At The Daily Cut, our mission is to bring you the best moneymaking ideas from Teeka Tiwari, Jeff Brown, Dave Forest, and the rest of the Legacy Research team.
So in today’s dispatch, I (Chris Lowe) am sharing with you more of their insights from the third annual Legacy Investment Summit.
Last week, about 350 of your fellow readers gathered with us at the Mandarin Oriental hotel in Washington, D.C.
They traveled from different cities, countries, and even continents to hear firsthand from our experts.
And hundreds more joined us via livestream.
Friday is usually when we feature questions from our readers… and answers from our team.
But for this special Summit issue, I’ll share questions I asked Teeka, Jeff, and Dave during one of the on-stage panel discussions I hosted.
For newer readers, Teeka is our crypto investing expert. Jeff is a Silicon Valley insider and our tech investing expert. And Dave is a professional geologist, mining entrepreneur, and natural resource speculator.
During one of our Summit discussions, we discussed the threat of inflation… and how you can grow your wealth through the current inflationary spiral.
You may think the panel was all doom and gloom. But our experts see things differently.
Sure, inflation poses big challenges for us as investors. But there are also opportunities to profit… if you know where to look.
You’ll find some ideas in our conversation below…
Chris: Dave, you’re a professional geologist. Your life’s work is in natural resources – aka commodities. How are you helping your readers navigate through the inflation crisis?
Dave: It may sound weird. But as an investor, I’m actually excited about inflation because of the opportunities it presents.
Like you say, I’ve spent my life looking at hard assets of all different kinds – energy, metals, agricultural commodities. [Hard assets are things it’s difficult to produce more of relative to their existing supplies.] Thanks to their relative scarcity, commodities tend to resist inflation. And we’re entering an unprecedented period of profit for them.
Throughout history, there have been dramatic spikes in hard assets. They’re usually inflation-driven. And some people make astounding fortunes as a result.
During the uranium boom of the 1950s and the oil boom of the 1970s, some investors became millionaires overnight. And being a millionaire was a big deal back then.
When commodities skyrocket, stocks in the mining and drilling companies that get them out of the ground go parabolic. We’re talking rises of hundreds of percent in the matter of two years.
For example, FPX Nickel Corporation (FPX) is up 368% since the beginning of 2020. Lithium Americas (LAC) is up more than 660% over that same time period.
It’s not just inflation driving up commodities prices. It’s that many of these commodities are tied to the massive tech trends Jeff writes about.
To make electric vehicles, we need platinum, palladium, lithium, nickel, cobalt, and iron.
These are scarce. And you can’t easily get them out of the ground. Getting a new mine up and running is capital- and labor-intensive. So supply is struggling to keep up with demand. And when that happens, prices must go up. It’s just how markets work.
Chris: How can Legacy folks profit from this boom? Should they buy mining stocks? Or exchange-traded funds (ETFs) that hold the metals?
[Metals ETFs hold physical metals in a vault to give you exposure to their price movements. ETFs can also give you exposure to baskets of mining stocks.]
Dave: ETFs are fine as an easy way to get exposure to commodities. I recommend the ETFs that hold metals mining stocks, as opposed to physical metals.
Mining stocks give you leverage – or extra oomph – over the metals themselves. Without getting too deep in the weeds, when the price of the physical metal goes up 1%, stocks in the companies that mine that metal tend to go up more than 1%. Sometimes a lot more.
Chris: Thanks, Dave. Turning to Teeka, I want to talk to you about bitcoin (BTC) and gold.
In March 2021, you said gold wasn’t working to protect against inflation.
And you recommended your subscribers sell some gold… and increase their allocations to bitcoin. That was a controversial decision at the time. Because investors have long turned to gold as the ultimate inflation hedge. Why did you make that call?
Teeka: I saw everything coming together to ignite a firestorm of inflation. It was obvious to me that we’d have a massive problem with rising living costs. Yet the gold market hadn’t moved.
