Preserving Purchasing Power in a Shifting Financial World: Embracing Bitcoin and Commodity-Based Currency?

All the doom and gloom about de-dollarization, don’t be a slave of the algorithms, sure the trend is there, but it will take decades. The idea of the Euro had been brewing from the 1960s until its official launch in 1999. The development of China and the Yuan has taken decades. This was China’s goal for already a long time. I wrote my bachelor’s thesis about Yuan and China in 2010/11, and it was PBOC’s agenda back then. This is good for the world in the long term, with a more “decentralized” system and balancing imbalances. However, challenges persist, such as the Eurozone’s massive deficit and significant commodity needs. France already made a deal with China in Yuan. No, the Yuan in its current state won’t become a world reserve currency, and I don’t know what would be the most optimal solution for a global trading system.

Looking a decade ahead, focus on preserving your purchasing power. Currency dynamics are changing, and we must pay closer attention to them.

How to keep purchasing power? Should you invest in Bitcoin? Gold? Stocks? Bonds? Buy a new car? Buy more real estate? Start by cutting your consumption to the bare minimum.

Will we experience double-digit inflation similar to the 1970s? It’s difficult to predict. We know our purchasing power is eroding if we trust traditional finance. The rate we get for our savings is 2.2% here in Finland (locked for 12 months), and inflation is 8,5% — Im getting screwed.

Inflation is the most destructive disease known to modern societies — Milton Friedman.

Benjamin Graham’s “World Commodities and World Currency”

Benjamin Graham, the father of value investing, proposed using commodities as a world currency. His goal was to stabilize international trade and maintain purchasing power. He presented this idea in his book “World Commodities and World Currency,” published in 1944.

A basket of commodities, including essential goods like wheat, cotton, and metals, could be used as an international currency. By tying the value of a currency to a diversified basket of commodities:

• Reduce the influence of individual countries’ monetary policies and create a more stable global economic system.
• Less susceptible to inflation & fluctuations caused by national policies.
• Promote economic stability and international trade.

Make your own “currency” in the form of a diversified basket of commodities — a robust shield against inflation and instability.

Bitcoin, a decentralized apex predator of assets, offers a unique solution for preserving purchasing power. It provides numerous advantages: Read more.

Bitcoin is:

First Global

Private (no government oversight)

Digital rules-based

Monetary system

Thx RELAI: Best app to buy Bitcoin in Europe

However, there are challenges, such as a steep learning curve and price volatility. Despite these drawbacks — decentralized nature, predictable monetary policy, and limited supply, Bitcoin stands out as a powerful contender for wealth protection.

Long-term goals and dollar cost averaging can counter the volatility. FOMO to the top? -55%. DCA from the top monthly? Up 7%. If you are even more disciplined, you could adjust your position size.

Will these dynamic changes in world currencies increase demand for Bitcoin or make it irrelevant? The demand will only rise from here, what do you think? Just dollars & euros? Let’s go straight to the other end in the form of YUAN.

Is there really no demand for a solution that operates without government oversight, works globally, and relies solely on physics and math (eliminating the need for trust)?

No Bitcoin will not be the new reserve currency, but it will continue to grow and do its thing. It will take at least a decade to flip the golds market cap. Still early.

Practical Tips for Retail Investors to Stay Ahead

Stick to what you know best, as these are highly uncertain times. If you strongly focus on Bitcoin, consider taking advantage of its massive volatility. Build your own system and strategies. It is more than fine to just DCA to ETF’s. I like to pick stocks, hoard Bitcoin, study commodities, and constantly keep myself up to date. Don’t do what others say. Cut the noise.

My Approach to Safeguarding Purchasing Power:

• A few stocks already wrote about BASF & UPM. I want undervalued companies, and I want to own something nice. UPM is Finland’s second-largest energy producer, with plenty of Nuclear and hydropower on top of everything else. I know Tesla quite well, so I dapple with that also. Will jump into technology if opportunities arise.
• Some commodity ETFs I don’t know this space so well. I try to find those with the largest exposure to the pure commodity, fewer talking heads, fewer fuck ups, no massive debt/leverage risk (small miners), and no dilutions. I will discuss these more in upcoming articles.
• Some cash, no bonds.
• Zero debt, highly uncertain times — I sleep better when there is no debt and leverage.
• Tiny exposure to real estate, just minimal. I don’t like it at all, would require massive amounts of debt, which I don’t like. Owning pristine and highly wanted real estate or having massive farmland would be awesome, but I am not a billionaire.
• Maintain a student-like budget. Keep all expenses minimized to the essentials.
• Stay up to date constantly — Keep my dancing shoes on 24/7 — Maximise my well-being.
• The mindset of winning and self-confidence in my ability to beat the markets. Yes it is extremely hard to beat ETFs — Let’s see, I feel the playoffs will start soon, and we will see who will get slaughtered and who wins. Easy mode is over.

Tips for finding what suits you:

1. Diversify your portfolio: I am shilling here idea to diversify to commodities and Bitcoin, don’t put all your eggs in one basket. Allocate your investments across different asset classes, such as stocks, bonds, and real estate, to reduce risk and achieve a balanced portfolio. How do you sleep well?
2. Dollar-cost averaging: Invest consistently over time by making regular, fixed investments. This strategy helps mitigate the impact of market volatility and reduces the risk of making poor investment decisions based on short-term market fluctuations. Can you pick the tops and bottoms? Do you want to follow markets constantly?
3. Focus on long-term strategies: Don’t get caught up in the daily noise of financial markets. Keep your eyes on the long-term potential of your investments and remember that preserving your purchasing power is a marathon, not a sprint. Start chasing, and you will get slaughtered.
4. Stay educated: Continuously improve your financial knowledge by reading books, listening to podcasts, and following industry experts.
5. Manage your risk: Always assess the risk associated with your investments and be prepared for potential losses. Plan and stick to it, ensuring you don’t jeopardize your financial future.

In conclusion, navigating the rapidly changing financial landscape requires adaptability, resilience, and a commitment to continuous learning. By leveraging the wisdom of Benjamin Graham’s ideas and embracing the potential of Bitcoin, retail investors can craft a savvy strategy to safeguard their purchasing power.

Stay curious, stay informed, and remember — the best investment you can make is in yourself.

Originally published at https://kiiski.substack.com on March 31, 2023.