A visionary prediction… This chart says bitcoin will be 28% higher by Thanksgiving… But don’t expect a return to all-time highs in 2018… In the mailbag – “Legalizing marijuana is a very bad idea…”
Judging by the mailbag responses we’ve been getting, some folks think our ideas are too “out there.”
But our firm’s history is full of ideas that seemed out there when we first published them… but later came true.
That’s 12 years before a pseudonymous Satoshi Nakamoto published the whitepaper for bitcoin, the world’s first crypto.
Here’s the background…
When Bill Bonner launched Legacy Research’s parent company – The Agora – 40 years ago, two of his earliest writers were investor James Dale Davidson and the former editor of The Times of London, Sir William Rees-Mogg.
They worked together on one of our flagship newsletters at the time, Strategic Investment, which focused on the big picture trends shaping markets and society.
In 1997, together with Agora, they published a book about the coming internet age called The Sovereign Individual.
The book featured a number of predictions – a coming era of electronic warfare, smartphones, and the possibility of “bots” impersonating humans online.
In their book, Davidson and Rees-Mogg envisaged a “new digital form of money” to “consist of encrypted sequences… unique, anonymous and verifiable… tradable at a keystroke in a multitrillion-dollar wholesale market without borders”…
They also imagined how payments in the future would not only be made via the internet, but also outside the jurisdictions of nation states. As they wrote at the time…
Payments will be rendered in cybercurrency. Profits will be booked in cyberbanks. Investments will be made in cyberbrokerages. Many transactions will not be subject to taxation… Extraterritorial regulatory power will collapse…
Control over money will migrate from the halls of power to the global marketplace. Any individual or firm with access to cyberspace will be able to easily shift out of any currency that appears in danger of depreciation. Unlike today, there will no longer be any necessity to deal in legal tender.
We now call them cryptocurrencies, not “cybercurrencies.” And as we’ve been reminding readers, you have to pay taxes on your cryptocurrency transactions.
But the idea of transacting online with a private digital currency… one that makes it possible to sidestep government fiat currencies… describes bitcoin with uncanny foresight.
Remember, Davidson and Rees-Mogg made this prediction when we were all still looking up phone numbers in the Yellow Pages… accessing the internet via dial-up modems… and walking around with pagers clipped on our belts.
Had you understood the potential of “cybercurrencies” back then… you could have invested in bitcoin when it was still selling for a couple of cents… and made a fortune as bitcoin rallied into the thousands of dollars.
We also look at where markets are headed over the nearer term.
It’s why master trader Jeff Clark recently showed the chart below to readers of his Market Minute e-letter. (You can sign up for free here.)
It’s of the NYSE Bitcoin Index, which tracks the price of bitcoin.
Here’s Jeff on what it means for the price of bitcoin…
This chart is forming a tight “consolidating triangle” pattern [the blue lines]. Bitcoin is rapidly approaching the apex of the triangle. So, the price is set to break out of the pattern, one way or the other, within the next week or two…
A breakout to the upside – above $6,600 per coin – should lead to a rally up to at least the first resistance level around $7,500 [lower red line]. A stronger move could target the next resistance level at about $8,100 [upper red line].
At writing, bitcoin is trading at $6,338.
So a move back to $7,500 would be a roughly 18% gain. And a move back to $8,100 would be roughly 28%.
Not bad for a holding period of a couple of weeks.
Of course, if you’ve been following bitcoin’s fortunes over the past year or so, you’ll know that it hit an all-time high of $20,000 last December.
So even a rally back to the $8,000 mark may not sound that exciting for bitcoin buffs.
Bitcoin reached its record price of $20,000 after what’s known as a “parabolic” move higher.
That’s just a fancy term for when an asset shoots up in an almost vertical pattern.
Take a look for yourself…
Here’s more from Jeff on why that’s so important…
Parabolic tops – like the one formed on bitcoin last December – tend to mark the top of the price for several years.
Think about the parabolic top in silver back in August of 2011, when silver traded up to $49 per ounce. That was seven years ago. And although silver has had many decent rallies over the past few years, it has never come even close to getting back toward the $49 level.
I could be wrong, of course. But I don’t see bitcoin trading back up to $20,000 for a very, very long time.
That said, a gain of 18% over the next several weeks is not to be sniffed at. So consider buying bitcoin now to profit from the short-term rally Jeff sees coming.
Last Tuesday, we showed you how the “green wave” of cannabis legalization is spreading across America. And we got some pushback from one of your fellow readers…
I’m sure I’ll draw some heat for this post. My opinion is that legalizing marijuana is a very bad idea. I will not invest in it even though it has the potential for big gains.
First, this whole movement is being driven by nothing but the desire by states to generate more tax revenue, especially since many of them have dug themselves into holes so deep that they can’t see their way out. In my mind, that is no reason to legalize a clearly mind-altering drug. If that’s the logic, why not go ahead and legalize heroin and cocaine while we’re at it?
I am of the opinion that marijuana is indeed a gateway drug. Consider a scenario wherein a group of potheads are having a smoking party, and one of the group has brought along a stronger drug such as cocaine, heroin, crack, etc.
With everyone’s heads already in the clouds, how likely do you think it is that they would have the control to resist trying it? And that’s just one example.
You may argue, well, what about alcohol? To an extent, that’s a valid point. But I would ask, if you feel that way about alcohol, then why add another drug? And don’t forget, we already have an opioid epidemic. This movement is just one more case of our society moving in the wrong direction.
– Charles H.
We’ve said it before. Investing in legal cannabis stocks is not for everyone. Same goes for investing in tobacco stocks… alcohol stocks… and other “vice” stocks.
But as colleague Nick Giambruno has proven over at our Crisis Investing advisory, investing in the opening up of the legal pot market can be highly lucrative. His readers are sitting on average gains of about 167% on the five legal pot stocks he recommended last year. And the top performer, pot grower Canopy Growth (CGC), is up 465%.
The word “drug” is a loaded term. People said the same thing of alcohol during Prohibition. These days, drinking a beer or a glass of wine is commonplace, and we don’t attach the same stigma to it.
Cannabis is a plant that has psychoactive and medicinal properties. If people want to ingest it, that’s up to them.
Besides, as Legacy Research cofounder Doug Casey has been reminding readers, cannabis prohibition has funneled billions of dollars in profits to drug lords, corrupt government officials, and thugs. So there’s a strong moral argument for legalization.
What do you think? Does Charles have a point about the dangers of legal pot? Does it hold you back from investing? Write us at [email protected].
November 12, 2018
P.S. More than two decades after it was first published, The Sovereign Individual is still a must-read if you want to understand the shift from an industrial to a digital society and how you can adapt financially.
As Jeff Brown – our resident tech investing expert here at Legacy – put it, “It was largely dismissed by Silicon Valley around the time of its writing. But it was passed around amongst the more libertarian leaning crowd in the Valley that had to keep a low profile and keep their thoughts to a whisper amongst friends.” You can pick up a copy on Amazon here.