This was between March 2020 and March 2021, the first year after the coronavirus hit the U.S. You couldn’t have built a better bull case for gold. We had everything the gold market could have needed to reach $3,000 or $4,000 an ounce. The U.S. had spent more than $4.6 trillion on COVID relief – more stimulus spending than any other country on the planet. At the time, it was worth a staggering 27% of our annual GDP…
At first, gold shot to as much as $2,050 by August 2020. But in the second half of 2020, gold started drifting lower… and by March 2021, it traded at the same price it did at the start of the pandemic in the U.S.
I also saw some of the most brilliant investors leave gold and go into bitcoin.
Take legendary hedge fund manager Paul Tudor Jones. He’s been making billions of dollars as an investor for 35 years. You know how hard it is to be a top-ranked money manager for 35 years?
Last October, he said bitcoin is a better hedge against inflation than gold.
So it was a combination of those two factors – gold not doing anything even though inflation was rising… and folks moving into bitcoin.
But the bottom line for me is there’s way more upside in bitcoin. Especially as the traditional financial system embraces bitcoin as a serious asset.
Chris: Bitcoin has a supply cap of 21 million coins. Computer code – not a central bank – governs the rate new coins enter circulation. And these new coins are costly to mine.
But some folks still doubt that bitcoin is a hard asset. They say there’s no cost to set up a new cryptocurrency to rival bitcoin. So they think bitcoin’s limited supply doesn’t count. What do you say to them?
Teeka: People were using the same logic in the 1990s about Amazon.com (AMZN)… and in the 2000s about Facebook (FB). They thought there could just be more Amazons and Facebooks. So why were the originals valuable?
The size and quality of a network give it value.
Bitcoin is the most secure computer network in the world. No government has anything like it. You can’t hack it… break it… or destroy it.
That has enormous value. So it doesn’t matter how many other cryptos you launch. There’s only one bitcoin. Thousands of cryptos have already tried to displace bitcoin. None of them have succeeded.
Chris: I’d like to turn to Jeff now. You’re a tech guy. But you’ve been writing a lot about inflation, too. You say that owning tech stocks with high earnings is a good way to outpace inflation. Tell me more.
Jeff: The trick with inflation is to invest in assets that are appreciating faster than the government can destroy the value of the U.S. dollar. That should be our goal as investors, no matter which asset class we’re talking about.
In the tech sector, we’ve seen $93 billion go into artificial intelligence (AI) companies… in a single year. This tells us that industry is growing rapidly.
AI will automate many parts of our lives. Anyone who’s bought something from Amazon.com has already benefited from the use of AI in online shopping, warehouse management, and supply chain logistics. Amazon couldn’t promise to deliver such a vast array of products right to our doors in two days or less without AI.
And consulting firm Deloitte has noted that AI is becoming a competitive necessity for nearly all types of businesses.
That’s why best-in-breed AI stocks will outperform the rate of inflation by far.
The same is true for pre-IPO [initial public offering] investments in early-stage tech companies. When we invest in a bleeding-edge tech company at a valuation of only $10 million, it has the potential to go up not just 100% or 300%… but 3,000%.
We’re getting in when these stocks are still cheap. Then we’re using time to our advantage. It’s like compounding interest. With every round of fundraising, these companies increase their valuations.
These are the types of investments that will create generational wealth in any inflationary environment. That why, I launched my Day One Investor advisory last November. It’s focused on bringing the best pre-IPO opportunities in tech to regular investors.
Chris: Is there a tech you see as most likely to deliver those life-changing returns?
Jeff: It’s hard to pick just one! But right now, I’m very excited about blockchain tech.
As most folks know, it’s the decentralized tech behind bitcoin and other digital assets.
With blockchain tech, we’re not just reinventing currencies. We’re reinventing financial services… data storage… even the internet. We’re making them censorship-resistant and available to all globally.
And we’re building monetary incentives into the blockchain protocols to accelerate network adoption. For example, Block, Inc. (SQ) allows users of its payment platform – Cash App – to send each other bitcoin without incurring the usual 3% fee for the transaction.
That’s key. Because adoption drives prices higher.
More broadly, we’re entering a time of accelerated technological development and adoption. As we hit major inflection points – such as superhuman AI or limitless energy from nuclear fusion – it’ll cut the amount of effort we have to expend for work.
Imagine how different life will be when we can meet our basic needs at a nominal cost.
This is an extraordinary time to be alive. This decade is one for the history books.