“Invest in inflation. It is the only thing going up.”
– Will Rogers
October 25, 2024 – To paraphrase Shania Twain: Early voting polls are open … that don’t impress us much.
Yada. Yada. We know that the race will be close. And if it comes down to the electoral votes from Georgia, it will not be decided on election night but five days later. Maricopa County, Arizona, reports that it may take up to two weeks to tabulate the final result.
Today’s soaring stock market may succumb to fear and uncertainty not just next week but also into the certification of the election results in January.
So we have to chuckle a bit at investors giving into FOMO (fear of missing out). Today’s investors are buying dangerously close to the top ahead of a potentially contentious election.
While it may not break out into a second Civil War, another contested election that sews doubt and legitimacy will spawn several potential Grey Swan events in the years ahead.
Worst case? We see a constitutional crisis. The last time we had one, markets tanked 50%, and inflation soared. Ugly stuff. You can see our research on the subject here : The Grey Swan Election Nightmare Scenario.
If we’re radically honest (unlike the knuckleheads pining for your votes on t.v.): No matter who wins, the U.S. dollar will lose.
The BRICS nations made it clear at their summit this week, they’re well aware. And why, as we forecasted, they worked this week to cement closer ties with a symbolic “BRICS Buck.”
No matter who occupies the White House come next January, they both have promised big spending. Analysis of both Harris and Trump policy proposals would rack up even more trillions in annual deficits on top of our $35.8 trillion debt today.
Can the government spend its way out of a political crisis?
Our humble answer is “no.”
The interest on the U.S. debt is already over $1 trillion for the first time this year. With a larger amount of debt going to service… debt… the fewer services the government can provide, regardless of the fatuous promises made on the campaign trail.
The House Budget Committee’s 2024 Budget report, published on May 16, reveals interest on the debt has surpassed military spending for the first time in the nation’s history.
In the 1960s, the last episode of runaway debt, social spending at home and costly wars abroad (i.e. the Great Society and the Vietnam War) foreign governments lost faith in the U.S. government’s ability to pay its bills and demanded physical gold in return.
The political result was a dismantling of the Bretton Woods exchange rate system… the dollar losing its last tie to gold in 1971… and runaway inflation.
What will make this time any different, we ask into the dank political void?
Below our intrepid portfolio strategist Andrew Packer looks more closely at what you can do to protect yourself from the maddening crowd. Enjoy. –Addison
Buy Bitcoin Before, During, and After Election Day
Andrew Packer, Grey Swan Investment Fraternity
We’re just one Scaramucci away from Election Day 2024.
As a refresher, a Scaramucci is 11 days. Longer than a week, shorter than a fortnight.
It’s a term that jokingly came up during President Trump’s (first?) term. SkyBridge Capital founder Anthony Scaramucci joined the White House staff, but only lasted for 11 days. Amazingly, he only tied the record for shortest tenure on staff.
While Scaramucci was a poor fit for the Trump team, his investment record is far better.
A huge part of that success has come from investing in bitcoin early.
Today, Scaramucci reports that 55% of his wealth is in bitcoin. Don’t worry; you don’t need to go that far to see great returns. Simply look at making a small move today.
Scaramucci noted that if, in 2010, you had allocated just 1% of your wealth to bitcoin and kept the other 99% in cash, you would have outperformed every other asset class. Or every top stock of the past 15 years.
A report from Bitwise noted that between 2014 and 2020, a 60-40 portfolio split between stocks and bonds would have returned 26%. If investors reduced each of those positions by half a percentage and put just 1% into bitcoin, the return would have jumped to 34%, 31% higher.
From just 1%!
A 5% allocation over the same period would have resulted in 65% returns, a full 150% better.
That’s the power of asset allocation. You don’t need much in volatile assets like bitcoin. But if you don’t have any exposure, you’re missing out on a tremendous opportunity.
Why Bitcoin Will Continue to Beat Fiat
Remember, bitcoin is a piece of code. It doesn’t have a monetary policy. Or a marketing team. A few people volunteer to work on projects related to it.
But it’s largely a self-sustaining project, driven by people who want to run the bitcoin code on their own, creating a node in the network in the process.
Bitcoin uses a proof-of-work model. One way of looking at that is that it takes real-world computational power and electricity to run.
That helps derive bitcoin’s value. It also helps electric utilities manage their baseload power needs, and allows energy companies to use what would have been “stranded” energy.
