Welcome to the weekly mailbag edition of The Daily Cut.
Later today, we’ll hear from our tech expert, Jeff Brown, on when to pull the trigger on a new 5G smartphone… and which make and model he’s most excited about.
But let’s start with the controversy that’s been raging all week in our reader mailbag.
Legacy’s globetrotting gold expert, Tom Dyson, kicked it off when he predicted in his Postcards From the Fringe e-letter that “Bitcoin’s legacy will be short-lived.”
Tom’s no crypto greenhorn. In 2011, he sank $25,000 into bitcoin as a speculation.
This was just two years after the release of the bitcoin white paper. Back then, the crypto was mostly the domain of hardcore libertarians and computer geeks.
But Tom reckons gold is a much better form of money, because it has intrinsic worth. As he put it…
Bitcoin is more convenient to use in trade than cows and furniture. That’s a good thing. But unlike gold, bitcoin has no primary use as a physical material. So how can anyone confidently accept it in barter when no one uses it in industry?
They can’t. Accepting bitcoin is the same thing as taking a leap of faith.
So in my opinion, bitcoin is just a speculative vehicle… like a gambling game… and the most perfect experiment in greater fool theory mankind has ever devised.
The greater fool theory suggests people will pay irrationally high prices for assets because they think there’s a “greater fool” coming behind them to pay an even higher price.
Now, let me be crystal clear. Tom is in the minority on this here at Legacy.
Colleagues Teeka Tiwari and Nick Giambruno believe bitcoin is headed a lot higher. Our tech expert, Jeff Brown, agrees. He’s recommended a long-term position in the cryptocurrency at our flagship tech-investing advisory, The Near Future Report.
But we don’t do groupthink here at Legacy. One advantage of bringing together some of the smartest independent analysts in the world is you get a range of opinions.
Tom’s pushback on bitcoin is getting readers thinking…
Reader comment: Blockchain – the digital ledger bitcoin operates on – allows absolute trust between two people who don’t know each other… who will never meet… and who don’t share a language. It does this without the need for a trusted third party.
This has NEVER happened before in history. It’s revolutionary. It’s a new way of relating and doing business. Those future relationships have an incalculable value. Decentralized finance is just the beginning. Tom is completely missing the point when he uses historical analogies to assess bitcoin. There is no precedent for this.
Reader comment: Although bitcoin is said to get rid of bankers and third parties, the tech lords still maintain the wallets, the blockchain, and other infrastructure. I had a crypto wallet with a few hundred dollars in it. When the wallet was no longer maintained, I lost the bitcoin in it. That turned me off of crypto. I don’t see the benefit to crypto at this point. It isn’t mature enough.
Reader comment: Every currency gets its value from the people who appreciate it. The same goes for everything of any worth, including art. If bitcoin – with its special features of anonymity, scarceness, decentralization, being unforgeable, etc. – has no intrinsic value, then what about collecting stamps? Philately is a worldwide business, with examples of exorbitant value.
Reader comment: For a true store of wealth, I agree with Tom. Not necessarily because of his golden rule [that money should have intrinsic worth], but because of the durability aspect.
Not many things can affect gold and make it unusable. But several things can render any electronic currency unusable or even make it disappear. These include a disruption to the electrical supply or the internet due to natural or manmade causes. It might be restorable through the blockchain – but that’s not been proven yet.
One of the big concerns readers have is that the feds could easily ban bitcoin…
Reader question: I continue to be shocked when you guys recommend bitcoin as a sound asset. What happens when governments decide bitcoin is too competitive with their own currencies and make it illegal?
– David D.
For an answer, we turned to hard-money advocate Nick Giambruno. As he explained in these pages, bitcoin is one of the world’s hardest assets. That means it’s hard to produce relative to existing supply… and hard to inflate as a result.
Nick also sees bitcoin as the perfect currency in a crisis, which is why he’s added it to the portfolio at our The Casey Report and Crisis Investing advisories. And he isn’t losing any sleep over the possibility of crypto prohibition…
Nick’s answer: Bitcoin offers regular people a safe haven. They can easily use it to send and receive wealth. That might mean paying for goods and services when the local paper money becomes worthless, or discreetly receiving a much-needed influx from relatives who have managed to get out of crisis-ridden countries.
