The Gold Standard - 50 Years Later

To investors,

Yesterday was the 50th anniversary of President Nixon taking the US dollar off the gold standard. While you may be familiar with the basics, there is quite a bit to unpack from that historic moment.

First, let’s take a look at what Nixon’s exact comments were when he decided to execute this idea.

You can read more of the speech here:

The language used here was important. There was reference to the American economy being the strongest in the world, the importance of defending the US dollar against speculators, the promise of temporary action, and of course - the confirmation that the US dollar would be stable and immune from being devalued.

Cute idea, but historically this has been proven to be one of the worst policy decisions in history. Don’t believe me? Our friends over at River have collected a few charts to highlight the impact:

Just incredible to see the impact of the United States going off the gold standard. Remember, President Nixon said that “inflation robs every American, every one of you.” That is correct. But while he was referring to pre-1971 conditions, he should have foreseen how destructive his decision would be.

It is interesting to look back on the 50 year anniversary and realize that we currently are experiencing 5.4% CPI and 4.3% core inflation numbers. These are basically the highest they have been in decades.

There are currently 78% of Americans who live paycheck-to-paycheck and 45% of Americans who hold no investable assets. These are the people who have suffered at the hands of poor policy decisions. While disheartening, the free market appears to have created a brand new global competitor — bitcoin.

There is no need to replace the US dollar in the short term, so bitcoin is likely to serve as the global store of value for decades to come. The transparent, programmatic monetary policy of a digital currency that has decentralized infrastructure is too powerful an idea, especially when compared to the backdrop of continued insane monetary and fiscal policy decisions. The legacy organizations are doing just as much to market an alternative store of value as any bitcoiner could dream of.

As Niall Ferguson wrote in a Bloomberg Opinion piece this morning, “If we have learned nothing else from the past half-century, it is surely that the best way to win a race with totalitarian rivals is not to copy them, but to out-innovate them. Make the wrong decision at this historic turning point, and we shall be interrupting a much bigger bonanza than Nixon did.”

If you have any material amount of wealth, you are not able to preserve it by holding US dollars, bonds, or gold. All are producing negative real rates of return. You essentially are left with bitcoin or equities, which leads you to consider an allocation to bitcoin given the high degree of volatility that will likely serve to outperform equities over a long enough time period.

We are living in weird, weird times. President Nixon kicked off the fiat experiment in 1971 and 50 years later, we are watching the global adoption of a potential solution to that problem. There is still a lot of work to do. Plenty more people to educate around the structural disadvantage they have as they pursue financial security in the legacy system. But….slowly we continue to head in the right direction.

Stay alert out there. Make sure you are educating yourself as best you can. The uncertainty and chaos of markets can be calmed by further understanding of history. Hope your week is off to a great start. I’ll talk to everyone tomorrow.

-Pomp

SPONSORED: It's no secret I hold Bitcoin as majority of my portfolio. But even I know you have to diversify into other asset classes like elite investors. 

You need an asset that won’t get murdered by the Fed's money printing and Biden's $6T stimulus plan. In my search for other alternatives, I found something game-changing. 
It's an art investment platform that lets you invest in multi-million dollar paintings by artists like Basquiat and Banksy.

Art as an investment excites me because, like BTC, its supply is not only fixed but can decline. 

Contemporary art prices outperformed traditional inflation hedges like gold and real estate, while crushing S&P 500 returns by 174% from 1995-2020. 

 Take a look at investing in art. I hooked it up and partnered with Masterworks, so you all can get to the front of the line with this private link.

Podcast Sponsors

These companies make the podcast possible, so go check them out and thank them for their support!

1. Exodus is an absolute game changer in the crypto wallet space. With over 100 assets supported, one-click built-in exchange, Trezor hardware wallet integration and 24/7 customer support, this is a no brainer for both newcomers and crypto heavyweights. Download Exodus on desktop, iOS, and Android using my code http://get.exodus.com/pomp

2. Cosmos is building the Internet of Blockchains, marking a new era of interoperability, scalability, and usability. The free flow of assets and data between blockchains with bridges to Ethereum and Bitcoin will unleash the potential of DeFi, NFTs, and much more. Dive into Cosmos at cosmos.network/pomp

3. OKEx is a leading crypto exchange known for providing the most options for crypto traders and investors. Whether you want to trade spot, futures, options or swaps, OKEx gives you institutional-grade tools and a best-in-class trading engine. The platform offers credit and debit card funding options and supports 40 different fiat currencies, including EUR, CAD, GBP, TRY, INR and RUB, to name just a few. You can invest, trade, and earn yield, all within one place at okex.com. OKEx is not available to customers in the United States. 

