Investing

We've all heard about Bitcoin and other crypto-currencies, which are all the rage right now.  But did you know that central banks around the world have been looking to create their own versions of crypto-currencies called central bank digital currencies?

This entire process kicked off in mid 2019 when social media giant Facebook announced ambitious plans to create a blockchain-based digital stable-coin called Libra.  This new crypto-currency was going to be backed by vast pools of safe, short-term debt instruments denominated in U.S. dollars, euros, British pounds, Japanese yen and Singapore dollars - much like a money-market fund.  The resulting digital currency would be relatively low-volatility - hence the name "stable-coin" - and could easily be traded across international borders via Facebook's digital Calibra wallet.

However as 2020 dawned, it quickly became apparent that Facebook's Libra digital currency would be stillborn.  Politicians and central bankers across the political spectrum strenuously objected to the bold plan.  Although the official skepticism towards Libra was ostensibly because of concerns over money laundering, in reality the idea was scuttled because it had the potential to permanently disempower existing national fiat currencies and their political beneficiaries.

But this idea did make it apparent to central bankers all over the world that digital currencies were here to stay and that if they wanted to remain relevant, they needed to adapt.  Facebook's failed Libra initiative became the motivation behind the idea of replacing existing national fiat currencies with central bank digital currencies.

There are a lot of very rational reasons for the adoption of central bank digital currencies.  Probably the biggest benefit is that it can simplify and expedite global payment systems.

Most people aren't aware of this fact, but the world's financial system is laboring under a disorganized patchwork of different payment systems that have haphazardly accumulated over the last several centuries.

We have cash, consisting of paper money and coins which originated in the 17th century or earlier.  There are checks, which are a late 18th century invention.  The first credit card was the Diners Club card, which was first issued in 1950.  The ACH (Automated Clearing House) system was deployed in Great Britain in 1968 and the U.S. in 1972.  Finally, we have the SWIFT (Society for Worldwide Interbank Financial Telecommunication) system which came into being in the mid 1970s.

Unfortunately, these payment systems are slow by modern standards and often don't communicate well with each other.  Enter central bank digital currencies.  Under this new system the dollar (or euro or pound or yen) would utilize blockchain technology to allow for near-instantaneous transfers of money from person to person, institution to institution, or any combination thereof.  So for example, a digital U.S. dollar would be nearly identical to the existing dollar other than its purely digital nature and built-in payment system.

The coming advent of central bank digital currencies isn't just idle speculation either.  The Swedish Riksbank began testing its digital e-Krona in February 2020.  The United Kingdom's Bank of England is actively researching its own digital currency.  And the Reserve Bank of Australia announced in November 2020 that it will explore the concept of a sovereign digital currency.

But the Bahamas has beaten them all by launching its very own (domestic use only) digital currency called the Sand Dollar in October 2020!

The United States Federal Reserve has signaled that it will not be left behind in the rush for central bank digital currencies by preparing its own FedNow Service.  FedNow is slated for release in 2023 or 2024 and will include core functionality necessary to any successful digital currency including fast clearing and settlement capabilities and balance inquiry/reconciliation features.  Although FedNow isn't a digital currency in its own right, it could very easily be used as the foundation for a future U.S. digital dollar once it has been perfected.

Now this is all well and good, but what I'm really interested in is the future implications of fully functional central bank digital currencies.  And due to the U.S. dollar's importance in global trade and finance, I'm going to focus my analysis on the effects of a possible Federal Reserve digital dollar.

My thinking was really sharpened on this matter by a YouTube video I recently watched featuring Raoul Pal, the CEO and co-founder of Real Vision Finance.  It is an incredibly thought-provoking video that I highly recommend you watch.  I would even go so far as to say that Raoul Pal is almost prophetic in his musings.  I've embedded the video below for you convenience.

Let's see if we can intelligently speculate about the future ramifications of a fully-digital, Federal Reserve dollar (which we will nickname "FedCoin").

First it is apparent that upon the launch of FedCoin every citizen will receive a free online account (or digital wallet) capable of storing, sending and receiving the Fed's new digital currency.  This will almost certainly be coupled with enticements for individuals to use the new system.  These could include higher interest rates on balances held in FedCoin (versus dollars held in the traditional banking system), faster receipt of government mandated stimulus payments, lower prices for goods and services (because there would be no credit card vendor fees for retailers to pay) and the possibility of bonus stimulus payments not sent out to people who don't use FedCoin.

