Tuesday 9th January 2018
Figure out where the black money goes next….
It is a blessing to live through interesting times….
And no-one can fail to appreciate just how interesting the world of money is as we freewheel downhill into a new year….
It is a case of extremes every which way you turn….
- Rewriting the record books….
After a decade of the lowest interest rates in 5000 years, 2018 begins with British and American stocks recording all-time new highs – putting further gains on what was already an over-extended bull market….
And volatility is setting new records too. The CBOE Volatility Index (VIX) is hovering around its all-time low – and has been for a while now…
This tells us that investor complacency is at an all-time high. The market has never been more confident that things will continue to tootle along just as they have been….
Maybe the markets are correct. Maybe these trees can grow all the way up to the sky and out into space….
After all, stocks are sitting at pinnacle valuations wherever you look – all over the globe. Surely so many markets can’t be wrong….
But markets have a funny way of biting you hard on the backside….
Just when you think you’ve got them fathomed, just when you think everything is just as it should be, they are liable to do something to surprise you….
- A change in the crypto-focus….
Bitcoin players might recognize the phenomenon I’m talking about….
The cryptocurrency enjoyed unprecedented gains during 2017 – with the price rising from just a few hundred dollars to not far short of $20,000….
The line on the chart was literally vertical. I believe many speculators went into Bitcoin thinking that the currency could go no other way than up….
But right at the back end of the year there was a significant drop off and prices haven’t yet bounced back to previous levels. Some of the momentum appears to have been lost….
And, despite all the headlines and all the hype and all the talk, when it boiled down to it Bitcoin didn’t even make the top 5 when it came to crypto-asset performance in 2017….
Bitcoin finished all the way down the list at number 14 in the rankings – growing a measly 1318% over the year. Mere chickenfeed compared to the real growers!
Number one spot went to Ripple. That crypto grew an incredible 36,018% during 2017. And Ripple was one of the coins to benefit from Bitcoin’s recent fall as speculators appeared to switch allegiances over the Christmas period….
Monero was another crypto-asset that went on a festive-season tear as the focus of the cryptocurrency game appeared to shift a little….
- Why Monero?
Privacy-issues will have had a lot to do with money shifting from Bitcoin to Monero over the last few weeks….
Law enforcement agencies are slowly getting to grips with Bitcoin and developing software tools that help to identify and monitor people using the currency – and to track payments….
Because Bitcoin has been the poster-boy of the crypto-revolution, it has also been the number one target for investigators.
And, as a result, the anonymity that made it so attractive to early-adopters is steadily being eroded….
But that’s not the case with Monero….
Monero is specifically designed to avoid tracking and has fast-become the crypto-currency of choice for online extortionists who remotely lock computers until victims pay a ransom….
In December, hackers targeted hundreds of thousands of WordPress-based websites in this manner and demanded payment in Monero.
And it won’t just be online extortionists who find something to like in the anonymity afforded by the Monero coin.
Criminals of all stamp and creed will recognize the value of adopting and using a currency that leaves no paper-trail leading back to an individual or organization….
- Profit from the black money?
Clearly, there’s a great deal of black money at work in the largely unregulated cryptocurrency system….
And cryptocurrencies that make it difficult for law enforcement by building anonymity into the system are going to be heavily attractive to criminal elements who wish to keep money and their ownership of it outside of official boundaries….
If I were a complete pragmatist, I might make that fact the basis of any future speculation in penny-cryptos….
I might set out to identify little-known coins available for pennies that offer strong anonymity or other privacy protections – knowing that these features stand a strong chance of proving attractive to big market players (albeit criminals) somewhere down the road….
I’d be looking to buy such coins and then sit on them in the expectation that their privacy-features ultimately attract the allegiance of the many wrong-doers in the World – creating a price spike and a potentially massive profit opportunity….
- Cat and mouse….
It’s a simple idea. Nothing too complex.
But that’s what I like about it. Simple is often best.
Profiting from predicting the movements of black cash won’t be everybody’s cup of tea. Call me a cynic, wag your finger and tick me off. Your call. But these are interesting and extreme times….
And dodgy money has a lot to do with the surges in price some of these cryptos are experiencing….
It’s going to be a cat-and-mouse game between the crooks and the cops for some time to come….
The criminals are going to be switching from coin to coin as the cops either catch-up to or close-down the current secure coin of choice….
Sitting on a few possible options for the crooks at pennies on the pound doesn’t deliver guaranteed success….
But if you’ve got a few quid to speculate with (money you don’t mind waving goodbye to), it’s something to keep you entertained – and who knows where it might take you.
If the crooks do take-up the coin you’ve purchased early doors, you’re going to be in a nice position….
- I’m going in….
I’m going to be buying some cryptos this year….
I won’t be buying for big money and I won’t be buying with the intention or expectation of making big money either. I’m looking at the whole thing as an education process.
Crypto-currencies are volatile and subject to wild fluctuations in price right now, but they are not going anywhere.
Crypto-currencies are here to stay. They are going to form a big part of the future financial landscape….
Bitcoin may or may not endure. It remains to be seen….
Maybe one of the second-tier coins – Bitcoin Cash, Ethereum, Ripple, Monero or Litecoin – will soon displace Bitcoin as the kingpin crypto….
Maybe we haven’t even yet heard of the cryptocurrency that will one day in the future become the dominant player – if indeed it turns out there is just one dominant player….
It is still very early days in the cryptocurrency world. But it is not too early to start developing a working knowledge of cryptos and the tech behind them: how to select, how to buy, how to store, how to spend, how to transmit, how to trade and how to exchange….
I think that’s a worthwhile investment of time and effort in 2018. And it’s an area I’m committed to exploring. I want to familiarize myself with the technology. I’m going to be watching, reading, learning and doing….
And I’ll be documenting some of what I learn, what I do and what I discover as part of the Money Truths coverage over the next 12 months….
Of course, that’s not all we’ll be doing. These are very interesting times and there many things to keep us interested….
More next week….
That’s how it looks from here….
All the best,