trough of disillusionment

Cryptos Enter The Trough of Disillusionment – Now the Work Begins

OWNx Team Cryptocurrencies

Our first post of this new year was just thirty days ago. Entitled “2018: The Year of the Crypto Hangover?” we introduced you to the hype cycle that impacts nearly every technological breakthrough–including cryptos and the blockchain.

What we are now witnessing is the beginning of the crypto market’s slide into “the trough of disillusionment.” It follows the peak of inflated expectations, which is when new technology is held out as the answer to all of mankind’s problems (hyperbole admitted).

But then reality rears its ugly head, and the markets react. Negative press begins in earnest. Doubts are cast on the viability of the technology and its promises. Yet that is when the real work begins.

The early pioneers in technology serve a useful purpose. They bring forth new ideas that humans have never before thought possible. It is rare, however, that implementation of the initial ideas end up being the “gold standard” – the ones that produce applications that truly transform society.

It’s in the trough of disillusionment that the hard questions are asked:

  • Is the original technology viable?
  • Are there limitations that everyone has overlooked (blockchain transaction scalability)?
  • Can those limitations be overcome?
  • Is it going to require a new iteration or evolution of the initial technology?
  • Is there a newer application of technology better suited to solve the problem?

Now we get to watch innovative companies ask and answer these questions. This is the time to take a deep breath and be patient. Terminology that has been loosely thrown around will now be cleaned up. Clarity will emerge, and the cream will rise to the top.

And that is what we are excited about.

Digital assets are here to stay. So are cryptocurrencies. So is digitized ownership of real assets such as silver and gold bullion (which we’ve been providing our clients for years). Those are all three very different things, yet over the last 12 months, they were a conflated mess. That’s about to change.

The slide into the trough of disillusionment began a bit earlier than we expected. It’s no fun for those who were on the front of the hype cycle curve. Yet 2018 and beyond will be an exciting time for those who have waited to build their solutions based on the answers to these hard questions. We’re on task. We’ve been asking those questions for months.

The answers are forthcoming. Now the work begins.

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Gold, Silver, Fiat, and Cryptocurrencies – Welcome to the Dance

OWNx Team Cryptocurrencies, Global Finance and Economics, Money & Financial Technology

A new monetary ecosystem is emerging. But you probably already knew that. What has yet to be determined is just how the historical forms of money are going to play together with the new kids in town.

Imagine if you were the owner of a dance studio that for decades had been churning out the most widely-acclaimed dance production in the city. It was made up mainly of traditional waltzes with an occasional polka number thrown in. While predictable, the audience was comfortable with the consistency of the experience.

Then one day, you’re told that you have to open your production to a new and more energetic form of dance. It is a combination of jazz and hip hop. Not only that, but few if any of your performing crew fully understand it, and nobody is very good at it. Oh – and the company owners are under pressure to choreograph a new production to be released in the not-too-distant future.

Welcome to the world monetary system.

National fiat currencies, along with traditional stalwarts of gold and silver (waltz and polka), are being asked to put on a world-class production that now must include a bevy of cryptocurrencies (jazz and hip-hop). Seasoned professionals must work alongside a mix of newcomers (solid projects) and some who have no business even being on the dance floor (ICO scams).

Meanwhile, the instructors (regulators) either are throwing their hands up and walking away, or are trying to control the newbies with rules they don’t understand or agree to. Some of the seasoned veterans on the team have abandoned the waltz, and are joining this exciting new dance that has yet to be defined.

I say again – Welcome to the world monetary system.

Related: Are Cryptos Money? Not Yet.

How Will This End?

There are several possible outcomes to such a situation:

The cast fights among each other and the instructors blow up the whole thing by getting heavy handed. Nobody comes to the show and the dance company folds. It is a decade before another company comes to town.

The new style completely confuses the traditional cast and they all quit, leaving the town to adjust to a completely new production – one that they aren’t sure if they like, and can’t see themselves getting comfortable with.

Or, the traditional cast, along with the instructors, take a deep breath and begin to speak some wisdom into the newbies. They shape a new production based on the experience and values and elegance of traditional waltzes, which brings a bit of order and sanity to what otherwise looks like chaos.