The savvy observer will immediately note that a Federal Reserve digital currency would permanently disintermediate a large segment of the financial services sector almost immediately.  The importance of this development cannot be overstated.  If FedCoin is rolled out successfully, the demand for credit cards, bank deposit accounts or other transactional, retail-facing banking services (think PayPal or Venmo) would decline dramatically nearly overnight.  FedCoin would simply do what these companies' services already do, except faster, cheaper and better.

However once successfully established, the financial authorities would have unprecedented control over the financial system.  They could almost instantaneously credit or debit any FedCoin digital wallet for any amount with little oversight.  It would be difficult - bordering on impossible - for any central bank to resist the raw power that this scenario would bestow on them.

And while it could be used relatively responsibly - for the fast payment of stimulus funds or UBI (Universal Basic Income) to citizens in need - it is more likely that our central bank overlords will ultimately abuse their newfound financial power.

I imagine this would be a gradual, creeping process.

For example, if the economy were to take another nosedive (a distinct possibility in a world of rolling lockdowns due to COVID) the Fed might feel compelled to step in to provide fiscal stimulus if the legislative branches of government were unable to come to a speedy agreement among themselves.

In fact, the Federal Reserve has already floated a trial balloon for this idea via what it calls "insurance recession bonds".  These would be contingent, zero-coupon bonds that would only be "activated" when GDP declines below a certain threshold.  Once activated, the Fed would automatically issue checks to every American household using the bonds as collateral.  It is important to note that the bonds would simply be a book-balancing accounting exercise - in reality it would be naked money-printing.

Insurance recession bonds are important because they would allow the Fed to usurp congress' traditional role of allocating government spending.  Suddenly, the Fed would be the real fiscal power behind the throne.  I expect this outcome, if for no other reason than because the U.S. Republican and Democrat parties are unable to collaborate in any meaningful way anymore.

And if a Fed issued central bank digital currency already exists, then this entire process would become even more irresistible.  After all, it would be convenient for both U.S. political parties if they were to grandstand for the cameras, each refusing to give an inch to the other side, while the central bank did the real heavy lifting of making sure tens of millions of people got the necessary funds to put food on the table or avoid eviction.

One dark side to this system is that there will be tremendous political pressure to make FedCoin the only game in town.  Right now the Federal Reserve (along with most other central banks) is bumping up against the limits of monetary policy due to the zero-bound problem.  When interest rates are at 0%, it is almost impossible to stimulate the economy via traditional monetary policy.  It is also very difficult to institute negative interest rates because people can always flee to physical cash (which is exempt from such a policy).

But once FedCoin has been properly rolled out and scaled-up, there isn't any reason why the U.S. Treasury couldn't phase out the use of cash (and non-FedCoin bank accounts).  The justifications for such a move could be numerous: cash is dirty and unsanitary in an age of pandemics; cash is antiquated and unnecessary; only criminals and tax-cheats use cash, etc.

The point is that once Fedcoin has been firmly established as a universal, convenient and low-cost alternative, the financial authorities might well move to ban cash.  This could be done via a carrot and stick approach, with small bonuses for those who use the new FedCoin (extra one-time payments or higher interest rates) and punishments for those who fail to adopt the new digital currency (slower stimulus payments or additional financial scrutiny from the authorities).  It is even possible that citizens may eventually be forced into using FedCoin or face the prospect of not receiving their stimulus or UBI payments at all!

Once the Fed has transitioned everybody to FedCoin and phased out cash, it will find a wonderland of new monetary policy tools at its fingertips.

For instance, the central bank could easily implement negative interest rates without having to worry about people hoarding cash.  It could (electronically) print and instantly distribute massive sums of money to systematically-important financial institutions or favored industries.  It could engage in targeted interest rates where some groups (like college students) would receive high interest rates on their FedCoin (to encourage them to save) while other groups (like retirees) might receive negative interest rates on their savings (to encourage them to spend).

It is even conceivable that the Fed could deposit stimulus funds into peoples' digital wallets, but then declare that if the money is not spent within a certain time frame it will disappear!  And all of this could be done with little to no oversight from elected officials.

There are other downsides to central bank digital currencies for the average citizen besides delightfully cruel new monetary policies.  Once FedCoin is the exclusive money of the realm, the government would be able to track every single purchase or financial transaction that you make.  The central bank would even have the ability to block transactions that they feel are suspicious or that they don't like.

