Bo knows baseball. 

Bo knows football. 

Bo knows…

I remember that 1989 Nike commercial like it was yesterday… and I remember owning a pair of the Bo Jackson-endorsed crosstrainers the commercial was pitching. 

In case your memory needs jogging, Bo Jackson was a phenomenal athlete in the 1980s. And when faced with the choice of pursuing a career as a professional baseball player or as a professional football player, he chose not to choose. He did both… and did both exceptionally well. 

He won the Heisman Trophy as a running back at Auburn before enjoying several strong seasons as a running back for the Los Angeles Raiders, and he was an All-Star baseball player with the Kansas City Royals.

I think about this when I hear investors debating whether gold or crypto is the better dollar hedge. I choose not to choose. I recommend both in The Freeport Investor model portfolio and consider both to be permanent positions (learn more about how to join us at the Investor by going here; or log in here if you’re already a member). 

Our friend James Hickman of Schiff Sovereign has a good take on this rooted in over 6,000 years of history. He’s kindly given us permission to share his thoughts with you. I hope you enjoy it as much as I did!

To life, liberty, and the pursuit of wealth.

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Setting the Gold Vs. Crypto Debate

By James Hickman, Schiff Sovereign

In 1972, while excavating to build a factory on the Black Sea coast of Bulgaria, a backhoe operator noticed gold objects glimmering in the bucket of his machine.

The construction worker had accidentally discovered the Varna Necropolis.

Dating back to around 4500 BC, the jewelry found in this ancient burial site is the earliest evidence of human’s use of gold, and archeologists believe that they were considered a status symbol in ancient burial rituals.

Thousands of years ago, gold was likely collected from the earth’s surface in the form of nuggets or river dust.

It wasn’t until about 3500 BC, on a hilltop located in the modern-day country of Georgia, that a group of people from the prehistoric Kura-Araxes culture dug the oldest known gold mine.

Known as Sakdrisi-Kachagiani, the gold mine predates Ancient Egypt and even Mesopotamia.

By around 2000 BC, commercial transactions involving gold were being recorded on cuneiform tablets in modern-day Turkey. Materials like tin and textiles were traded for a particular weight of gold, because the first known gold coins weren’t minted until around the 6th century BC.

King Croesus of Lydia, also in modern-day Turkey, used these coins to standardize the weight and purity of gold.

After that, gold coins were used directly in commerce for thousands of years, until the United Kingdom formally adopted the gold standard in the early 1800s. This was the first monetary system where a country’s paper money had a value directly linked to gold.

And even today, over 50 years since the United States abandoned its own gold standard, central banks around the world still hold vast quantities of gold as a reserve to store value.

Individuals and large financial institutions do the same. And gold jewelry is still extremely valuable.

That’s quite a track record. For over 6,000 years, humans have valued gold.

Fifteen years ago, Bitcoin was created. And today there are countless millions of people who believe crypto has value too.

Now, gold and crypto are completely different and seldom belong in the same sentence. But for some reason there are often heated debates between proponents of each who argue bitterly over whether gold or crypto is better.

No other asset classes attract such conflict or controversy. You don’t see passionate oil investors engaging in riotous debates with natural gas speculators. There is no heated argument over wheat versus soybeans.

But gold and crypto are sometimes positioned as diametrically opposed, and this is just silly. Each asset has its function.

Gold has an enormous amount of value — and I have actually argued that it is still undervalued, even at its all-time high.

Like Charles here at The Freeport Navigator, I’ve written extensively about the U.S. government’s financial woes. The national debt is closing in on $35 trillion, and that figure is set to grow by $20-plus trillion over the next decade according to the government’s own financial forecasts.

In addition to the new debt, the amount of debt the U.S. government has to refinance over the next five to seven years is staggering — literally tens of trillions of dollars. And all of it will be refinanced at a higher interest rate.

This means that interest payments on the national debt will keep growing like a malignant tumor.

In fact, this year the amount of interest paid on the national debt will exceed defense spending for the first time in U.S. history. And it will only keep rising.

Gold will most likely do very well in that scenario. But more importantly, foreign governments will likely move away from the U.S. dollar as the global reserve currency over the next five to 10 years… and gold is the most likely asset to replace the dollar.

Central banks are already buying more gold as a reserve. And when the dollar loses its dominant global reserve status, countries are likely to turn to gold as a stable alternative that they can trust… because they already own it.

Simultaneously, crypto also has a lot of benefits. If you hold 100% of your savings in the financial system — whether at a bank, brokerage, etc. – you might be surprised to find how easy it is to lose access to your funds.

Government agencies can seize your account (without due process) even by mistake. Banks can fail. They can freeze your account and force you to prove that you’re not doing anything wrong.

Plus, even the most mundane bank transfers these days are heavily scrutinized. I had an exasperating conversation with a bank not long ago when I tried to send money to my sister… and they required all sorts of paperwork and justification to send my own money to my family.

Crypto is a great way to bypass that mess… to simply send money from Point A to Point B directly, without any middleman whatsoever.

Crypto exists digitally, so it can be moved across borders easily and at no cost. And if you know what you’re doing, you can hold it yourself, without any third party or even special security equipment… and this is an incredibly unique feature.

You need to figure out what you want to accomplish and figure out which tools are available to help you achieve your goals.

It’s a pretty smart goal to want to have protection against the declining currency of the world’s most heavily indebted nation. It’s also a reasonable goal to want to own some assets that are completely beyond the financial system.

Crypto and gold are two completely separate tools for completely separate purposes. There’s no sense in debating crypto vs. gold. To me the answer is both.

To your freedom.

P.S. Wednesday, May 1, is Election Shock day. It’s the latest Federal Reserve meeting, and as Charles explains in this video, he’s expecting fireworks. Best prepare yourself now.

And again, thank you to James for letting us share these thoughts. If you’d like to read more from him, visit Schiff Sovereign.