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How to Simply Protect your Wealth in a Digital World

How to Simply Protect your Wealth in a Digital World

You’re at a coffee shop drinking a latte, taking advantage of the free Wi-Fi and reading the latest article on HowIGrowMyWealth.com. But then you realize you forgot to pay a bill that is due today. So you login to your online banking website and pay your bill. You continue to sip your latte go back to reading the article.

What you just did is risky. Not reading the article of course, but using public Wi-Fi to send confidential information.

Virtual Private Networking - VPN

Unfortunately there are unscrupulous characters out there who will try to steal your personal information

Unsecured Wi-Fi in a public place is dangerous to your wealth and privacy. Someone else could have been on that Wi-Fi network and used a “sniffer” to monitor the information being sent and received between your device to your bank’s website. Thanks to HTTPS the most sensitive information from your bank should be secure–but with the right tools bad people would still be able to see the sites you go to and see any emails or instant messages you send.

It’s fairly alarming how much people can see with readily available tools. Eric Geier of PC World was able to view emails, instant messages, logins and websites of people on an unsecured Wi-Fi network.

Source: https://www.pcworld.com/article/2043095/heres-what-an-eavesdropper-sees-when-you-use-an-unsecured-wi-fi-hotspot.html

VPN

The Importance of Security

I’ve worked in Information Technology for over a decade. I’ve worked for small businesses, startups, three fortune 500 companies, a non-profit and online-only virtual companies. I understand the importance of security. I also value my privacy.

While websites that use HTTPS to safeguard vital information is helpful–one of the best ways to protect your privacy when browsing the internet on an unsecured network is virtual private networking (VPN). It essentially creates a secure tunnel between you and the website you’re accessing and prevents malicious hackers from intercepting the data you’re sending and receiving.

As more and more of what we do is conducted online it becomes more and more important to take steps to protect your digital life.

LifeHacker.com has this to say about VPN:

The most important thing you need to know about a VPN: It secures your computer’s internet connection to guarantee that all of the data you’re sending and receiving is encrypted and secured from prying eyes.

Source: https://lifehacker.com/5940565/why-you-should-start-using-a-vpn-and-how-to-choose-the-best-one-for-your-needs

TechHive does not mince words about the importance of VPN:

One of the most important skills any computer user should have is the ability to use a virtual private network (VPN) to protect their privacy. A VPN is typically a paid service that keeps your web browsing secure and private over public Wi-Fi hotspots. VPNs can also get past regional restrictions for video- and music-streaming sites and help you evade government censorship restrictions—though that last one is especially tricky.

Source: https://www.techhive.com/article/3158192/privacy/howand-whyyou-should-use-a-vpn-any-time-you-hop-on-the-internet.html

To that last point, if your government is censoring information it is probably illegal and thus not advisable to use VPN to circumvent any laws.

VPN means Serious Security

The best security comes in layers. Any online banking webpage worth anything will have an HTTPS that secures your most sensitive information. But that won’t stop hackers from spoofing fake site and exploiting vulnerabilities in the HTTPS protocol. Even if you’re accessing an HTTPS site, your ISP and hackers can still tell what sites you’re going to, even if they can’t see all the data being sent back and forth.

A VPN provides an extra layer of security on top of HTTPS sites because not only does it encrypt the information you’re sending and receiving, but it also prevents anyone, whether it be your internet service provider or a malicious hacker, from viewing the sites you’re going to.

Virtual Private Networking

Using VPN helps ensure that hackers and other can’t view your online activity.

I’ve been using a VPN to secure sensitive data while on public networks for years. There are many VPN providers but I use TorGuard. They are fast, affordable and they don’t keep any logs. You can sign up for TorGuard here: https://torguard.net/aff.php?aff=3596

And for a limited time you can sign up for 2 years of secure browsing for just $49.99 by using the above referral link and then using the following coupon code: TGLifetime50.

Protect your Online Wealth with VPN

Banking sites, brokerage accounts, email accounts: these are all at risk if you access them on an unsecured connection like an airport, library, hotel or coffee shop. Using a VPN in these high risk places ensures your valuable personal information is safe.

You owe it to yourself and your loved ones to educate yourself on Virtual Private Networking (VPN) and reduce the risks you face when accessing confidential information in via public Wi-Fi.

TorGuard is one such VPN provider that I use and recommend. Take a look at their services and if you decide to sign up be sure to use the coupon code TGLifetime50 to get 2 years of secure browsing for under $50.