Frankly, the latter outcome seems most likely. Gold, silver, and national currencies will always have a place in the emerging monetary eco-system. The 5000 year history of gold and silver will anchor the new system to reality – both literally and figuratively. Governments will not give up their national currencies. It is unrealistic to expect them to. And the crypto world still has to figure out who can dance and who the pretenders are.

Just how much influence each style of dance has on the final production will depend a great deal on two primary factors:

1) How quickly (if at all) will the newbies kick the pretenders off the stage by themselves?

2)  If the instructors are called in to bring order, will it be the traditionalists, or open-minded realists who decide how to run the final production?

Definitely interesting dynamics in the world of money. Welcome to the dance.

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cryptos are not money

Are Cryptos Money? Not Yet.

OWNx Team Cryptocurrencies, Money & Financial Technology

The wild swings in the price of Bitcoin and other cryptos over the last week should have you convinced that they are not yet ready for prime time. After rising to just over $20,000 on December 17, 2017, Bitcoin dropped nearly 40% within a week.

That was just openers. After trading between $13,000 and $17,500, on January 16th, Bitcoin dropped 33% and Ethereum plunged 40% in 36 hours. What happened next? The crypto complex rose 20% over three days and is now falling again – nearly 10% on January 22, the day this post was written.

Are these investments? No. Is this money? Absolutely not!

What are they then? They are speculations at best. Gambling chips at worst.

Back in November, Arthur Brock, a respected crypto news analyst said, “…let’s tell the truth — cryptocurrencies just aren’t safe for everyday use by normal people and businesses yet.”

This week proved his words 100% correct.

The cryptocurrency trading market has a lot of growing to do. And unfortunately, “growth” means figuring out who the winners and losers will be in an unregulated wild west market. If there is any good news in the volatility of the last week, it is that it will force people to look more closely at the technologies behind the various cryptos and begin to shun the scams.

Gold and Silver Still Shine

In the midst of all the chaos about which cryptos to buy, the price of gold and silver has been steadily rising. Some of the “hot” money in the crypto sector and some folks who got burned by it may be returning to something a bit more stable. While the price of gold and silver can rise and fall substantially, it does not happen in days – or hours as we’ve witnessed in the crypto markets.

If gold and silver were ever to become this volatile, it would not mean they were in trouble. It would mean that the entire global monetary system was in trouble. Serious trouble. And if that were the case, you’d be happy to own some. It would mean you would have some level of protection over the instability of the uncertainty of electronic “money” that has yet to find its place in the world.

While cryptos will find their place in the future monetary system, we’re not sure when that day will come. But it seems like it’s further in the future than many believe.

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2018: The Year of the Crypto Hangover?

OWNx Team Cryptocurrencies, Global Finance and Economics, Money & Financial Technology

Last year was crazy for financial technology. For several years, FinTech innovation had been bubbling under the surface, until last year when it exploded into the mainstream in the form of the emerging crypto-mania.

2017 was the inaugural ball – the big party where all the possibilities of financial technology were introduced to the public. Cryptocurrencies. Tokenized asset ownership. Peer-to-peer payment systems. Robo investing. It’s a whole new world out there. However, after the party comes the hangover. This could begin to take shape in the second half of the year.

The excitement around crypto currencies and ICOs is likely to reach some kind of temporary peak this year. While FinTech may have had its coming-out party in 2017, there are still few people who understand what is actually happening. That is – the entire global monetary eco-system is being transformed before our eyes.

It is still in the early stages. The final form of what emerges is still several years down the road. Like most new, bright and shiny technologies that gain the public’s attention, it will proceed through the traditional hype cycle.

It appears now as though the peak of inflated expectations is fast approaching. When the crypto ICO frenzy ends – either through market forces, or due to heavy-handed government regulation – the plunge into the trough of disillusionment will commence. With the pace of scam ICOs growing, it would not be a surprise for this to occur in the second half of 2018.

Such is the new world of finance. Meanwhile, 2017 was a relatively quiet year for gold and silver with no major moves in either direction. Gold spent most of the year within a $150 per ounce trading range. With all the hype surrounding the crypto markets, this is quite an accomplishment.

It is unlikely that 2018 will be a repeat of 2017. If the crypto/ICO world begins its plunge into the trough of disillusionment, gold and silver stand to be beneficiaries. Scam digital assets will be shunned in favor of tangible assets with a proven history of maintaining their value.

