Today, I want to draw your attention to two investments that could be about to go ballistic.
They’re two very different assets.
One’s ancient, the other cutting edge.
But both are set to benefit from the strange economic situation we find ourselves in.
Before I get to that though, I first wanted to draw your attention to some news that flashed across my Bloomberg screen recently…
Source: Port Phillip Publishing
You might recall I talked last week about Deutsche Bank and how the flailing German giant was a red alert for bank investors everywhere.
Well, it now looks like they’re going to have to spend $5.7 billion to overhaul just one business unit.
For a company worth just $15 billion, that’s a hefty bill.
Is Deutsche Bank a canary in the coalmine for banks everywhere? It could well be…
What’s clear, is that there are a number of deep tremors taking place in the financial system.
And the two assets I’m going to talk about today, might be your only escape…
They’re not making any more of it
‘Land — they’re not making any more of it.’
So said the sign on the real estate agent’s wall when I bought my first property. It probably hangs on every real estate agent’s wall!
A not so subtle reminder to prospective buyers about the laws of supply and demand.
The funny thing is, living in Australia, if there’s one thing we’re not short of it’s land.
Perhaps the sign should instead read:
‘Property with access to adequate water supplies, good education and child care facilities, a modern hospital, great infrastructure, fast internet and employment opportunities — they’re not making any more of it!’
Not as catchy I suppose…
But right now, there are two investments that actually are in short supply. Just when huge demand could be a-coming.
Both are making moves that investors are starting to notice.
And if these continue, we could soon see a mad scramble to jump aboard either (or both).
Let me explain more…
Bitcoin for old fellas
You’re probably hearing a lot of chatter right now about gold.
It just hit a five-year high in USD terms. And it’s been at a high in Aussie dollar terms for longer.
Well, headlines like this in the Sydney Morning Herald probably have something to do with it: ‘Rogue President: Trump looks like he is ready to start off a currency war.’
The article quotes President Trump as saying:
‘“Mario Draghi just announced more stimulus could come, which immediately dropped the Euro against the Dollar, making it unfairly easier for them to compete against the USA. They have been getting away with this for years, along with China and others,” he tweeted.’
The theory for gold goes that any currency war will reduce confidence in our fiat system of money.
And traditionally in such times, the world has turned to gold as a secure store of value.
The oldies especially love it!
Blogger Howard Lindzon wrote this hilarious piece a few weeks back:
‘I have a lot of friends that are 65 years and older.
‘Don’t judge me…I did not realize it until about 7 pm PST last night.
‘After dinner, my phone started lighting up with texts that Gold was up $34 an ounce.
‘Gold is around $1,350/ounce so we are talking about a 2 percent move.
‘I am happy for my old friends. It’s a big few years for them with Fat Nixon, Joe Biden, the advances in adult diapers and legalized weed for the cataracts.’
Of course, he was gently ribbing his older ‘gold bug’ friends about their excitement over the recent gold price rises.
But if the generalisation about old men and gold is true, the reverse is probably true for the new gold…bitcoin.
Bitcoin — they’re not making any more of it
Bitcoin is gold for the younger generation.
And like gold, the bitcoin [BTC] narrative is benefitting from all this talk of currency wars.
Both gold and bitcoin are perceived — in their respective camps — as scarce, independent stores of value outside the snares of the ‘corrupt’ financial system.
There’s that word again — scarce.
And that’s the reason both could rocket up fast.
With bitcoin, it’s simple maths. The 21 million BTC limit is hard coded into the system.
There will only ever be 21 million bitcoins.
Forget what you think you know about bitcoin; this one feature could be enough to start a monumental price run on bitcoin if more people in the world start to perceive bitcoin as a safe haven asset.
For the very same reason, gold could go on a huge price run too. We already know a large part of the world think gold is a safe haven asset.
So, if the world starts printing out dollars, euros and yen willy-nilly, then it’s natural that demand for gold should increase.
But the unknown about gold is the supply.
My colleague Greg Canavan has been doing some very interesting research on that exact subject.
And he’s found an investment angle that I’d never considered before.
If you’re looking for the chance of some huge gains from gold, you need to read his special report coming out soon. Look out for that in your mailbox.
I’ll probably stick to bitcoin myself, but the lesson remains true for any asset:
If you can buy things that are scarce in supply before demand is about to rise fast, then you could make some astonishing gains, very, very fast.
Be that gold, land, bitcoin or any other asset…
Editor, Money Morning
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