Gold is Timeless

Gold is Timeless

The other day I was watching an excellent and classic Japanese film: The Hidden Fortress. This picture stars the inimitable Toshiro Mifune and is directed by Akira Kurosawa. It is about a defeated Samurai clan attempting to smuggle gold across enemy territory to restore the clan’s domain.

I also recently read a Clive Cussler novel: Inca Gold, a mildly diverting story which mixes historical events with legend and fiction. Inca Gold is about a race to discover a hidden cache of gold in South America. While both works are obviously fiction they serve as a reminder of the historical fact that gold has been valued across cultures and across time. One might even say gold is timeless.

Here are a few examples of gold in cultures throughout the world.

A 6,000 year old Gold Pendant

A gold pendant crafted over 6,000 years ago. Photo: via The Daily Mail

The oldest known gold treasure trove is in a Necropolis (burial site, literally “city of the dead”) near the city of Varna in what is now Bulgaria where thousands of gold pieces have been discovered.

One item in the hoard includes a 2 gram 24 karat gold pendant was found thought to date back to 4,300 BC. It is the oldest known gold jewelry.

Other Varna Necropolis gold includes necklaces, bracelets, earrings, a tiara and a gold hammer-scepter.

Source: http://archaeologyinbulgaria.com/2015/10/15/bulgaria-showcases-worlds-oldest-gold-varna-chalcolithic-necropolis-treasure-in-european-parliament-in-brussels/

Each of these bracelets weights upwards of 110 grams. These timeless bracelets look like they could have been forged yesterday. (Varna Regional Museum of History)

Source: https://www.smithsonianmag.com/travel/varna-bulgaria-gold-graves-social-hierarchy-prehistoric-archaelogy-smithsonian-journeys-travel-quarterly-180958733/

The Varna Necropolis was rediscovered in 1972. Only about 30% of the site has been excavated. Although I wonder that it might be better to leave the graves, the remains, and the artifacts undisturbed.

Source: http://archaeologyinbulgaria.com/2015/11/20/bulgarias-varna-to-make-site-of-worlds-oldest-gold-varna-chalcolithic-necropolis-accessible-for-tourists/ 

The 3,300 year Old Gold Death Mask of Tutankhamun

Golden Mask of Tutankhamun in the Egyptian Museum

Tutankhamun was an Egyptian Pharoh (colloquially referred to as “King Tut”). He is famous because his tomb, located in the Valley of the Kings, was found largely intact in 1922. It had been robbed twice in antiquity and resealed. But despite this his tomb is still one of the greatest archaeological finds. The tomb of Tutankhamun contained a veritable trove of artifacts including the iconic solid gold funerary mask pictured to the left.

Source: https://en.wikipedia.org/wiki/KV62
Some of the Egyptian pyramidia were said to have been coated in gold leaf or electrum.
Source: https://en.wikipedia.org/wiki/Pyramidion

Earliest known Gold Coins over 2,500 years old

Early 6th century BC Lydian electrum coin weighing about 4.7 grams

According to greek historian Herodotus the Lydians (a people located in modern day Turkey) were the first to use gold and silver coins somewhere between 700 BC and 550 BC.

At least some of these coins were made from a naturally occurring alloy of gold and silver called electrum and stamped with a lion’s head.

Source: https://en.wikipedia.org/wiki/Lydia#First_coinage

Roman Gold Coins dating back 2,050 years

Aureus of Octavian, c. 30 BC.

Aureus of Octavian, c. 30 BC.

The roman aureus dates back to the first century BC. Although minted prior to Julius Caesar, Caesar standardized the aureus at a weight of approximately 8 grams of 99% pure gold.

But the history of the aureus, like virtually all government issued money, is one of devaluation.

By the reign of Constantine Solidus, the aureus contained just 4.55 grams of gold.

The latin word for gold is aurum and is the genesis of the periodic table symbol of gold: Au. A derivative of the aurum can also be found in the first name of gold-loving James Bond villain Auric Goldfinger.
Source: https://en.wikipedia.org/wiki/Aureus

Inca and Pre-Columbian Gold

The Inca Empire had considerable gold and silver. However, between 1532-1572 Spanish conquistadors systematically plundered, stole and extorted this wealth as they destroyed the Inca Empire. The cups, necklaces and other gold items crafted by the Incas was melted down, cast into bars and shipped back to Spain.

Inca Gold Cup, Picture from National Geographic

A large trove of Inca gold does remain, at least in a legend. Like many others the legend of the lost Inca gold begins in historical fact.