So when might we realistically see FedCoin come into existence?  That isn't exactly clear.  The Federal Reserve states that their FedNow Service won't be ready until 2023 at the earliest.  This technology could serve as the backbone of a FedCoin rollout.  But in my opinion, it would still take a minimum of 18 to 24 months after the introduction of the FedNow Service for an official U.S. dollar-based digital currency to be ready.

That would put the first realistic date for the release of FedCoin at 2025 or 2026 at the earliest.  In all probability it would take substantially longer than this given the technical hurdles inherent in such an ambitious project.  In other words, the late 2020s or early 2030s seem like a far more viable date for the release of FedCoin.

But let's not lose sight of what is important here.

Although central bank digital currencies may be the future of fiat money, they'll only serve as a trap for the average person.  This is why I advocate buying portable tangible assets as a way to protect yourself from the possibility (maybe even inevitability) of FedCoin and other central bank digital currencies.  This could be as simple as purchasing a $1,000 face value bag of U.S. 90% junk silver coins or as complex as assembling a fine collection of vintage Patek Philippe wristwatches.  Bullion, fine art, gemstones and antiques are all feasible alternatives to a locked-down, FedCoin-dominated financial ecosystem.

Central bank digital currencies are coming, maybe not this year and maybe not next year, but they are coming.  Invest accordingly.

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The dominant narrative of the 2020 financial markets is that the U.S. Federal Reserve is printing the U.S. dollar into oblivion.  After having expanded its balance sheet by roughly $3 trillion between March and May 2020 (during the worst of the pandemic lockdown), the Federal Reserve has actually shrunk its balance sheet by $220 billion since then.  But this hasn't stopped financial pundits from breathlessly speculating about how close the U.S. dollar is to collapsing into hyperinflation.

A great example of this conventional wisdom can be found in an article I recently discovered on the financial blog Adventures in Capitalism.  This blog is run by Harris Kupperman (aka Kuppy), founder of the hedge fund Praetorian Capital.  This guy is a market pro with over two decades of investing experience.

Kuppy penned an article titled "Did The Market Actually Recover From COVID-19…???"  It posits that even though the broad equity markets are either near (the Dow and S&P 500) or at (the NASDAQ) all time highs in nominal terms, in reality they are grinding along very low levels in valuation terms.  This means that equities are a buy - a strong buy!  Only an idiot wouldn't be long this market!

The way he achieves this valuation sleight of hand is by arguing that the U.S. financial authorities are engaged in what he calls "Project Zimbabwe" - in other words, hyperinflation.  During hyperinflations, stock markets shoot to the moon in nominal terms, even as the economy disintegrates around them.  This has happened in every country that has 1) experienced hyperinflation and 2) had a freely-trading stock market at the time of its hyperinflation.

The two latest examples of this unfortunate situation are Zimbabwe and Venezuela.  The Zimbabwe Industrial Index is up 654% for the YTD period through July 2020 while the Venezuela Stock Exchange General Index is up 280% over the same time.  So just invest in stocks and we'll all be rich, rich as Nazis!

Or maybe not.

Inflation in Zimbabwe is running somewhere close to 800% on an annual basis while Venezuelan inflation is maybe around 2,000% (hyperinflation rates are notoriously difficult to track, so all these figures are approximate).  So equity investors in these countries might actually be losing money in real terms as inflation threatens to outpace any gains they make in the markets.  Suddenly, those hockey stick equity market charts don't look nearly so appealing.

But Kuppy will not be deterred.

He produces a chart that shows the ratio between the S&P 500 ETF (SPY) and the Federal Reserve's balance sheet.  The implication is that in a "true" bull market the S&P 500 will rise in relation to the Fed's balance sheet, while in a bear market it will fall.  The chart then shows this in action, with the market ratio rising (the green line below) for most of the 2010s only to get unceremoniously knocked back down by the 2020 global pandemic.

SPY to Fed Balance Sheet Ratio

But I find Kuppy's accompanying commentary to be an intriguing window into the hyperinflation-obsessed thought process of professional money managers everywhere.  I have excerpted a paragraph from his article below:

"What I find stunning is that after the COVID-19 crash, we’ve barely even bounced off the lows. In fact, we gave back a decade of retained earnings, financial engineering and everything else. We’re actually all the way back at 2010 levels. That’s stunning right? It’s literally been a wasted decade in the financial markets when indexed to the Fed’s balance sheet. That’s your COVID-19 crash and it’s as severe as you’d expect it to be."

So Kuppy thinks the downtrend in the S&P 500/Fed balance sheet ratio will stop and reverse higher as the Fed's money printing continues unabated.