The 25% plunge in the price of Bitcoin, and the steady rise in the price of gold and silver during the last half of December may be an early signal of what 2018 will look like. Only time will tell. One thing seems certain, however – there is a whole lot of shaking that is going to happen in the financial markets this year. And that nearly always favors gold and silver.   

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Mexico to Monetize Silver?

OWNx Team Global Finance and Economics, Gold & Silver Market, News & Current Events

On September 13, 2017, Mexico’s Chamber of Deputies met to discuss a potentially world-changing event regarding precious metals—specifically silver.

Mexico has had a history of using silver coins as currency before converting to the peso, which has been steadily losing its value against the US Dollar over the past forty years. This has put Mexico in a financially difficult place. It’s citizens have been unable to build up their savings as the peso continues to suffer.

In the September 13th forum, entitled, “The Promotion of Savings by Mexicans,” the Chamber of Deputies, led by Congressman Francisco Javier Pinto, discussed how the situation might be remedied. As the peso decreases in value, how can Mexican citizens—and their savings—be protected?

The answer, if it succeeds, could change the world of silver investing.

Saving money is vital to the growth of Mexico’s economy and the financial security of average citizens. However, a poll conducted in 2015 found that only 15% of Mexicans save money by depositing funds into savings or other bank accounts, buying stocks and bonds, or making contributions to an official retirement account. Meanwhile, 32% save their money by “stuffing [it] under the mattress.”

With the fluctuation of the peso over the past forty years, this method of saving has left Mexicans with little to guard against surrendering even more of their purchasing power, rather than retaining and increasing it.

The solution discussed by the Chamber of Deputies was to instate a law that would monetize Mexico’s Silver Libertad once more, allowing Mexicans to save and trade in their original currency.

By monetizing the Silver Libertad and encouraging Mexican citizens to purchase it, they could begin building formal savings for themselves, while safeguarding those savings against inflation and the continual devaluation of the peso.

Instead of fixing a permanent value in pesos on the Libertad, the bank would continue adjusting the value of the coins based on the price of silver in order to protect Mexicans from the peso’s decline.

How might this affect you?

Mexico is the largest producer of silver bullion globally, mining 186 million ounces of silver in 2016 alone. Much of this silver is then exported to other nations for minting and silver coin production. However, if the proposal percolating inside the Mexican congress were to gain political traction, it could cause a dramatic shift in the silver market, impacting silver prices and availability around the world.

If Mexico kept more of its silver in the country for production of the Libertad rather than exporting it, assuming the Mexican people responded favorably, buying the coins, the price of silver per ounce would rise globally.

Higher silver prices mean greater savings and wealth for current holders of silver—not just Mexicans who purchase Libertads, although we wish them well in their efforts to re-monetize silver!

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Secure Your Financial Future in an Uncertain World

OWNx Team Global Finance and Economics, Gold & Silver Market

If there was ever a time when the world is sending mixed signals, it’s now. The DOW is at all-time highs and seemingly unstoppable. Economic growth, as measured by GDP, hit 3%. Tax reform seems to finally be a possibility, which, if done correctly, would enable continued economic expansion.

Then there’s the other side of the coin. The current Administration is under investigation. Indictments are being handed down. New revelation of possible collusion from the opposing political party is in the news. Volatility in North Korea; Catalonia’s vote to secede from Spain – who vows to stop that from happening; Brexit talks heating up–and the list goes on…

Oh yes–then there’s the crypto craze with ICOs generating hundreds of millions of instant capital for entities that have business plans similar to many .com era companies. Marijuana stocks are going gangbusters.

And then there’s gold and silver, appearing to languish in the midst of all this turmoil and uncertainty. Why should anyone buy it these days? Aren’t gold and silver dying assets in this new digital age?

As Mark Twain was famous for saying, “The reports of my death have been greatly exaggerated.”

Gold and silver are behaving now exactly as they should. No panic. No fear. Just reasoned assessment of reality. And reality is uncertain for many.

Sure, cryptos are hot and interesting right now. But let’s see what happens a year from now when the present day .com fakes blow up and take the savings of hundreds of thousands with them. It will be at that point when the crypto space enters a new phase – finding reality.

