I am one of the few high-profile commentators in the financial community who has consistently, over a long period of time, revealed his portfolio composition. As well, WHEN major changes are made, and WHY.
To that end, it is well-known that I started aggressively accumulating Bitcoin in January 2016, whilst still Marketing Director of a major bullion dealer – and that until I left the Precious Metals business in summer 2017 to start CGC, I believed both could peacefully co-exist in the store-of-value universe. And FYI, my departure was decidedly involuntarily - as I was let go for writing too often, and bullishly, about Bitcoin.
Also, that I sold ALL my silver for BTC in July 2017 – the second Bitcoin SegWit locked in; and my gold in January 2018, when it became apparent to me that Bitcoin would inevitably usurp gold’s multi-millennial, but rapidly weakening role as the world’s “sound money leader.”
Rewinding a bit, it was also well-publicized when, after nine years of holding mining stocks, and five years working as an investor relations officer or consultant to dozens of small mining companies, I in summer 2011 sold my mining stocks in favor of far more stable, and liquid, bullion.
And BTW, the TSX-Venture exchange (i.e., the Vancouver Exchange), the best proxy of junior mining stocks, was 2000 when I sold it in summer 2011 (down from an ATH of 3,500 in 2007), compared to the TODAY’s all-time low of 388. This, despite gold falling from just $1,825 then, to $1,620 today.
https://www.google.com/search?q=tsx+venture+historical+chart&ie=&oe=
Back then, an increasing decoupling between mining stocks and bullion (rightfully) kept me up at nights…and fear of the extreme illiquidity they could have in bear markets. Which is exactly what I have learned to fear in altcoins – which, like the majority of mining stocks then, had weak long-term fundamentals.
Today, we continue to struggle to escape the Bitcoin bear market that commenced in late 2017 (and altcoins, in early 2018), though there have been several false alarms along the way. Actually, I think it would have been safe to say the new bull market had begun last month, with Bitcoin again recapturing $10,000 just three months ahead of the halving. However, due to the sixth sigma Coronavirus event, it is again being forced to regain its footing, having fallen to nearly the old bear market lows.
In other words, the type of event that causes one to seriously consider “rebalancing” one’s portfolio, particularly when a real-life liquidity crisis highlights just how dangerous illiquid assets can be.
When I first entered Bitcoin in early 2016 (excluding the ONE BTC I lost at Mt Gox in 2014), it was all I owned in the crypto space. I made it very clear to followers that Bitcoin’s superior fundamentals, and liquidity, were the reason I held such a portfolio – not to mention, there weren’t many altcoins in existence at the time.
To that end, I believed then, as now, that as the Digital Age unfolds, there will be many altcoin winners. However, that like the dotcom era, there would be MANY more losers.
Personal risk management measures caused me to sell my BTC, extremely publicly, when the Hoffman Line (a $100 billion market cap) was broken in late 2018 – after which, I spent a year focusing my investments, and marketing efforts, on BRhodium and MWC.
These were the most torturous 16 months of my career – as trying to build altcoin communities; let alone, during (for the most part) crypto bear market conditions; is extremely trying, to say the least – in large part, as the illiquidity these vehicles can have (and usually do) is as terrifying as the uphill climbs they face fundamentally.
Fortunately, I not only escaped, but in better position than ever before – having fully restored my BTC position, and then some. And thus, like my illiquid mining stock positions in 2011, was again able to rise “up the liquidity totem pole” (then, to bullion; today, to Bitcoin). Which, given my age and experience, is where I intend to stay, come hell or high water, for years to come.
To that end, I wanted to bring up some points about the comparative liquidity of Bitcoin and Precious Metals – which even those who still believe in the latter refuse to acknowledge. Which I bring up today, given relentless propaganda from the PM community that it is “soaring”; quite comical, in light of last night’s latest silver slam down…which continues to highlight how, as I said three years ago, it (and platinum) have lost ALL their monetary properties.
https://twitter.com/Andy_Hoffman_CG/status/1244481594020081664
The problems with Precious Metals as “stores of value” are many fold – though most of these issues were not apparent, including to me, until Bitcoin was invented. I mean, I spent years speaking of how PMs are more fungible, portable, divisible, and “outside the system” than fiat currency – when in fact, they have NONE of these properties.
Let along, liquidity – as unless you can show up at the door of one of the nation’s big wholesalers (Miles Franklin’s was in Fargo, North Dakota), you will be destroyed by huge spreads trying to sell to anyone…particularly the neighborhood coin shop.
Today, physical bullion premiums are soaring due to what is propagandized as “Armageddon fear” by the PM community. However, at closer glance, it is only premium products like gold and silver Eagles experiencing such pricing (and LOL, “junk silver” – the most useless bullion product of all); with lesser products, particularly in silver, trading at no more than spot market prices.
Of course, those pushing this narrative (including, ironically, Zero Hedge, which in times past attacked gold as viciously as it attacks Bitcoin now) fail to note the fact that due to Coronavirus, most mints are CLOSED – which is why products like Eagles and Maples are on back order, and prices driven so high.
To that end, bullion dealers are starving for revenue – and likely, many coin shops experiencing severe liquidity crises…which in turn, drive spreads up, even if you’re lucky enough to have the in-demand products (which those that do, will undoubtedly hold anticipating the “end of the world”; which, when it doesn’t happen, will cause such premiums to instantly vanish, as in 2008).
That said, even in “good times,” selling Precious Metals for good prices is nearly impossible. For one, coin shops ALWAYS charge massive spreads – for good reason, as they do not have the liquidity to pay good prices, or the authentication equipment to guarantee what you are selling is not fake. Ultimately, THEY pay the exorbitant shipping costs to send your coins to North Dakota for authentication – which every time, they will (rightfully) pass on to you.
And by the way, you CANNOT send Precious Metals via UPS, FedEx, or even the U.S. Post Office – so unless you LIE to them about what you’re sending; or pay the MASSIVE shipping costs charged by armored car services like Brink’s; you have no way to get the coins to places like Fargo. Unless, of course, you want to drive them there, at great personal risk – where, even if you do, they may not accept your coins because you are not an official representative of the bullion dealers they have relationships with.
So, particularly at a time like NOW – when the world is amidst a liquidity crisis, and the bullion industry starving for capital – the illiquidity of Precious Metals becomes more apparent…PARTICULARLY if you have them at home, and realize how HEAVY, and DIFFICULT, they are to transport.
As for Bitcoin, detractors can propagandize all they want, but the fact is that not only is BTC EXTREMELY liquid, but more divisible, fungible, portable, and safe to store than ANY asset, including cash.
Not to mention, more private – as despite even my own brainwashing about technology like MimbleWimble (which is amazing), Bitcoin is plenty private as is, and will shortly be adding technologies (like Taproot/Schnorr) that will make it infinitely more so. To that end, just as Bitcoin doesn’t NEED to scale like Visa to be valuable, it doesn’t NEED to be private like Monero, either.
To me, Bitcoin is the best financial asset ever created – far better then Precious Metals, fiat currency, or anything ever used as money, natural or man-made. It is only a matter of time before this is recognized by the GLOBAL financial community – and until then, I will relentlessly HODL my Bitcoin, with my ONLY other asset being some cash to address the reality of a still fiat-dominated world.
Whatever happened to that shit Bitcoin Rhodium you were pumping forever and a day Andy?
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