In our numerous previous articles going back to January 2014, we reported that gold coins and Bitcoins were pretty safe way to have a long term investment. With long term investment we mean investments that last longer than 1 year.
In a chance meeting chat with Oswald Grübel, Ex-CEO of UBS and Credit Suisse, he told us that Gold coins and Bitcoins were the only safest way to get good returns on your investment in the long run. “…the current states of the central banks are not as safe as they portray. This unstable situation is created by very risky practices of certain banks. This stems from the belief that the governments will rescue the banks when the banks are in trouble again.
We’ve seen that this happen during the recent bank crisis. Some banks could pay the loan or help package, like some of my colleagues like to call the aid, back within 1 year. Now remember it weren’t loans that are “just about 50 million euros or dollars”, in most cases the sum got near the billion currency mark. This means that banks had to continue their risky practices and in that time and place it paid off.
Now this creates an aura of immunity to crisis, or at least it is in the bank owner’s minds (not all banks but at least in some). It is business as usual at most banks (no, I will not name bank names that are thinking this way). This is an incredible risky game certain banks are playing because they are relying heavily on the government to bail them out when the going gets tough”.
He continued: “… In that perspective it forces the government and central banks to issue printing new money. A gorgeous example of this practice is the US (laughs). Basically the officials can keep on printing and nobody is going to make a sound or speak up, until it is too late. I know this is a bit simplistic but certain people are waking up and speaking out about these practices.
Don’t get me wrong, not every bank, central bank or government is acting like this. There are some really good banks that made some really bad decisions and took too much risk, mainly because some people in risk management and risk speculation were incompetent, which resulted in the said bank(s) going bankrupt. A lot of these banks have learned their lesson and are more cautious.
I also do wonder about the lack of court cases against certain banks and individuals. Of course most of them settled before any of them ever reached the court, but still I would think that people that were the instigators and culprits of the financial crisis should be punished. This is the same as a police officer would say to a robber: “ Hey man if you have the stolen items on you, give them to me and we will forget you ever stole”. If that happens everyone would be in an uproar. So we must ask ourselves why we all would be “screaming bloody murder” in said example and when it comes to the instigators and culprits of the financial crisis we all have an attitude of a “laissez-faire” ( with some exceptions but we all know what happened to them).
We also spoke at length of the future and the fear that some in Europe have about the holing out of the savings law and at what amount the government may tax savings. It is still a bit of a taboo concerning this theme but Mr. Grübel told us that that: “…. There are enough signs on the wall. In some countries there have been voices in certain governments that are talking about a tax on savings. Personally I think that is a wrong signal. This measure will hit the small, medium and some higher incomes while the “rich” can utilize certain constructions to evade those taxes. The Lux-leaks affaire is one beautiful example for this. If you are crafty enough you can circumvent nearly every law and regulation out there because most legislation is dubiously written. What I mean by that is that a lot of laws can be interpreted in different ways.
In my line of work I’ve come into contact with a lot of lawyers and legal experts. I was also confronted with a lot of laws and regulations and had to ask legal experts for clarification. I remember one law that I read but I didn’t quite get the meaning or how it would be relevant for our bank at the time. So I sought the counsel of 2 lawyers and after consulting them I had 3 explanations; the 2 lawyers and my own.
So we asked him what people who want to make mid and long term investments should do. Mr Grübel gave the following advice: “… precious metal and gems are always a good investment because there is a “limited amount” available. However gold bars, especially the big ones, can be tampered with. It is very hard to see if a bar has been tampered with, mostly because the detection machines are quite expensive.
So if you want to invest in something, I would recommend you start with gold coins, minted and bought from the government official minters. These gold coins are vetted by the government and regardless if the government falls, the guarantee and the testability of the coin will remain. For example if you have a genuine gold aureus from the roman republic or imperial period, it will be worth quite a lot (even the gold coins from WW II are worth a lot).
A gold coin is extremely hard to fake and can’t be holed out like a gold bar can (don’t be fooled, we had some reports that this holing out of bars is also occurring with the small sized ones). There are numerous other safeguards that will deter the forgers.
Of course you can also opt for gold and precious gems and buying jewellery from reputable sources and shops. The only problem that you will be confronted with, if you buy form third parties even if they are shops, is the question of is the product lying in front of me a genuine precious metal/gem or not? That means that you need to build up your expertise by doing research, visiting seminars and following lessons.
There is another option for people wanting to make a long term investment, and that is Bitcoin. This “virtual currency” or”cryptocurrency” can be a viable alternative and maybe even a “world currency” in its truest form. A lot of people are talking about the Bitcoin price, but it is the way they look at Bitcoin as a whole that is important. Most people I know approach Bitcoin from a stock perspective, a share or something a company issues to get some cash injection to get some funding. We need to see Bitcoin as a global currency.
So we asked Oswald Grübel what he thinks would be the best way for Bitcoin to get more traction and general acceptance. He answered: “ I think the main focus needs to be on education. 99.8% of the world population still doesn’t get what Bitcoin is. Even the Bitcoin enthusiasts can’t formulate a conclusive definition of what Bitcoin really is and does. This is not good for the image and credibility of Bitcoin.
Don’t get me wrong the brand name “Bitcoin” is good and it has some following but it would be much better if people would understand what Bitcoin is. The College Cryptocurrency Network has the right idea as does Bitbond (where you can invest in start-up yourselves).
The current focus, on getting more merchants, i
s not a good idea. How are you going to talk merchants into promoting or using Bitcoin in their business models when they do not understand what Bitcoin is?