In 1533 the war of succession between two Inca princes had ended. The younger prince Atahualpa defeated his half-brother Huáscar to become Sapa Inca (emperor). Emperor Atahualpa met with Spanish conquistador Francisco Pizarro. Despite being vastly outnumbered Pizarro and his 150 some troops were able to capture the Inca ruler.

Commander Pizarro agreed to release Atahualpa in return for a roomful of gold. This gold was indeed delivered, but Pizarro reneged on the deal and after a show trial had Atahualpa garroted. At this point the line between history and legend blurs.

Legend purports Pizarro had the Inca leader put to death before the last and largest part of the ransom had been delivered. Upon learning their Emperor was killed, the Incas buried the remaining gold in a secret mountain cave. This cave has never been discovered.

Source: https://en.wikipedia.org/wiki/Spanish_conquest_of_the_Inca_Empire

Source: https://www.nationalgeographic.com/archaeology-and-history/archaeology/lost-inca-gold/

Chavín Gold Crown 1200-300 BC

There were of course many other pre-Columbian civilizations apart from the Incas. One is the Chavín culture–an extinct civilization that was located in what is now the northern Andean highlands of Peru. Their achievements included advances in metallurgy, as evidenced by the gold crown shown to the right which could be over 3,000 years old.

Source: https://en.wikipedia.org/wiki/Chav%C3%ADn_culture

Gold Coins of Feudal Japan

The koban (小判) was a Japanese oval gold coin in Edo period (1603–1868) feudal Japan. Shown here is the Keichō-period koban containing 16.5 grams of gold.

Shogun Tokugawa Ieyasu established a metallic monetary system in 1601 which would last until 1867.

Source: https://en.wikipedia.org/wiki/Tokugawa_coinage

One of the units in the Tokugawa monetary system was the koban (小判) which means oval. When first introduced it contained 1 ryō of gold or about 16.5 grams and was considered to be a rough equivalent to four koku (石) of rice.

Source: https://en.wikipedia.org/wiki/Ry%C5%8D

One koku of rice was originally defined as the amount of rice needed to feed one person for one year. This original definition of a koku of rice would weigh about 150 kilograms (330 pounds). Thus one koban would be worth around 4 years of sustenance.

Source: https://en.wikipedia.org/wiki/Koku

Although in reality the amount of rice that could be obtained, even with a Keichō-period koban certainly would have fluctuated based on the size of the rice harvest, demand and various other factors, it still serves as an insight into the value of the koban when first introduced.

Like all nearly all governmental systems of money, it was steadily devalued as shown visually with the decreasing size of the koban over the years.

Koban debasement

Gold is Timeless

Gold has been valued across the ages and across cultures. In the spirit of modern hubris commentators have declared gold a barbarous relic and a pet rock. Some folks might concede that gold was once useful, but now that we have computers and electricity and bitcoin we don’t need gold. It takes a unique pride or perhaps outright ignorance to make such a pronouncement about an element that has been valued for millennia.

Puerto Rico Shows the Importance of Cash

Puerto Rico Shows the Importance of Cash

“With Widespread Power Failures, Puerto Rico is Cash Only” reads the title of a recent New York Times article in the wake of Hurricane Maria. This tragedy in the “Rich Port” is a sad reminder of the importance of keeping some emergency funds in physical cash.

The horrible devastation in this Caribbean territory of the Unites States is another reminder why keeping a few months worth of expenses in cash is a great idea.

It’s also a reminder to the anti-cash types that even in parts of the United States, power restoration can take weeks or months and a society without some cash is economically more vulnerable. This isn’t some abstract problem. It has a face, the face of people waiting in line, not being sure if they’ll be able to buy food or gas because they can’t access their bank account or use their debit card.

If there is a power outage I’m not going to want to spend my gold (the average cashier at the quick mart would probably stare at me dumbly even if I tried), I’m not going to be able to use a credit card, Goldmoney or bitcoin—I need cash.

If you think you’re going to be able to wait for a disaster and then go to an ATM at the same time as everyone else then at best you’re going to be faced with a long line. At worst the ATM won’t work or will be out of cash. Banks will have long lines and they could start imposing withdrawal limits to ration the cash they have available.

This isn’t my theory or some doomsday scenario, this is what happened (and is still happening as I write this) in Puerto Rico.

If people held a few months of expenses in cash then they would be in a better position to buy food, fuel, and start repairing their homes and businesses.

Of Course There are Downsides to Cash

I’m as bearish on US dollars and fiat money as anyone. So of course holding cash has downsides: Here are the main ones:

1) It loses value

The dollar has lost most of it’s value since 1913. So the wealth you have in cash will be inflated away as central banks inflate the money supply.