Hyperinflation Ho!  Zimbabwe here we come!  Save us Dow!  Save us S&P 500!  Save us NASDAQ!

The hyperinflation narrative is perhaps best represented by the catchy slogan "money printer go brrr", which implies that Fed governors are busy manning the printing presses in the basement of the Eccles Building in a nefarious attempt to destroy our collective monetary future.  Here is an absurdly entertaining YouTube meme that encapsulates everything the mainstream investment community currently believes about the Fed's money printing.

Kuppy, like many money managers in the world today, is suffering from Fed induced Hyperinflation Derangement Syndrome.  Their thinking is that because gold is going up and stocks are going up and the Fed is printing, then it must mean that hyperinflation is right around the corner.

Except it's not true.  The Fed printing is really just plugging a giant sinkhole in the economy…barely.

As soon as I read Kuppy's article I decided to prove it wrong.  After about 45 minutes of work, I had my own chart showing the ratio of the Japanese Nikkei 225 Index to the Bank of Japan's balance sheet.  Remember, this is the same Bank of Japan that has been printing with wild abandon for years…years!  They've printed so much that their balance sheet has now swelled to 118% of Japanese GDP.  To put that into perspective, if the Fed just matched the BOJ, they would have to print an additional $16 trillion - enough to double the value of every dollar deposit account in the entire country!

And despite all this BOJ printing, there is still no inflation in Japan.  None.  Zero.  Nada.  Zilch.  The latest Japanese inflation reading in June 2020 was a microscopic 0.1% year-over-year.

Kuppy implicitly believes that the last 10 years of retained earnings and financial engineering in corporate America couldn't have been for nothing.  But it was.  Outside of a handful of exceptions, corporations actually retained very little in the way of earnings over the past 10 years.  Instead they spent it all on share buybacks and dividends.  Financial engineering has likewise proven to be a curse for long-term shareholders.  It has hollowed out many companies' productive capacities, snuffing out their future viability.

Instead of arising like a phoenix to new highs, further Fed printing will only cause the S&P 500 to Fed balance sheet ratio to contract even more aggressively.  One only has to look at the Nikkei to BOJ balance sheet chart below to realize that.  Regardless of how many trillions of yen the BOJ has printed, the ratio has relentlessly sunk ever lower.  In fact, you can still buy the Japanese Nikkei Index for the same (nominal) price it was back in 1987 - over 30 years ago!

Nikkei 225 Index to BOJ Balance Sheet Ratio

In the final analysis, there are two interpretations of what is happening in the market right now.  The first is that we are in the nascent stages of hyperinflation - the money printer go brrr hypothesis.  This is the glib, simplistic myth that just won't die.

The other possibility is that traumatized investors are fully cognizant we have entered a modern-day Greater Depression.  Consequently, they are retreating to the safest, most liquid and money-like financial instruments possible - things like Treasury bonds, Agency debt and cash, along with gold and silver bullion.  In conjunction with that, we are also experiencing the end stages of the largest equity bubble in the history of mankind - the twilight of the dreaded Everything Bubble.

I think the latter explanation is far more compelling than the former.

Of course I don't hate equities simply because they are equities.  I hate them because they are so overpriced at the moment that their future returns will undoubtedly have a negative sign in front of them.  If the valuations weren't so obscene, my investment outlook would be more constructive.

As a parting gift, I will give you a little investing tip.  You'll often hear that you should invest in good, solid dividend paying stocks.  And I would, if there were any domiciled in the United States.  Alas, U.S. corporate management has mortgaged their shareholders' future through accounting tricks and excessive leverage.

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But I did stumble across a gem from overseas during my research.  Coca-Cola Bottlers Japan Holdings Inc. is a company that controls 90% of the Japanese Coca-Cola beverage distribution market by sales volume.  It administers the most important, most populous geographic areas in Japan, including Tokyo, Osaka and Kyoto.  The company trades under the ticker "2579" on the Tokyo Stock Exchange or "CCOJY" as an over-the-counter ADR (American Depositary Receipt) in the U.S.

The firm has a market cap of around $3 billion, making CCOJY a mid-cap company.  It also has an English language website, which makes gathering company information easier.  The ADR (CCOJY) will probably be the most accessible security option for most U.S. investors.

I like CCOJY because it has a healthy dividend yield of between 2.5% and 3.0%, a low price-to-sales ratio of 0.35, and a reasonable debt to (tangible) equity ratio of only 55%.  The company's debt sports a solid AA-/A+ credit rating, which means that their debt servicing costs are negligible.  The chances of this firm going bankrupt are nil.