Related: Gold, Silver, Fiat, and Cryptocurrencies – Welcome to the Dance 

Please don’t misunderstand, however. Cryptos have a place in the future economy and monetary system, but not in their present wild-west form. Someone will enter the picture and give reasoned analysis to all of these ICOs, and it may be US regulators.

And that is one of the many signals gold and silver are giving right now. They are patiently waiting as the general public becomes aware of, plays with, and gets burned by the crypto craze. Their traditional roles of guarding against financial mismanagement by governments are expanding to include the mismanagement of the emerging monetary system instruments by speculators.

Related: The Insanity of a Cashless Monetary  System: Why You Need Physical Gold and Silver

Those who recognize this are patiently accumulating the only form of money that has survived 5000 years of this kind of innovation. They survived fiat currencies. They survived debt-backed currencies. They will certainly survive electronic digit money as well. Their role will become even more solid in the minds of smart investors as a means to protect themselves, and the world, from what is emerging.

Real, tangible assets are one of the best means to survive a world that is changing in so many ways. So keep the faith. Keep stacking. You will be better off for it in the years ahead.

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Major Changes at The Federal Reserve Will Likely Be Good For Gold

OWNx Team Gold & Silver Market, News & Current Events

The Federal Reserve is arguably one of the most powerful institutions in the world. Its monetary policy affects every country in the world, either directly or indirectly. Like any organization that has been politicized (which the Fed certainly has), it takes on an ideological bent that manifests in its policy. So what happens when the leadership of that organization changes?

We’re not just talking about the impending replacement of Fed Chair, Janet Yellen. We’re talking about replacing her as well as four of the seven board members. This hasn’t happened since Woodrow Wilson’s presidency. President Trump and President Obama see the world a bit differently. While Obama generally praised the Fed, Trump has been more critical.

This means that, in the next several months, we can expect a significant change in the ideological makeup of one of the most powerful institutions on the planet. You might want to read that again. It’s a big deal.

The Fed has been on a rate tightening cycle over the past twelve months. Since the turn of the century, the Fed’s record on managing the economy while raising rates is not very good. And today, there are any number of things that could break if rates continue to rise. For starters, the sovereign debt crisis would come to center stage as budget deficits explode.

President Trump knows this. He is also very pro-business. Therefore, he is likely to appoint Fed Board members and a Fed Chair who will be quick to tap the brakes on the rate tightening cycle and reverse course quickly if necessary.

The result? According to Jim Rickards, “You should expect lower real rates, slower balance sheet normalization, and higher inflation than markets are now pricing. This will not happen all at once, but in stages over the next year. The biggest winner will be gold. The time to enter your gold position, if you don’t already have one, is now.”

We’ll just leave Jim’s thoughts for you to consider.

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Gold Is The Safe Haven Asset To Own Now

OWNx Team Global Finance and Economics, Gold & Silver Market

Gold has long been viewed as a safe haven asset during times of economic and geopolitical uncertainty. As we look around the world today, there certainly is a measure of both of those. The question many gold and silver holders ask is, “why haven’t the metals moved up in price more than they have over the last year?”

The answer lies in a several areas.


Presently, stock market sentiment (the belief that prices will rise) is still pretty strong. This is not unusual when markets reach and extend all-time highs. If the broader markets are making new highs, the crowd sees less of a reason to own safe haven assets.

However, contrarian and value investors see this as an opportunity. Investors are supposed to “buy low, sell high.” You can’t buy low when a market is at all time highs. It’s more likely that you end up chasing the last few upticks before the herd turns and runs the other way. By this measure, gold and silver are well positioned for gains in the coming years.

Recent History

Let’s be realistic. Gold and silver have been trading sideways now for the last four years while the stock market has made new highs. People like to be in the “hot” markets. That’s great – if they invested before they became hot. That is where real gains are made.

Again, by that measure, gold and silver bullion are well positioned. As we enter into the eighth year of economic expansion, interest rates are on the rise. An already long expansion (by historical standards) is due for a pause, and rising rates has been a key catalyst in causing those pauses to sometimes cause more harm than expected. When money begins to leave the stock and bond markets, it has to find a place to go. Precious metals are well positioned historically and from a value perspective to receive a nice portion of those funds.

Crypto Currencies

We would be ignoring an elephant in the room if we did not acknowledge that crypto currencies have taken some of the investment funds that otherwise would find their way to gold and silver coins and bullion. Some, like Bitcoin, are being touted as the next “safe haven” currency.

