“Which Lost More — Federal Reserve Notes or Tokens of FTX?“
That was the headline given to a recent New York Sun piece about the scandalous, multi-billion-dollar bankruptcy of the FTX cryptocurrency platform.
It asks which would have been a better investment: Sam Bankman-Fried’s FTX tokens or the United States dollar issued by the Federal Reserve?
The writers answer their own question: “Both have lost nearly all their value, shedding 98% of their worth in terms of the classical monetary metal, gold.”
The Sun is not the only publisher to notice the uncomfortably eerie similarity between made-up cryptocurrencies and the made-up dollar. No matter how much the U.S. dollar is dressed up with fancy engraving, national mottos, portraits of presidents, and official signatures, Wall Street on Parade also notices that the emperor is naked: “If one looks very closely at the structure of FTX, the collapsed crypto exchange now in bankruptcy and causing everything it touched to teeter, it was actually using a technique of the US central bank–the Fed–to create money out of thin air.”
It should not go unnoticed that it was the creation of this money, the Fed’s liquidity gusher–$5 trillion in COVID-era made-up money–that floated cryptos and speculative markets far and wide.
The practices of both, the crypto scamster and the central banker, accomplish the same thing: they transfer wealth from its owners to themselves or to their chosen confederates.
Meanwhile, the Wall Street Journal masters the obvious, noting in bold type, “FTX Crypto Customers Worry They Will Never See Their Money Again.”
Will they ever see their money again? Sure. When the American people reclaim the purchasing power that has been drained from the dollar, from their savings, and from their retirement plans due to years of unhinged money printing. In other words…never.
For those of us in the business of helping people protect their wealth, their families, and their retirement, all of this is a challenge. Because the air is coming out of all the bubbles, not just the crypto bubble, it is among our foremost duties to make clear that inordinate counterparty risk lurks in the shadows of all investment vehicles–except for gold and silver.
What is counterparty risk? It is your dependence on someone else’s performance. It is your dependence on their wisdom, skill, or honesty. It is your dependence on managers, officials, politicians, institutions, and governments. It is your dependence on debtors everywhere to meet their obligations.
The value and wealth preservation advantages of gold and silver do not depend on promises to perform. Their value is not dependent on officials, managers, institutions, or states. They are not at risk of nonpayment, default, or bankruptcy.
The value of gold and silver is intrinsic. It is ratified by the experience of mankind across the centuries and around the world.
Warren Buffett offers a timely expression: “It is not until the tide goes out that you learn who is swimming naked.” He means that malperformance, mismanagement, and fraud can go undetected until there is a change in market conditions or a crisis.
The stock market breakdown in 2008 was a case of the tide going out. Had it not triggered investors to redeem their funds, Bernie Madoff might still be defrauding people today. Customers withdrawing funds as liquidity conditions tightened finally exposed Bankman-Fried’s FTX swindle. Rising interest rates threaten to expose untold credit risk in banking, businesses, and markets near and far.
It is self-evident that this is an era of massive credit and counterparty risk. That is why you must really consider turning to gold and silver for wealth protection. No other investment vehicle offers their unique advantages.
If you’re interested in investing in precious metals, let us provide you with a free one-on-one consultation.
The opinions, beliefs, and viewpoints expressed in this article do not necessarily reflect the opinions, beliefs, and viewpoints of Red Rock Secured LLC or the official policies of Red Rock Secured LLC. Red Rock Secured LLC is not a financial advisor, is not licensed to provide investment advice and neither provides investment nor financial advice. Red Rock is a product specialist that can help evaluate your precious metals purchase options.