Coca-Cola Bottlers Japan Holdings Inc. is the kind of company you buy today and stuff away in your retirement account for the next 10 years.  You'll earn a fair return on it (probably mid single digits annualized), which I understand isn't stellar.  But neither will you wake up one random morning to news that the company disintegrated overnight as its executives fled to Mars in the wake of an accounting scandal.

CCOJY has declined by about 45% (in dollar terms) from earlier this year due to the impact of COVID-19.  But it is a consumer staple company and sales volumes are unlikely to drop significantly.  Positive near-term catalysts include the (now delayed to 2021) Tokyo Summer Olympics and the potential for further consolidation with the remaining smaller Japanese Coca-Cola bottlers.  CCOJY's dollar price is currently near an all-time low, while its yen price is the same as it was back in 2013, 2009, 1995 and probably earlier as well (but that is as far back as I could get data).

In any case, please do yourself a favor by not falling for the hyperinflation myth.  The U.S. dollar isn't going to fall apart anytime soon.  But even so, I think allocating some of your portfolio to gold or silver (or the rare undervalued stock) is a good idea.  Otherwise, holding cash while you wait for better investment opportunities to come along is just fine.

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We all want our fair share in life.  Unfortunately, with the onset of the greatest financial disruption since the Great Depression I suspect that getting your fair share will become increasingly difficult in the years ahead.  But there is still a small window of opportunity remaining - a period of time when the increasingly debased dollars in your bank account haven't quite caught up to the reality of the extreme scarcity of most tangible assets.

You see, the world is currently awash in financial assets.  There are more equities, bonds and real estate securities in existence today (as measured by dollar-denominated value) than at any other time in human history.  And the growth rate of these financial assets has been absolutely stunning over the past several decades - a classic exponential curve.

In contrast, hard assets in the real world - things like precious metals, antiques, gemstones and fine art - have only experienced linear growth.  This makes them quite rare when compared to financial assets.

How rare?

That's something I wanted to find out.  So I asked myself a hypothetical question.  What if everybody tried to get their "fair share" of hard assets?  In other words, what if we split the world's supply of tangible assets evenly among the total world population?  How much would there be per person?

But let's assume for a moment that we only care about the richest 10% of the global population.  Why do I make this distinction?  Because poor people, regardless of whether they live in developed or emerging markets, have a very limited ability to invest in anything.  They will almost certainly not get their "fair share".  As unjust as this sounds, it is the truth.  Only the world's middle class and wealthy have the means to realistically protect themselves financially against the coordinated central bank debasement that we now face.

Taking the richest 10% of the world corrects for this situation.  So it is only this select group that I will divvy up the world's tangible wealth among in the calculations below.  But don't worry.  It is actually much easier to make it into the world's richest 10% than you might think at first.

As of March 2020, the world's population reached 7.8 billion.  According to investment bank Credit Suisse's 2019 Global Wealth Report, it takes a net worth of just under $100,000 (including primary residence) to belong to the richest 10% of the global population.  The people who fit this description are the usual suspects - many North Americans, Western Europeans and Japanese, along with China's rising middle class.

So how much is your fair share of the world's hard assets?  Read on to find out!

It is estimated that the total stock of above ground gold is around 170,000 metric tons, or 5.5 billion troy ounces.  This king's ransom represents about 90% of all the gold humanity has mined throughout history.  This is due to the fact that gold is almost always recycled and, therefore, never truly lost.

If we divide this massive gold stash evenly among the richest 10% of the global population (780 million people), we come up with a modest per person "fair share" of 7 troy ounces each.  At the current spot price of $1,800, this amount of gold would only cost you $12,600.

The numbers for silver are even more shocking.  Although estimates vary widely, if we (generously) assume that there are perhaps 1,360,000 metric tons of silver stockpiled in the world today, it would translate into just 56 troy ounces for each of the world's wealthiest individuals.  Even with today's usurious premiums on physical silver bullion ($22 an ounce, delivered), your fair share would cost a paltry $1,232.

And if you thought the numbers for silver were nuts, just wait until you hear how rare platinum is!  We can safely predict that there are no more than 12,000 metric tons of platinum in the form of bullion, jewelry and scientific equipment in the world.  If we split this (probably overestimated) amount evenly among the world's richest 780 million people, we would come up with a scant 1/2 troy ounce per person.  Even when paying an elevated premium over spot to acquire physical metal, your fair share of platinum would only cost you $500 to $600 today.

