no future as a viable option as money and the dollar system is also predicted to fail very soon, according to a few experts. What do you think the replacement currency will be?
That’s the $100 trillion question. Personally, I don’t expect the dollar system to fail or collapse. I just think it’ll need to be re-capitalized or, at least, reorganized.
I expect gold will play a role, although I doubt we’ll go back to a formal gold standard. More like an informal gold standard, especially if China’s ascendency continues…
Reader comment: I love your work, but I completely disagree with the view that bitcoin hasn’t material value 🙂 See if you agree with my vision…
Gold per se also hasn’t material value; what gives gold its value is its unique properties… it’s durable, physical, rare, off the grid, etc. On that same note, bitcoin also has unique properties… super rare, easily transportable, more accessible to most, etc.
I would add that some other cryptos also have material value, some, only some, protocols… They are like real estate.
Gold has value to producers, like dentists, electrical engineers, jewelers. I’m sure I’ll be able to sell my gold, even if no one wanted gold as a store of value. It would still have value as a material – probably a lot less than its value as a money commodity, but still…
Reader comment: I agree with your musings about gold but believe there are flaws in your thesis on bitcoin. Your “island economy,” using nails as currency, doesn’t factor in the ease of adding supply to the market. What makes good money, among other things, is scarcity.
Your nails are more akin to Federal Reserve Notes than true money. Bitcoin’s finite supply is one of its strongest attributes. Your sense of Bitcoin Mania may prove to be correct, but I believe you have not given it the respect it deserves as money. Thank you for sharing your insights. Best wishes!
What makes good money is that it’s discovered by a free market reacting to price signals. The nail maker will only produce nails so long as the market signals that he should do so, via the price of nails.
Bitcoin is not money. It’s just an elegant score-keeping system that doesn’t require an overlord to administer it. But I don’t have a problem with overlords issuing currencies, as long as they’re competing in the free market. And I’m free to choose whether or not I can trust them.
Reader comment: I accept your point about bitcoin just being a collection of electrons, but isn’t that the way that cash is going as well? Most countries and governments are actively working to remove paper cash and metal coins from their economies and just recording people’s capital on an electronic register.
It will be very easy for governments to take what they want from depositors’ savings as they continue to introduce negative interest rates. As such, how is fiat money any better than bitcoin? Bitcoin only has a finite limit, whereas Reserve Banks are proving time and again how they can just print more cash out of thin air.
Do not read my skepticism towards bitcoin as support of government-issued fiat currency. I wouldn’t use either to store value.
Personally, I like hard assets, especially gold and silver. But some would say I’m old fashioned that way…
Reader comment: Love reading about your family’s adventures! All of you will forever treasure those times. My husband and I did that years ago. Now that he is very ill, we talk about places and people. Still in touch with a lot of those folks.
Because of his illness, I now have the role to keep track of our investments, etc. How do I go about buying gold and silver? How much? Would appreciate all of your thoughts. Thank you. Continue to enjoy your fantastic life.
Buying gold and silver is easy. The trick is making sure you buy from a trustworthy source. Start with Apmex.com, the world’s largest gold coin dealer.
Or if you’re buying through the stock market, there are half a dozen gold and silver ETFs to choose from. (I would avoid GLD because it has high fees.)
Reader comment: I’ve been reading (and greatly enjoying) your Postcards since before your trip through China, but am writing for the first time. While I don’t object to anything you have written about your experience of Turkey, the other side of the picture is an almost dictatorial leader.
Try and criticize the government, particularly as an independent journalist, and you’re likely to end up in prison for a very long time (or worse). Many people have lost their jobs just on the suspicion that they may have sympathized with the views of a critic of Erdogan who lives in the U.S.
The current Turkish economic woes are due, in part, to the president’s interference in the economy. Now, where does that remind me of? Please keep up the good work. Hope the ski lessons go well and that you love your time in Driggs.
I personally love freedom and hate being forced on what to do. So I’m not advocating for Turkish-style – or even Chinese-style – government. I’m just pointing out that Turkey is a very cheap, very pleasant place for expats to live…
Reader question: Regarding the oil tanker companies you recommended a few months ago, we’re down quite a bit. They’ve triggered my normal stop-loss levels; however, I haven’t sold yet. I remember you saying you were “going down with the ship”… metaphorically speaking. Is that still your position? Please let me know your thoughts.
Nothing’s changed for me. I own tankers, too, and I’m down over 50% in them. But as I said, I’m prepared to go down with the ship, and I won’t sell.
I know what they’re worth and I’m sure the market is not pricing them properly. (There’s a liquid market for secondhand ships. The stock market is pricing these tanker stocks at a 50%-75% discount to what they’re worth in the real world.)
One of these days, I expect their stock market values to reflate. And when it happens, it’ll happen fast…
– Tom Dyson
P.S. Starting next week, I’m trying something different. I’m moving to a reduced publishing schedule for these Postcards. Instead of sending them out every weekday, I’ll send them out on Mondays, Wednesdays, and Fridays. This is just a temporary thing… an experiment… to see how I feel not having a deadline every day.
Of course, I’ll continue to receive your feedback and respond to it, so please keep your questions and comments coming at [email protected]! As always, I’ll answer as many of your e-mails as I can in upcoming Postcards.