DRIGGS, IDAHO – Greetings from our hideout by the continental divide…
My family and I are so tired from two-and-a-half years on the road, we’ve hardly left our new house since we moved in 10 days ago.
We’ve just holed up together, playing board games, watching TV, doing a jigsaw puzzle, and doing homework.
We love the Airbnb we’ve rented. We’ve got TVs, big, soft beds, a fully-stocked kitchen with a refrigerator… and two clean bathrooms…
It’s been so nice.
Now, we’re just waiting for the snow to arrive so we can start learning how to ski…
Not much more to report, so I’ll sign off for the night. But make sure you read today’s mailbag below…
I answered your questions about how Kate and I pay for things on the road, even though we have our savings in gold… and what separates the U.S. dollar from bitcoin as money – despite the fact that, as I wrote yesterday, they both have no intrinsic value…
– Tom Dyson
P.S. Driggs, the town we’ve chosen to settle down in for the next six months, is a tiny “one traffic light” town on Idaho Highway 33.
This is the sign that greets you as you enter Driggs from the north on Highway 33…
Road to Driggs on Idaho Highway 33
P.P.S. If you’re a paid-up Tom’s Portfolio subscriber, make sure you read the gold portfolio update I sent out today. We’re already up as much as 74%, 131%, and 145% on some of our gold stocks. And in my update, I outlined two moves that will make our model portfolio even more profitable…
If you’re not paid-up yet but would like to learn more about a Tom’s Portfolio subscription, just go right here.
Today, Tom explains how he pays for daily expenses… the difference between gold and bitcoin… and why paper money and bitcoin are worthless…
Reader question: You save your money in gold. How are you able to live and travel as you do without currency? The grocery store or gas station will not take gold…
Tom’s response: Gold is where we keep our savings. We don’t intend to touch our savings for many years into the future… or unless there’s some emergency. In the meantime, we keep a checking account at a bank to pay for our daily expenses.
Reader question: I’m a great fan of yours and admire your courage to break free and go your own way. You say that bitcoin is just a bunch of electrons and has no use on its own. Could the same not be said of gold? It has few industrial uses, and use as jewelry is just convention, no?
Tom’s response: Gold has some unique qualities that make it very useful material for electrical engineers, dentists, jewelers, architects, etc. It’s also got a 3,000-plus year track record of service to the marketplace.
Bitcoin is a 100% useless material that has no primary utility in the marketplace. And don’t tell me it’s useful as an anonymous transfer mechanism. Gold can do the same thing.
All you need is for some private gold warehouse to issue a cryptocurrency backed by the gold in its vault and now you have an international transfer network that works just as well as bitcoin. Actually, it would be better than bitcoin, because its network wouldn’t consume 1% of the world’s daily energy bill. The warehouse would maintain the network privately.
Reader comment: Tom says, “Bitcoin is not a valuable material,” but I say that printed paper is not a valuable material either.
Tom’s response: Precisely. Paper is a terrible idea for money because it’s bulky and perishable. Printed paper should only exist in the marketplace in the form of tradeable receipts, i.e., when it’s 100% backed by gold or silver, or some asset that’s being stored in a warehouse.
The paper bills we currently use as money are Federal Reserve Notes. They used to be receipts for gold and silver, but that’s no longer the case.
The paper money system has lasted longer than I would have expected because it’s been very useful for inflating the money supply, generating profits in corporate America and on Wall Street, and expanding the size of the federal government.
Unfortunately, as I wrote in an update for Tom’s Portfolio subscribers on Monday (read it here if you subscribe to Tom’s Portfolio), I think we’re at the end of this Great Experiment…
Reader comment: I agree that bitcoin is not real money. In addition to the reason you stated, another flaw is that, while there is a limit to the number of bitcoins that are created, there is no limit to the number of electronic currencies that can be created. There are already dozens, with many more to come.
Real money, like gold, is always useful in its own right, divisible into convenient amounts, and in limited supply. Electronic currencies just don’t qualify.
Tom’s response: Totally agree. Electrons are in infinite supply. And some of the new cryptocurrencies they’ve come out with are probably superior to bitcoin. Making a big bet on bitcoin is like making a big bet on MySpace in 2004.
Reader comment: With all due respect, our paper dollars are not a useful material either. Anything can be used as money as long as a society places its faith in it. As more and more companies accept bitcoin, (or other cryptocurrencies), as an accepted medium of exchange, a society will adopt the “currency” that holds the most purchasing power over time. And the hardest of all assets is bitcoin.
Tom’s response: Agree that paper dollars are a terrible idea for money. It’s just that paper bills suit Washington and Wall Street well for inflation purposes, and they’ve kind of railroaded the marketplace into accepting them even though they have no intrinsic value. Don’t worry. This experiment is coming to an end soon.
“Faith” has no role in the marketplace. It’s utility that matters. Utility engenders trust. Trust engenders acceptance. Bitcoin has no special utility. So how can one confidently accept it in trade? You can’t… unless you make a leap of faith.
Reader comment: Money is only valuable when people BELIEVE that they can exchange it in their community for something that they value. Bitcoin does have an existential fault. The network is maintained by “miners” who are rewarded with new bitcoin for each block “mined.” However, the reward regularly halves every few months, and is now so small that it does not pay for the electricity consumed in “mining” The only other way for “miners” to get paid is from transaction fees, but that requires a steady flow of transaction fees, which is not happening. Without a huge community of “miners” maintaining the bitcoin network, bitcoin will collapse.
Meanwhile, other readers wish the Dyson family well in Driggs, Idaho…
Reader comment: Good luck living your winter in Driggs. Hope you enjoy the skiing. Living in Florida, it sure will be a change for you that, at the moment, I doubt you can even imagine. Especially if you get as much snow as they say they usually get.
Your driving will be a new experience also, and you need to be very careful while learning to drive in snow, if you aren’t used to it. Having lived in Canada all my life of 80 years, I have pretty much seen more than I needed to see. Anyways enjoy and be safe and healthy. While I am here, I will wish you and your family a very Merry Christmas . I know it’s a little early, but just in case I forget near Christmas. Bye for now.
Reader comment: Love the Postcards. Be sure and give cross country skiing a try if you get the opportunity this winter.
Tom’s note: As always, thank you for your kind messages! We love to hear from you, so please keep writing us at [email protected].