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But what happens when we move beyond precious metals?

Here's a hint.  Antiques are just as rare as gold and silver, if not more so.

For example, numismatic experts believe that up to 65 million of the iconic U.S. Morgan silver dollar have survived in mint state condition.  Perhaps a slightly smaller number of U.S. silver Peace dollars are also extant in mint state.  These U.S. silver dollars were struck in massive quantities, making them relatively common today.  They are so common, in fact, that there is probably the same number of Morgan silver dollars as there is old foreign silver crowns (silver dollar-sized coins) in existence.  Some well-known examples of foreign silver crowns include the British crown (a pre-decimal 5 shilling piece - last struck in 1937), the French 5 franc (last issued in 1871), the Mexican 1 peso (last minted in 1914) and the Japanese 1 yen (also last struck in 1914).

So let's assume that we divide the world's estimated supply of mint state U.S. silver dollars and foreign silver crowns equally among the world's wealthiest 10%.  That would be 65 million Morgan dollars plus maybe 40 million Peace dollars plus another 65 million foreign silver crowns for a grand total of 170 million coins.  These are probably excessively kind assumptions about the surviving populations of large silver coins, but we'll use them anyway.

Once we divide our 170 million coins among 780 million people, we find out that your "fair share" is only about 1/5th of a coin.  Of course, we can't split a coin into fractions and still have it retain any numismatic value.  So about 78% of the wealthiest 10% of the population will never, ever get their fair share here.  This is in addition to the poorest 90% of the population who will also get a big goose egg.  Only 1 in 5 middle class/wealthy individuals could possibly have the honor of owning one of these impressive pieces, representing about 2.2% of the total global population.

And the price tag?  A mere $50 or $60 will get your foot in the door with a PCGS or NGC certified mint state Morgan silver dollar.  For those interested in learning more about this subject, please read my beginner's guide to investing in slabbed Morgan silver dollars.

It is insane to think that rare coins have been so devalued in the modern age that $50 is enough to buy an entry level investment grade example.  But it is completely true.  And coins aren't the only category of tangible asset that has been neglected during the raging paper asset bubbles of the past decade.

Vintage watches are also incredibly undervalued.  These include pre-1990 watches from world-renowned brands such as Rolex, Omega, IWC, Hamilton and Longines, among others.

A quick search of eBay reveals that there are approximately 40,000 vintage watches for sale on the platform at any given time.  Now I've tried to filter out examples that I consider uninvestable.  This means I've excluded parts watches, quartz watches and gold-filled or gold-plated watches.  If we conservatively guesstimate that the remaining 40,000 specimens for sale on eBay represent just 0.1% - 1/10th of a percent - of the surviving vintage watch population, it means that there are around 40 million old collectible watches out there.

It seems like a lot of watches, right?

Wrong.

If everyone in the global middle class wanted to own just one of these horological treasures, we would quickly discover that only 1 in 20 people would have their wish fulfilled!  High quality vintage watches, like most hard assets, are obscenely rare.  Yet $500 to $1,000 will allow you to choose from a wide range of desirable examples.  $1,500 to $3,000 will get you a superlative solid karat gold dress watch or complication-laden sports watch from some of the finest manufacturers out there.

Vintage Wristwatches For Sale

So what is going on in the world?  How can hard assets that are so scarce be so cheap right now?

I have a theory on this.

In my opinion, the financial authorities have spent the last 30 years striving to answer a question that nobody asked.  What if everything that humanity once held in high esteem - precious metals, gemstones, antiques, fine art - was suddenly ignored and treated as though it was worthless?  It is a bizarre sociological experiment doomed to end in tears.

So why would the central bankers even attempt it?  That, at least, is somewhat easier to answer.  If everyone is chasing paper assets instead of tangible assets, it gives the world's monetary authorities unprecedented control over the global economy.  At least while it lasts.

But the outcome of this perverse experiment has been surprising.

The value of hard assets didn't drop to zero as the central planners had hoped.  Instead, they stubbornly maintained a bid - albeit at reduced prices - in a financial world madly obsessed with worthless unicorn IPOs, securitized junk debt and exotic derivatives.

Now the pendulum is slowly but surely swinging the other way.  This threatens to destroy the fake economy that the world's central bankers have so painstakingly tried to build.  Your only protection is to diversify your portfolio into hard assets - precious metals, antiques, rare coins and other tangibles.  It is imperative that you get your fair share of these undervalued assets while bargain pricing still abounds.

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