We begin today’s mailbag edition with a question about money.
And since Legacy Research cofounder Bill Bonner (The Bill Bonner Letter and Bill Bonner’s Diary) is fond of saying that his daily beat is money, we turn to him for an answer…
Reader question: Can we understand money without first understanding politics? I agree with many of your readers who insist one must look at politics if you want to protect your family and your wealth. Those who don’t will be led like sheep to the slaughter.
The question can also be turned around… can we understand politics without first understanding money? I firmly believe that both propositions have to be embraced. A bit like the chicken and the egg (Which came first) conundrum.
– Ken L. (Legacy Research member)
Bill’s answer: It is time to keep our eyes on Washington. This is an exceptional time. Never before in the life of the planet have so many bets been placed on something that depends on politics. Never before has so much wealth rested on the policies of central banks. And never – or perhaps not since the 1930s – have politics threatened to intrude so fully on our economic lives.
Next up… our recent essay titled “How to Avoid the No. 1 Security Mistake Crypto Owners Make” prompted a question for Legacy’s top crypto experts – Teeka Tiwari (Palm Beach Letter, Palm Beach Confidential, Alpha Edge, and Crypto Income Quarterly)… Marco Wutzer (Disruptive Profits)… and Jeff Brown (Near Future Report and Exponential Tech Investor).
We couldn’t reach Marco in time for publication, but here are Teeka and Jeff…
Reader question: I wanted to ask a follow-up question after reading the February 22 Daily Cut article on investors’ No. 1 Crypto Mistake.
The February 19 MIT Technology Review has an article titled “Once hailed as unhackable, blockchains are now getting hacked.” Among other dangers, the article sites vulnerability to blockchains via poor coding of smart contracts.
I’m very interested in any or all of your crypto experts – Teeka, Marco, Jeff (have I missed anyone?) – sharing their thoughts on the significance of the article’s thesis on the future of our crypto investments. Thanks!
– Gregory S. (Legacy Research member)
Teeka’s answer: No blockchain is unhackable. The key to stopping a successful attack against a blockchain is to make it prohibitively expensive – i.e., no rational person would spend $1 million attacking a bank that only had $10 in it.
Theoretically, the Bitcoin Network could be hacked if someone amassed enough computing power to launch a 51% attack. This is when a bad actor amasses 51% of the computing power on a blockchain and can then rewrite the blocks of information.
With 51% of the computing power they can rewrite the blockchain and essentially “steal” coins by spending the same coin twice. However, at this time there is not enough computing power available to rent to launch a successful attack against Bitcoin. However, smaller blockchains are not so lucky. These are the blockchains that have been getting hacked.
Since my very first report on Bitcoin, I’ve been writing about the risk of 51% attacks. That said, you must remember that the consensus algorithms that govern blockchains are being tweaked and adjusted to patch this 51% attack vulnerability. Just like with any new technology, we will see it attacked. But it will ultimately come out stronger in the end.
Jeff’s answer: Taking one step back, theoretically, any open network can be hacked.
The goal of any blockchain project, or corporation for that matter, is to reduce chances of the technology being hacked, while at the same time ensuring that the technology is accessible for users. This is the key objective, and struggle, that the world of cybersecurity technology has always been focused on.
The good news is that technology has advanced in meaningful ways to make it easier to find and shut out bad actors and allow good actors to maintain access to networks. This is why the quality of specific blockchain projects is so critical from an investment perspective.
The architecture and design are directly related to a blockchain’s vulnerability or strength and, thus, longevity, which is critical to understand from an investment perspective.
Moving on to Legacy Research’s other Jeff – master trader Jeff Clark (Delta Report and Market Minute) – we’ve got a question about performance…
Reader question: What percentage of trades have lost money for Jeff in the last two to five years? Thanks.
– David S.
Getting Jeff to brag about his track record is harder than making it snow in South Florida. So we’ll answer for him…
Since we launched Jeff’s Delta Report advisory in January 2017, his subscribers have booked 63 winners out of 76 trades for an 83% win-rate. And the average profit was 20%.
Now, if you also include the “scalp trades” Jeff recommends in his Delta Direct blog, those numbers jump to 121 winners out of 153 trades. That’s a 79% win-rate with an average gain of 16%.
(You can view Jeff’s full Delta Report track record, including closed trades, right here.)
And now, for our last question of the week, one reader wants coin-collecting advice from E.B. Tucker (Strategic Investor and Strategic Trader)…
Reader question: I’m a Legacy Lifetime member and wanted to ask which gold coins does E.B. Tucker recommend? Thanks for the great information you provide.
– Jose P. (Legacy Research member)
E.B.’s answer: My favorite coin is the Saint-Gaudens. Sculptor Augustus Saint-Gaudens designed it. The U.S. government minted gold Saint-Gaudens Double Eagle coins from 1907 to 1933.
I like collecting Saint-Gaudens coins because they’re easy to track by year. Some years have the “In God We Trust” motto, some don’t. Congress and the President disagreed over including the motto.
While not impossible, it’s uncommon to see a fake Saint-Gaudens. Certain years, however, are extremely rare.
In 1933 for instance, President Franklin Roosevelt ordered the Treasury not to pay out gold. Of 25,000 struck that year, 10 vanished in the process of melting the uncirculated coins. One of those 10 surfaced at a Sotheby’s auction in London in 2002, selling for $8 million. If you find you own one of these elusive coins, don’t tell anyone… it’s a federal offense to possess it.
I prefer hunting for Saint-Gaudens gold coins at jewelry stores over coin stores. Coin stores know all too well what these coins are worth. You can be sure they’ll send out the best coins for rating and capture the difference in value. Jewelry stores, on the other hand, don’t care much about sending coins out for rating. They’re happy capturing the grey sheet spread brokering the sale. They’re far more interested in selling off an estate’s old watches, rings, and bracelets.
Anyone can collect gold coins this way. The next time you’re near a jewelry store, stop in and ask them if they have any Saint-Gaudens for sale. Hunting for the coins is half the fun.
And if you’re looking for another unusual way to buy gold, legendary speculator and Legacy Research cofounder Doug Casey has the answer…
Casey Daily Dispatch editor Justin Spittler covers the story here.
That’s all for today. Have a good weekend.