It would be wise to look at this from another perspective. Cryptos are the shiny new object in the investing world. There have been spectacular gains for early speculators. However, they have never been tested in a real crisis. They have not stood the test of time. While some cryptos may find their way into a safe haven status eventually, the first time they, as a group, experience real volatility in a crisis, it would not be a surprise to see a major sell-off. It also would not be a surprise to see that when that happens, those funds – already earmarked for “safe haven” investments – flow strongly in the direction of gold and silver.

Related: 2018: The Year of the Crypto Hangover? 

It’s been a difficult market over the last few years for gold and silver investors. The factors that have caused that to happen also now favor a change for gold and silver in the not too distant future.

Note: The opinions presented here are only for educational purposes and should not be considered investment advice. Consult a qualified investment adviser before making any investments.

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The Insanity of a Cashless Monetary System: Why You Need Physical Gold and Silver

OWNx Team Money & Financial Technology, News & Current Events

The old saying “cash is king” may soon be dealt a major blow. Governments around the world are experimenting with the idea of going 100% “cashless.” While this may sound like a good idea, it perpetuates the trend toward our monetary system becoming increasingly hyper-efficient.

This is not a good thing.

Hyper-Efficient Systems are Prone to Catastrophic Failure

A predatory animal, for example, may prey on several species, or depend on only one for its food supply. The latter will likely have more skill as a hunter when it comes to catching its only prey. However, if its prey adapts a new defense, or the hunter’s skills are compromised in any way, it will likely die. It became too efficient in its skills, and changing just one variable caused its food ecosystem to collapse.

This principle applies to all systems – including monetary systems. If all money is digital:

  • What happens when the electrical grid fails? It doesn’t have to be a global or national failure; it can be regional or local.
  • What happens if the monetary digits “disappear” due to hacking, failed hardware or poor software engineering? Data loss happens every day on a micro level. Nearly everyone alive today over the age of 20 has lost some data due to a system failure of some kind.

An all-digital cash society is ripe for catastrophic failure – not necessarily because of the design of the money (that is another subject), but because of the design of the delivery system. The United States electrical infrastructure is woefully in need of major upgrades – and we want to place 100% of the lifeblood of the economy on its back?

Not a wise idea.

Related: Are Cryptos Money? Not Yet.

Owning Gold and Silver Is One Way to Protect Yourself

Today, there are too many ways that your digitized money can disappear. This is why you need to have insurance. Physical commodities, including–and especially gold and silver, have, throughout history, been an anchor in every stable monetary system. Regardless of what happens with cryptocurrencies and digital money, this is not going to change, and it is why today, more than ever, it is smart to own some.

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3 Charts Show Why Value Investors Should Look at Gold

OWNx Team Gold & Silver Market

As they say, a picture is worth a thousand words. Thus, today’s post is mostly visual. Many markets have had a nice run over the last several years. In fact, they are approaching levels that, in the past, have signaled they may be getting overvalued.

The first chart is that of housing.

We all remember what happened after 2006. And while housing may yet have some more room to run, it is not a liquid asset as many people learned in the housing crash that followed.

The second chart is one that legendary investor Warren Buffett uses to measure the value of equities.

As you can see, it is rising toward the range where sharp reversals have occurred.  Maybe that is why Berkshire Hathaway has an unprecedented 40% cash position of over $100 billion.   

In an interview in June, he remarked, “We shouldn’t use your money that way for long periods.  The question is, ‘Are we going to be able to deploy it?’”

Maybe he should buy some silver like he did in the late 90s and early 2000s when it was $5 per ounce.

Finally, we have the two-year chart of Bitcoin.

History is not kind to parabolic moves, and that is what Bitcoin and other cryptocurrencies have seen over the last 12 months.

Value Investors Look For Undervalued Assets

Gold and silver have had a difficult stretch over the last five years. However, as we said in January, it appears they have indeed carved out a long-term bottom. This is the zone where value investors establish their position.

It looks like a good time for smart investors to own gold and silver. We can help you do so automatically over time, and even within a self-directed IRA.

(Note: OWNx is not a registered investment advisor company. The information given is for your consideration. You should always consult with an investment advisor before making any investment).

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