Whatever the particulars, bitcoin bypasses unsound banks, worthless currencies, and government confiscation schemes.
First, the idea that a government would want to throw peaceful people in cages for using bitcoin is an insult to anyone who values personal and financial freedom. It would be a sign that much worse things are coming, and I would suggest leaving such a place.
Second, if governments try to ban bitcoin, it would be an explicit recognition of its value and threat to their control of money. Governments wouldn’t bother banning something that didn’t matter. That’s why I would consider it an enormous stamp of approval if a bunch of bureaucrats tried to ban bitcoin.
Third, in any case, banning bitcoin is impractical. Think of it like this. Look at how successful governments have been at prohibiting cannabis over the decades. Despite their best efforts, cannabis has always been readily available in most big cities. Trying to enforce a prohibition on bitcoin would be much less practical.
I’d like to see governments try to ban it and then fail spectacularly. It would be a big reinforcement of bitcoin’s value proposition.
We’ll wrap up today with one of the biggest investment themes we’ve been tracking for you – the unstoppable rise of 5G wireless networks.
Our go-to expert on technology is Silicon Valley insider Jeff Brown. He’s been tracking this trend closely for his readers. And he’s already racked up three triple-digit winners from his 5G recommendations across his Near Future Report and Exponential Tech Investor advisories.
Reader question: I’ve been putting off buying new phones. When will it be safe to purchase new phones?
Ours are on their last legs, so to speak. I’d like to know which brands and models are safe to purchase.
– Fred K.
Jeff’s answer: Hi, Fred. I’m happy to say your patience in waiting to buy a new phone will be rewarded.
The smartphone I’m most excited about… the one I’ve been waiting for all year… was finally announced last week.
Last Tuesday, Apple announced its 5G iPhone 12. This comes in four options – the iPhone 12, iPhone 12 Mini, iPhone 12 Pro, and iPhone 12 Pro Max.
The screens are better than ever before… The cameras are improved yet again… The new models are faster and more power-efficient than before.
But none of those features are what I’m most excited about.
All four versions of the iPhone 12 are 5G-enabled. They can use the mmWave band 5G networks that Verizon is building right now. Others will soon follow. That means we’ll have access to the lightning-fast speeds and extremely low latency that 5G can bring.
Not only that, but these phones also have a number of other important advances.
As just a few examples, the iPhone 12’s central processing unit (CPU) and graphics processing unit (GPU) combined are about 50% faster than those of any other smartphone. It also has the first 5-nanometer CPU in any smartphone in the industry. That equals faster results, more power efficiency, and a better experience.
Plus, this iPhone has a whopping 11.8 billion transistors. You’ll be carrying around a supercomputer in your hand.
Apple’s A14 chip has a neural engine that’s capable of performing 11 trillion operations per second. And it has up to 70% faster machine-learning accelerators. This “supercomputer” can run artificial intelligence/machine-learning software.
This is truly an amazing upgrade to our current phone models.
For those ready to upgrade, I recommend buying an iPhone 12 Pro (or Pro Max) because the Pro models include “lidar” – or light detection and ranging – technology.
They can accurately produce a depth map of any room or space that you’re in… in just seconds. It’s key to unlocking realistic augmented reality apps. These are going to proliferate when combined with 5G network connectivity.
This is the future of wireless and mobility… and it is here now.
If that hasn’t convinced you, there are other options.
I’m not a fan of Google’s exploitative data-collection practices. But I understand many people use its products.
And for Android users, Google has also just announced its flagship 5G-enabled smartphone, the Pixel 5. It will launch sometime this fall.
A 5G-enabled version of the Pixel 4a will also be out this fall. Other smartphone makers will likely follow with versions based on Google’s designs.
Even if you don’t buy a 5G phone right now, pay attention to this trend. A tidal wave of 5G devices is about to hit the market – especially now that Apple and Google have joined the fray. It will catch everybody by surprise.
But for investors who see this early, there is a way to profit. Every single one of these 5G devices – hundreds of millions of them – will need an essential component.
And I’ve found the company that produces it.
That’s why this is my No. 1 large-cap, 5G stock of the year. If any readers aren’t prepared for the 5G devices boom, I encourage you to get the details here.
That’s all we have time for this week.
If you’d like to put a question to the Legacy experts, get in touch at [email protected].
Have a great weekend.
October 23, 2020