We are living in the Upside-Down
It’s official. We are living in the “Upside-Down”. The fictitious land from Netflix’s “Stranger Things” is now real. There are monsters* from another world trying to get us, and it seems that the best remedy is to hide under the bed like a child.
Self-isolation or “quarantine” is the new trend de jour. Whilst there are still many who flaunt the rules, thumb their nose at the government and cry “You can’t tell me what to do!”, most of us know that those people are obliviots. (Calm the hell down, Karen. You haven’t been to the beach for three years, so don’t go risking your life and endangering your grandmother’s health just because someone told you that you shouldn’t. #StayHomeKaren.)
It’s not just the monsters that make this the Upside-Down. It seems like the whole world inverted incredibly rapidly. All of a sudden, and seemingly without warning, the busy retail stores are closed and the once-bustling streets have become a ghost town. The person who drives a garbage truck is paid more than a plastic surgeon. Flights are grounded and supermarket shelves are empty. A former international airline pilot in Brisbane offers to mow lawns for $20 and there are people selling toilet paper on eBay for hundreds of dollars. It’s a world which was unthinkable even a few weeks ago.
In recent days, the beaches and parks have been filled with obliviots (obliviot: (noun) someone who is an idiot, and oblivious to most facts, including being oblivious to the fact that they are an idiot). Sydney’s iconic Bondi Beach was swarming with rebellious fools and also, as it turns out, swarming with viruses.
Childhood hero of scores of movies from the 1980’s and 1990’s, Tom Hanks, visited Bondi Beach on March 7-8, and became another Hollywood victim of shaking hands with the wrong fan. Sadly, the person who infected Tom Hanks and his wife, probably didn’t even know they were sick, and could have infected hundreds more people on the same day. Maybe the world could be better off without some of the rebellious fools, but we all need more Tom Hanks in our lives. (#JustStayHome)
The long-sick economy slips into a coma: now what?
On a single day in March, almost a million working Australians became unemployed. Almost 3.3 million Americans lost their jobs at the same time. Welfare services were severely underprepared and overrun. Other countries saw civil unrest and transport lines snaking for city blocks, as city workers fled, or were sent, back to their homes and villages. It was eerie. It was immediate. It was unprecedented in speed and magnitude. A slow-moving monster is a little frightening (think “The Walking Dead”). A swift-moving monster is terrifying (think “Jaws”).
This was similar to our earlier predictions back in 2001 and 2006. Back in those BC days (Before Crypto), we measured the stock market indicators and knew there would be a crash coming very soon. We knew that prices and earnings were out of alignment. We knew that debt levels were too high. We did not have prior knowledge of the trigger events such as the 9/11 plane crash or the bond crisis which later became the #GFC1. But we knew that something would burst the bubble.
We wrote about the Coronavirus back in January 2020 and thought it had the potential, if not contained, to be the 2020 trigger event. Back in January, there was also the chance that the virus would be contained, but the economic system was still very sick, and it would only take one small push to make the patient slip into a coma.
There is a certain degree of schadenfreude in knowing that we were correct about something so terrible. Terrorist attacks, deadly infections, unemployment explosions and market crashes are all horrible things, but unfortunately they do occur sometimes. When tragedy strikes, when millions may lose their lives or their livelihoods, we can sometimes draw simple solace from knowing that those near and dear to us are safe.
For those who have been invested into BostonCoin for a while, and for those who have been reading these newsletters, we trust that you found yourself forewarned and forearmed by our analysis. In this new Global Financial and Health Crisis, which we dubbed #GFC2, know that, “we are all in this together”.
Some people may have a natural immunity to the new disease, but they may still lose their job, or lose a family member. Some people may have billion-dollar fortunes, but even piles of paper currency are not as soft as the almost unobtainable Quilton 3-Ply. A physical disease and a financial depression are things which can strike the rich and poor alike. GFC2 is not just another Great Depression, it’s the Great Equaliser.
When Gods Die
There was a time when much of the world worshipped gods such as Ra, Seth, Anubis, Osiris, Isis and Aten. Over time, Greek invaders came into Egypt and the ancient gods were ousted in favour of Zeus, Hera, Apollo and Dionysus. These gods were in turn supplanted by Roman invaders who worshipped Jupiter, Venus, Pluto and Mars. Many years later, a Roman emperor became tired of feeding Christians to lions, and adopted Christianity as the official religion of Rome.
Over time, as gods died out or were forgotten, empires rose and fell, and the money changed. An Egyptian shekel is now a curiousity, not a currency; ditto for the Roman denarius and Confederate or Continental dollars. There was a time when a single Zimbabwe dollar could buy two British pounds sterling; now the defunct 100 Trillion Zimbabwe dollar note is sold to tourists for pocket change.
