The dangerous provocations between North Korea and the United States haven’t yet escalated enough to rattle financial markets. The U.S. stock market notched another new record high last week, helping to blunt safe-haven demand for gold and silver.
The North Korean situation is, however, causing political reverberations in the cryptocurrency markets. Following China’s recent crackdown on cryptocurrency exchanges, U.S. officials may be gearing up for a regulatory attack on Bitcoin as part of an economic sanctions package.
Enter Massachusetts Senator Ed Markey (D). In an interview on CNN last Friday, Markey said, “The only answer is to go to final sanctions on the North Koreans… The cryptocurrency Bitcoin, which they are using to supply funding to their economy – all of it should be shut off.”
It’s hard to believe the regime needs bitcoins to keep its nuclear weapons program up and running. But U.S. politicians have lots of other reasons to launch a crackdown on cryptocurrency. Chief among them are bringing home tax revenue and defending the U.S. dollar and banking system from free-market competition.
As with the National Security Agency’s backdoors into encrypted smartphones, we may not know the U.S. government’s full technical capacity to track or disable cryptocurrency transactions until it is deployed (or leaked).
The U.S. possesses sophisticated cyber warfare capabilities. It is widely believed that teams of U.S. and Israeli hackers sabotaged Iran’s fledgling nuclear program through cyber attacks. It is likely that government agencies possess some sort of cyber “nuclear” weapon with which to sabotage cryptocurrency markets.
Gold and Silver Currency Advantages
The advantage of “low-tech” free-market currencies such as gold and silver coins is that they can remain completely off the grid. They aren’t vulnerable to cyber attacks or electromagnetic pulses.
Precious metals could be subject to conventional regulatory attacks, to be sure. The U.S. has a sad history of banning the private ownership of gold.
But in the era of digital currencies, online banking, and smartphone-enabled day trading, physical gold coins aren’t even a drop in the bucket. They’re more like a drop in the ocean relative to the tens of trillions of dollars in wealth that could be seized digitally.
It’s not the 1930s anymore. Today’s cyber economy offers previously unfathomable financial opportunities…as well as risks.
It’s not a question of whether or not to participate in the digital economy. Almost all of us do this to some extent (including whenever we use debit or credit cards). The question is whether or not to be 100% reliant on digital finances without any grounding in tangible wealth.
We don’t foresee a day when that will become safe or prudent. As long as we live in uncertain times, the timeless value of physical gold and silver should command a place in your personal finances.
About the Author:
Stefan Gleason is President of Money Metals Exchange, the company recently named "Best Overall Online Precious Metals Dealer" by Investopedia. A graduate of the University of Florida, Gleason is a seasoned business leader, investor, political strategist, and grassroots activist. Gleason has frequently appeared on national television networks such as CNN, FoxNews, and CNBC and in hundreds of publications such as the Wall Street Journal, TheStreet, and Seeking Alpha.