Chris Curl,
Editor
Nov. 16, 2021
The government has finally admitted that inflation is here.
The official statistics show a 6.2% increase in the CPI since this time last year. Not surprisingly, officials are warning that it might not be getting better any time soon. So much for transitory.
Gasoline is up 50%. Used cars 26%. Even bacon, a staple food of the American breakfast, has surged 20% in the last year.
And I hope you haven’t tried to buy a house recently.
None of this is surprising given the government’s massive print-and-spend bonanza of the last two years.
Trillions of dollars flooding into the economy chasing fewer goods and services tend to have that effect.
Those looking for an inflation hedge have historically looked to gold. And gold is not looking bad. It is rising again to near 5-month highs and looks likely to break out in the near future — with $2,000 gold very likely in the months ahead.
Many goldbugs deride cryptocurrency. They see it as nothing more than a speculative frenzy — a modern day tulip mania. They don’t believe in decentralized finance, nor do they think there is any utility in the space.
Some crypto enthusiasts see goldbugs as deranged wingnuts hoarding metals and firearms in their doomsday bunkers.
Some goldbugs also resent Bitcoin becoming the preferred inflation hedge as many in the financial world are branding it “digital gold”.
But the truth is that both Bitcoin and gold can coexist and even compliment each other.
In fact, companies are working on bridging the divide between digital and hard assets. And now you can purchase asset-backed tokens. These are called “stablecoins”.
One prominent example is PAX Gold (PAXG). Launched in September 2019 and based on the Ethereum blockchain, PAX Gold is a token that is pegged to one troy ounce of a 400-ounce London Gold Delivery gold bar. This is the real deal. And holders of PAXG tokens actually own the underlying asset and can redeem it at any point.
PAXG tokens are backed by one ounce of gold that is stored in a Brink's vault. Investors can sell their PAXG tokens for gold bars from smaller retailers if need be. They use the same blockchain as Ethereum and have access to the same features, including smart contracts.
Paxos Trust also utilizes Chainlink's data oracle product to provide real-time price information for gold and the PAXG token. An oracle is technology that brings data from an external source onto a blockchain.
Also, last year, the Celsius Network — a crypto account platform that pays you interest — added PAXG to its platform. And their competitor Nexo quickly followed suit. This means that PAXG holders can earn up to 4.5% APY on their digital gold by transferring it to these wallets.
Can your gold bars do that?
For people who are leery of cryptocurrency’s volatility and lack of determinable value, stablecoins — tokens that are fixed by hard assets — like PAXG offer an exciting opportunity to enter the digital asset space.
Keep coming back,
Chris Curl
Editor, Daily Profit Cycle