Gold vs. Bitcoin

Sean Brazney: When you think about the Bitcoin crowd and the gold crowd, these are… these are people that kind of want the same thing. I know that there’s some upside potential that everybody talks about, but when you think about something that people think is secure, that nobody can take from me, or it’s based on the blockchain, or whatever it might be is… it’s kind of another alternative to maybe, kind of off-balance sheet asset kind of an idea. Shouldn’t we be working together with that industry in some way, shape, or form?

Jeffrey Christian: I guess there is scope to work with that industry by virtue of the fact that what you really need to do to be honest with your customers is say, “Understand the differences between cryptocurrencies and precious metals.” Precious metals are tangible assets, they’re physical assets, they’re real, they have an actual geological limited supply, and they are nobody’s liability, and you can have total control of your assets. Cryptocurrencies are the exact opposite, totally intangible, anonymous creators or anonymous owners, people make a great deal about the security of the distributed ledger protocol, but that’s simply an accounting basis, right? You have a very nice interesting new technology for accounting those assets, but it has nothing to do with the security. You’ve seen this over and over again, even like where the FBI or the CIA or the NSA will go in and drain $250 or $500 million dollars of cryptocurrencies from people, that they say, are breaking the law. You have a distributed ledger protocol, which is basically an accounting system that says, “Oh yeah, that’s mine, it’s gone, but it was mine.” You have to understand that. Again, it’s the liquidity versus the asset basis.

Now, if the cryptocurrency industry were honest, it would work with its clients and say, “Yeah, you should have some gold and silver, because those are the tangible, secure assets, but you should also trade cryptocurrencies for the liquidity and the value.” If you look at the volatilities, as I said, if you look at the volatility of gold to the lesser in silver, the volatility of price changes day to day, month to month, year to year, are similar to those in the dollar and the euro, major internationally traded currencies. You look at cryptocurrencies volatilities and you say, “Where do I find volatilities like this in terms of returns?” The answer is a slot machine, right? So, If, cryptocurrency sellers were honest, they would say, “Yeah, you should have gold and silver, but this stuff is fun for a daily basis.”

We have a lot of clients, wealthy individuals, who will own gold and silver for decades. They’ll trade cryptocurrencies, but they never go home long or short the cryptos. It’s a day trade for them. It’s like playing a slot machine and then you take your winning and then you go home. Or you don’t take your winning, you mark your losses. You hope to make them up the next day.

Sean Brazney: I always keep it simple. If you’ve got $100,000 in Bitcoin, you can always go out and get yourself $20,000, $30,000 of gold and have part of your net worth and a real tangible asset just like you do your net worth. Like what we talk about almost every month.

Jeffrey Christian: Make two points. One is I’m a very moralistic person. I know a lot of people who have made millions of dollars in cryptos and say, “Yeah, but what have you done with it?” Is it really, how do you feel about the fact that basically what you did is you took money from somebody else in a gamble? I used to play poker a lot when I was in university, but the biggest risk I took was playing against professors. Then you had to worry that you’d have his course sometime. That’s really one of the things. The other thing is, like in September 2008, when Lehman went bust, I was in Vancouver and my wife called and she was very concerned and stuff. I came home and we were talking and I said, “We’re good for 30 years. If the world goes to hell in a handbasket, we lose our jobs, we have enough liquid assets for 30 years of our lifestyle.” I said, “That’s good.” She goes, “How can this be?” I said, “I’m in gold. I’m in the gold and silver industry.” If you look at it, the best days of our lives financially were 1979, 1981, 2005 to 2011. We do well like an arms dealer. We do well when the world is full of anxiety and risk.