4. Choice is a new self-directed IRA product that allows you to buy Bitcoin with tax-advantaged dollars, while still holding your private keys. You can go to retirewithchoice.com/pomp to sign up today.

5. Unstoppable Domains makes crypto easier by replacing your address with [AnyName].crypto. They allow you to send and receive over 70 cryptocurrencies, including BTC, ETH, and LINK with a single blockchain domain. Go to unstoppabledomains.com and get [YourName].crypto to make your crypto life easier.

6. BlockFi provides financial products for crypto investors. Products include high-yield interest accounts, USD loans, and no fee trading. To start earning today visit: http://www.blockfi.com/Pomp

7. Crypto.com allows you to buy, sell, store, earn, loan, and invest various cryptocurrencies in an user friendly mobile app. Join over one million users today. You can download and earn $50 USD with my code “pomp2020” when you sign up for one of their metal cards today.

8. Public Rec is on a mission to make comfort look good. Their fan-favorite Flex Short is the ultimate crossover short you’ll need all summer long. From the beach to the gym, this quick-drying short has you covered. Comfort starts with a better fit. Free shipping. Free returns. Visit www.publicrec.com/pomp and use POMP at checkout for 10% off!

9. Circle is a global financial technology firm that enables businesses of all sizes to harness the power of stablecoins and public blockchains for payments, commerce and financial applications worldwide. Circle is also a principal developer of USD Coin (USDC), the fastest growing, fully reserved and regulated dollar stablecoin in the world. The free Circle Account and suite of platform API services bridge the gap between traditional payments and crypto for trading, DeFi, and NFT marketplaces. Create seamless, user-friendly, mainstream customer experiences with crypto-native infrastructure under the hood with Circle. Learn more at circle.com.

10. Gemini is a leading regulated cryptocurrency exchange, wallet, and custodian that makes it simple and secure to buy bitcoin, ether, and over 30 other cryptocurrencies. Offering industry-leading security, insurance and uptime, Gemini is the go-to trusted platform for beginner and sophisticated investors alike. Open a free account in under 3 minutes at gemini.com/pomp and get $20 of bitcoin after you trade $100 or more within 30 days.

11. Revolut is a finance app in the US and UK, that say they're the simplest way to access crypto. Sign up today at Revolut.com/pomp and make 3 card transactions to get $15, which you can exchange for any tokens Revolut supports. As usual, when you move your money from fiat to crypto your capital is at risk. See T&C's for details. Revolut is a financial technology company. Banking services provided by Metropolitan Commercial Bank, Member FDIC. Cryptocurrency services provided directly by Paxos Trust Company, LLC.

12. Did you know nearly 338 million dollars worth of NFTs were sent last year? And in 2021 that number is growing faster than ever. Looking to make your first NFT? Check out NEAR’s fast, scalable, low-cost, open-source platform. Learn why NEAR is the infrastructure for innovation at near.org

13. Amber - Invest, trade, swap, and earn crypto with Amber App, where new users can receive 16% APR on BTC, ETH, and USD Stablecoins! Click here to sign up now.

14. LMAX Digital - the market-leading solution for institutional crypto trading & custodial services - offers clients a regulated, transparent and secure trading environment, together with the deepest pool of crypto liquidity. LMAX Digital is also a primary price discovery venue, streaming real-time market data to the industry’s leading analytics platforms. LMAX Digital - secure, liquid, trusted. Learn more at LMAXdigital.com/pomp

You are receiving The Pomp Letter because you either signed up or you attended one of the events that I spoke at. Feel free to unsubscribe if you aren’t finding this valuable.

Nothing in this email is intended to serve as financial advice. Do your own research.