MAMARONECK, NEW YORK – Greetings from Grandpa’s apartment…

It’s time for our Friday mailbag edition, where I answer the latest questions you’ve sent in.

This week, we talk about why I refuse to buy bitcoin again…

Why I don’t trade gold – and the gold investments we’re making instead…

And a reader weighs in our homeschooling, and the fear I shared on Monday that we may be raising soft kids.

All this and more below, so let’s get right to it…

Reader question: You had 3,300 bitcoin at one point? I hate to even mention that it’s worth $218 million USD at today’s record high. Is it possible that you are jaded that you sold it back then and that’s why you refuse to add even a small portion back into your portfolio? Regardless, you did very well with it, but I can’t understand your aversion to even adding a small 5% allocation at present.

Actually, I had 3,330 bitcoin, which I held in cold storage. Yes, I must be a little bitter and it’s one personal reason I refuse to own bitcoin.

I know myself. If I bought even a fraction of a bitcoin at today’s price of $60,000, I’d be extremely nervous. I’d want to check the price all the time and the moment it started falling, I’d sell it. (I bought my bitcoin at an average cost of about $6.50.)

In trading terminology, I’d be what is called a “weak hand.” When I’m investing or speculating – in any asset class, not just bitcoin – I never want to be a weak hand. I don’t think it’s possible to make money as a weak hand. You don’t have the fortitude to withstand the downdrafts, which you must if you want to be successful.

So I won’t be buying bitcoin. But I wouldn’t begrudge anyone for putting 5% of their portfolio or even 1% of their portfolio into bitcoin… especially if they have conviction in bitcoin. It sounds like quite a sensible strategy to me, actually.

Reader question: Do you have any thoughts on Interactive Brokers’ U.S. gold, which lets you trade U.S. spot gold in amounts as small as one ounce? U.S. gold transactions have low and transparent tiered commissions from 0.7 bps [basis points] to 1.5 bps of trade value with a minimum of $2.00, and are priced with tight spreads. In addition, you can request some or all of your U.S. gold positions in one-ounce increments for physical delivery in the United States.

Thanks for writing in! This is the first I’ve heard of this idea. Sounds like a great service for Interactive Brokers customers.

I won’t be using it myself for two reasons.

First, I don’t trade gold. I hoard it… in physical form. And requesting delivery from trading houses and exchanges like COMEX, Interactive Brokers or even exchange-traded funds (ETFs) doesn’t seem like an efficient way to accumulate physical gold.

It’s easier to just buy coins or bars. (Catch up here on my favorite gold coin dealers, and the best approach for buying physical gold.)

Secondly, I don’t like trading gold. As I’ve mentioned in my answer above, I’m prone to making impulsive and emotional investment decisions – even when I have great conviction in the idea. And so I only want offline gold that I can’t sell with some clicks of a mouse.

Reader comment: Thanks for all the hard work you put into writing Postcards From the Fringe. Although I own gold in many forms, I’m not a true believer in it as a good investment. I look upon it as a form of insurance.

That’s how I see it too. Physical gold is insurance. It’s insurance against a financial hurricane that I believe has a very high probability of coming ashore in the next ten years.

Here’s another way of saying this… I’m using physical gold more to preserve my wealth than to increase my wealth. (Although I do expect to increase my wealth when the hurricane hits because I have so much insurance.)

Our gold equities, on the other hand, are investments. In my Tom’s Portfolio advisory, we own a basket of gold royalty stocks and gold optionality plays. These give us leveraged upside to the gold price. They are our attempt to capture huge gains when the gold price rises.

Reader comment: I love the idea of being streamlined with just one suitcase each for you and your family members. My wife and I did this for about two years and with some ups and downs, and we survived. The challenge that my wife deals with being truly a hobo is the lack of a home base for her nesting instincts. I can handle that a bit better but see the advantages of a six month summer and six month winter location.

Kate has the nesting instinct too. I feel it, too, sometimes. And the idea of having a base or even two bases is very appealing.

But the fact is, nests are luxuries. And they’re expensive. I only realized this once we started traveling and we got rid of all those bills and we weren’t able to shop anymore. (I was a bit of a compulsive online shopper.)

Right now, I don’t feel any nesting instinct. In fact, I feel the burden of my mother’s house and possessions that I’ve just inherited. Here in America, living out of a suitcase and camping at Grandpa’s house, I can’t wait to return to hobo life again.

Reader comment: You aren’t “raising soft kids who aren’t being tested.” Your children are brilliant. They will grow up to be very interesting people who are very wise at a young age. They will do great things.

Thanks, but you never really know how people will turn out. Parenting is full of surprises!

One thing is for sure though… because our kids don’t have any pressure to study through tests, exams or securing places at prestigious schools, they seem to enjoy studying. They’re naturally curious and they like to learn.

To me, schoolwork felt like a big chore that I endured however I could. The school system and the pressure to study turned learning from “play” into “work.”

Reader comment: If and/or when you decide it’s time to sell your mom’s home and all the dear possessions so you can continue to travel light in life, I would do a family project of creating a photo log or book of all her things including the garden, the architecture and design of the home, her favorite chair and desk, and her China and glassware all set on the dining room table for a fine dining experience, and on. Our memories can fade over time, but this will be a way to keep them strong even if you let go of most of the physical objects.

Yes, I completely agree. Taking pictures of things and then writing a little description for each one will be an excellent way to memorialize each item and then allow me to part with them in peace.

And that’s all for this week! As always, please keep your questions and comments coming at [email protected], and I’ll address as many as I can in a future Friday mailbag edition.

– Tom Dyson

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