Nowadays, one would be unlikely to find those who still worship the old gods, and nobody uses the old currencies. It is highly likely that you who read this will see, in your lifetime, the end of the US currency, once referred to, or almost worshipped as, “the almighty dollar”. It was once heresy to decry the old gods or disrespect the coin of the realm. It is no longer sacrilege to speak of the death of the US empire or the US dollar. A few decades ago, the concept seemed laughable. Now it seems a certainty.
Most US citizens would be unaware that the $US in their pocket is not the one of their forebears. The currency has had several regenerations; initially the 1792 US dollar was backed by an ounce of silver, then in 1900 by 1.5g of gold, more recently the 1944 Bretton-Woods dollar (fixed to gold) and finally the 1971 Nixon dollar (free-floating fiat, backed by nothing). The chart below shows the stability of backed currency and the mayhem which ensues when dollars are backed by nothing.
[Chart shows the number of countries having a banking crisis in each year since 1800. The dramatic feature of this graph is the virtual absence of banking crises during the gold-backed period of the Bretton Woods agreement, 1945 to 1971. Chart by DavidMCEddy – CC BY-SA 3.0,]
The obvious conclusion is that the financial system needs to be backed by something, otherwise we risk more chaos, more financial crises, longer and deeper depressions and a possible #GFC3. The hard part is convincing the financial oligarchs to bring in a simple and sensible system, which would render much of their middleman meddling obsolete.
There is potential for the 99% working class who create goods and services to conduct all their transactions via bitcoin, digital gold or digital silver. This could make redundant the 1% who trade in futures and derivatives and create nothing tangible or worthwhile.
It is an interesting thought experiment to imagine what would happen if all of the roles of the stock brokers, bond traders and hedge fund managers were suddenly obsolete. Those who have been tasked with minimising market risk have created chaos, many times.
Perhaps we would all be better off if they were working in roles where, if they screwed up, they only hurt themselves?
During the initial shock of the Coronavirus or COVID-19 crash, it was interesting to see that almost everything dropped. One would expect stocks and bonds to plummet, as investors feared a dramatic drop in economic output and financial instability. The unexpected blip on the radar was to see scarce commodities such as gold, silver and bitcoin also go down at the same time.
There is no other explanation for this but simple fear and panic. We can draw parallels to the first GFC in 2008; when the financial system shuddered, investors sold off everything, even traditional economic safe havens such as gold and silver.
This was the initial shockwave, where everything dropped in a moment of madness. However, during the next few months as the GFC unfolded, scarce commodities such as gold and silver rebounded quite strongly.
After an initial drop of around 20% in 2008, gold prices picked up almost 250% over the next four years of the GFC. Similarly, silver dropped almost 50% initially, before recovering for gains of almost 500% by 2012.
Bitcoin was not around during the GFC; it was created in response to the GFC, but we have seen the “digital gold” almost mirror its physical counterpart. Valued at around US$10 000 in February 2020, the COVID19 shock saw bitcoin drop briefly below $5000 before bouncing back.
Gold and silver are basically as untraceable as cash, so nobody could really identify who was buying and selling. However, the handy part of crypto is that whilst it provides a large degree of anonymity for users, anyone can see the wallet flows on the blockchain.
It is interesting to note that 80-90% of the people who sold bitcoin in the initial days of panic, were new users (those who had held their BTC for under one year). This shows that more experienced cryllionaires are unafraid of the dips, and they did not sell in a panicking market. Congratulations if you are a HODL’er. Continue to hang in there, buy the dips if you can, and stack assets for when the world comes out of this CovidCrisis into the new normal.
How did we do?
Obviously there are many losers in a panicked market, however there are also some winners. Despite many thinking the world was going to end, grandpa bitcoin still held over 80% of his pre-covidcrash value. It may have been frenzied trading which saw screens light up at Binance exchange, and the exchange profits whether coins go up or down. ChainLink and Celsius are still great utilities with real-world use, and continued to show strong performance.
Binance Coin up 131%
ChainLink up 232%
Celsius up 218%
For now, as always, we continue to watch the markets, seek opportunities and HODL good assets through the crazy times. The Boston puppy does not have crystal balls, but if he did, he would have one focused on the past patterns and one focused on future echoes. We anticipate good rises in many cryptocurrencies over the next few months as the covidcrisis unfolds, including Bitcoin, Binance, Chainlink, Celsius, BAT and POWER, but we always diversify and we always have a Plan B.
Tell your friends: #BostonCoin continues to hold a well-diversified portfolio of 50 cryptocurrencies, plus a handful of tech stocks. We have you covered amidst the covid.
See you next month. Hang in there, and stay safe: financially as well as physically.
BOS NAV at 31/03/2020
BOS price 23.11511
*see BostonCoin news Feb-March 2020 for more on the monsters, COVID19 (coronavirus 2019) and COVID08 (Creation of Virtually Infinite Dollars 2008)