In May 2002, I went all-in the Precious Metal sector because I thought the dollar was “overvalued” relative to other fiat currencies. At the time, the dollar index was 110 – enroute to a low of 80 in 2011; and gold, $440 – enroute to its ultimate high of $1,920 in 2011.
https://www.macrotrends.net/1329/us-dollar-index-historical-chart
https://www.macrotrends.net/1333/historical-gold-prices-100-year-chart
Fortunately, and unfortunately, I owned mining stocks at the time, not bullion. From 2002 to 2007, their meteoric rise was as fun as cryptocurrency in 2016-17 – but from 2008 on, it was decidedly not. If not for the fact I bought my house in 2007 – and thus, sold some stock to pay for it – I would likely have lost all of my gains.
http://www.mining.com/web/1200-days-of-pain-and-counting-on-the-tsx-venture/
From 2011-17, I only owned bullion – and similarly, came out barely ahead when I finally sold it for Bitcoin. In other words, a 15-year round trip of modest profits, and horrific pain. Only some extreme portfolio decisions, and luck (as noted above), kept me in the black – and unquestionably, I would never have touched Precious Metals if I had a chance to relive the experience.
As for Bitcoin, it started with a very small, but painful experience with Mt Gox – and morphed into the best investment of my life, in early 2016. Like Precious Metals, it dramatically changed my life – and like Precious Metals, started with a bubble, and ended with a bust. However, the lessons I’ve learned with alternative investments have served me well; first, in selling my miners in 2011, when it was clear they weren’t responding to rising gold prices; second, selling my Bitcoin when the “Hoffman Line” was broken; and finally, identifying what I believe will be one of the top altcoins of the future, the soon-to-be-exchange-listed BRhodium.
What’s the common theme here? The battle of sound money against fiat currency, given my strong belief that the latter will ultimately die, as it has consistently done throughout history. The problem being, that fiat currency dies much harder than it should, given how entrenched it is to the global political, economic, and social status quo. Consequently, it’s been extremely painful to fight – through mining stocks, bullion, and Bitcoin.
Specifically, the U.S. dollar, my home currency, has proven insurmountable in these 17 years – putting up every imaginable hurdle to protect itself against “competitors” like PMs and cryptocurrency. Sure, other fiat currencies have crashed during this time – but if anything, the dollar has grown stronger, particularly during “safe haven” times like today; i.e., when “risk on” asset classes are declining, like stocks and real estate…a broad group that sadly, also includes Precious Metals and cryptocurrency – which have decidedly not acted as safe havens.
In PMs’ case, they have become obsolete in the Digital Age – and destroyed by Wall Street paper dilution. As for Bitcoin, it is equally opposed by a powerful status quo – whilst experiencing technological growing pains, particularly from hostile forces from within (BCash, SV, etc). For PMs, there is no turning back – as they are no longer needed in the modern monetary world. However, cryptocurrency is unquestionably here to stay – in my view, the most amazing invention in monetary history. This, at a time when the world desperately needs it - but is not yet “ready” to accept such radical change.
Which is exactly what I mean, about how timing is everything in investments – particularly, revolutionary ones that threaten the status quo. I.e., the MANY pitfalls that will stand in your way – some of which, could NEVER have been comprehended - like the SV fork prompting a violent, sector-wide crash…or weakening capital markets, heightened government regulation, or a variety of events with the common theme of supporting the status quo.
What I’m trying to say is that, despite everything I predicted about fiat currency having come true over the 17 years since I stated betting on “sound money,” the fact remains that the dollar is stronger than ever – so much so, I’m holding more now than at any time in my three-decade investing career. Ultimately, I plan to deploy them back into Bitcoin – perhaps, via BRhodium’s “Crypto Trinity” philosophy (though I’d NEVER buy Litecoin). However, the fact remains that, when investing in sound money asset classes, one must be VERY nimble – as while fighting the Venezuelan Bolivar has been quite easy, fighting the dollar has been the most difficult battle of my life…which is why, right now, I’m not fighting it at all.