Comparatively, what’s the U.S. dollar? Or the future BRICS bucks? Those are fiat currencies. They can be created at a whim. In the digital age, there’s zero cost to creating them. At least printing physical money required ink and paper.
Their purchasing power is subject to change based on political needs, not economic ones. That’s why fiat currencies have a long-term downward trend. And why their purchasing power will continue to decline.
And those who run those fiat currencies like to change the rules all the time. Just ask Russia, who’s been pushing for a BRICS Buck in part because it was kicked out of the SWIFT payments system.
When you save in fiat currency, you’re losing money to inflation. Sometimes quickly, sometimes not. When you save in bitcoin, you have wild price swings. But over time, the swings higher more than make up for the short-term volatility.
Bitcoin is a lesson in transferring wealth from the impatient to the patient.
Your Key Move Before Election Day
There’s no excuse not to own any bitcoin. There are 11 ETFs that buy it for you, so you can hold it in a retirement account.
You can also go to Coinbase to get started.
You can also set up an account using a bitcoin-only exchange. I use Swan Bitcoin. I have also met some of the team at River, another highly-regarded bitcoin-only exchange. Both allow you to set up recurring buys and self-custody if you so choose.
But if you still own none, your allocation is zero.
You need to get off of zero. 1-5% is a good start.
Even if it’s just 1%, the returns could be huge. Future price estimates for bitcoin within the next 10 years range from around $500,000 to $1,000,000.
While the percentage returns are lower than in bitcoin’s early years, the ease of investing today means you can still benefit. And from current prices, a 10X or 20X return on an asset will still beat whatever future inflation comes down the pike.
The upcoming election offers investors little choice in terms of monetary policy. Both Kamala Harris and Donald Trump are big spenders. It’s only a question of where that spending is going.
We stand a very real chance of seeing a repeat of the 1970s’ “double dip” inflation.
And as with the 1970s, the second wave higher could be far worse than the first. If that happens, owning gold and other tangible commodities, should protect your wealth. But bitcoin could grow that wealth in real terms.
Since fiat currencies can be printed to infinity, investors need to own real assets as an escape valve. Bitcoin is one of them. It doesn’t need to be a huge part of your portfolio. But those who have been investing in it for a while, from Anthony Scaramucci to Michael Saylor over at MicroStrategy (MSTR) continue to up their stake.
For now, just to get ahead of any uncertainty in 2025 that could see massive money printing or resurgent inflation, grab some bitcoin. And keep dollar-cost averaging to build your stack. ~~ Andrew Packer, Grey Swan Investment Fraternity
So it goes,
Addison Wiggin,
Grey Swan
P.S. The government is supposed to be “of the people for the people,” right? Didn’t we learn that in some forgotten civics class somewhere?
From the outset. The Constitution was designed to preserve liberty.
Today’s elite think it’s their job to tell us what to do. What to think. It’s not.
There’s no writing in the document that gives the government the right to tell citizens how to behave or what ideas to have. It doesn’t give Congress or the President the right to tell anyone what to do… unless they infringe on the rights of fellow citizens.
The political class and its supplicants in the media have completely abandoned that section of the civics program.
As a consequence, this election has devolved into a series of tantrums about “character” and who is better fit to tell you what to think and do. It’s hard to watch.
Liz Wolfe who writes the Reason Roundup took a look this morning at just how patronizing, arrogant and absurd this election has gotten.
She notes:
There are a bunch of narratives that have emerged from this election cycle… but one under-discussed narrative is the degree to which the younger generation (and apparently Tucker Carlson, too!) grafts familial roles and relationships onto politicians and their supporters. It started as just a silly little meme—Gen Z calls people mother as a sort of term of approval, in the same way that they’ve recast brat’s meaning—but it says something about the level at which we’re operating: We wrongly understand politics as deeply personal (which raises the temperature); interpret authority as something to be assented or submitted to, not checked; think in terms of oversimplified memes, not foundational principles.
Specifically, Ms. Wolfe is responding to a bizarre speech given by Tucker Carlson where he likens Americans to teenage girls in need of strict discipline.
You’ll notice there has been zero effort in the mainstream media to report on the BRICS buck – and the payment system behind it.
The geopolitics behind half the world aligning against the West is easily a more important issue in the election than Tucker’s odd sexual proclivities.
Buy bitcoin – start with 1-5%.
Buy gold – 5% or more.
Then you’ll be protected while Washington burns itself to the ground. As always, please send your thoughts to: addison@greyswanfraternity.com