2) Theft

Carrying around a lot of cash is generally considered risky and not without reason. Looting and a general increase in crime is an unfortunate reality in the wake of disasters. There is also the problem of civil asset forfeiture. In the United States, the “freest country in the world,” if members of the law enforcement community suspect you of a crime, they have the means to simply take your money and/or other property and it will be up to you to sue the government and prove you’re not guilty and get your property back.

Civil asset forfeiture in the US is a black and white violation of the 4th amendment, but it happens all across the US and in 2014 more property was taken from US citizens by members of the law enforcement community than was taken by burglars. But I digress.

These Risks can be Mitigated

Think of cash as a form of insurance against: 1) Loss of electrical power 2) Capital controls 3) Negative interest rates

And like all insurance it comes at a cost. The cost of holding cash is inflation and the opportunity to put the cash to work in other investments.

I already own various hedges against inflation, such as gold, silver, stocks, and even cryptocurrency, albeit I remain very cautious of this last one. So the fact that a few months worth of expenses in cash losing value is of little concern.

The risk of theft can be mitigated as well:

1) Keep most of your cash in a safe or hidden place

2) Keep it in various locations around your home and perhaps at other locations as well

3) Don’t carry all of your cash at any one time

4) Dress nicely and be respectful to members of the law enforcement community

If two months worth of expenses is $2,000 I’m not saying carry around two grand. Maybe you keep $900 in a safe, $500 hidden someplace else in your home, and $500 with a trusted family member or close friend and a $100 in your purse or wallet. When you go to the store or gas station only take the cash with you that you need. That way if someone uses force to take your money, they won’t get all of it.

The Upsides Makes Holding Some Cash the Smart Move

1) I can be my own ATM. I’m not reliant on a bank or ATM allowing me to withdraw my money. I hold my money. This is vital when everyone is trying to withdraw cash at the same time.

2) If there is a power outage or communication disruption I can still buy food and fuel. Whether it is an EMP, ice storm, hurricane, brownout or cyber-attack, I can still buy the basics of life until things settle down. While fiat money is weak over the long term, in a disaster cash is still king.

Holding a few months of expenses in cash is a great idea. It can also double as an emergency fund in case you have an emergency repair to your car or home, medical expenses, etc.

Smaller denomination bills make more sense. Acquire $10s and $20s not $50s and $100s. Stores are generally more suspicious of larger denomination bills.

Not only that but it allows you to provide for yourself and help others. If I don’t have to go to the ATM or bank to withdraw cash that means there is one less person in line and anyone who would have been behind me in line can get cash faster. If 20-30% of people or more are prepared for a disaster it means there are much fewer people that need to be helped and there will be more resources to help a smaller number of people who need help. Maybe you’ll be able to share some of your cash with a neighbor and help them out.

Cash isn’t an investment and yes it loses value thanks to central banks, but holding a month or two’s worth of expenses in cash is a smart idea as part of a larger wealth and financial protection strategy. My thoughts and prayers are certainly with the people of Puerto Rico and it is a sad reminder of the importance of cash.

Trumpty Dumpty

Trumpty Dumpty

Article image above is by Chloe Cushman

Humpty Dumpty sat on a wall,
Humpty Dumpty had a great fall.
All the king’s horses and all the king’s men
Couldn’t put Humpty together again.

Denslow’s Humpty Dumpty

Back in February of 2016 Candidate Donald J. Trump stated, “I hope I’m wrong, but I think we’re in a big, fat, juicy bubble.”

Source: https://www.cnbc.com/2016/02/08/trump-markets-in-a-big-fat-juicy-bubble.html

In the first presidential debate in September of 2016 Trump stated the US economy is, “in a big, fat, ugly bubble.”

He also presciently said that when Obama returns to the golf course (did Obama ever leave the golf course?) that the U.S. Federal Reserve would raise interest rates.

Source: http://www.businessinsider.com/we-are-in-a-bubble-trump-debate-attacks-federal-reserve-chair-yellen-2016-9

Candidate Trump seemed to have some understanding that U.S. Stocks and Bonds are in a Bubble.

So President Trump should be concerned that the bubble is going to pop on his watch. But he seems to have pivoted to taking credit for the stock market just a few weeks after his election.

“We’re doing really well. The fake news media doesn’t like talking about the economy. I never see anything about the stock market” setting new records every day, he said.

Source: https://www.cnbc.com/2017/02/16/donald-trump-tweets-that-hes-the-reason-the-stock-market-is-rallying.html

I don’t know that Trump listens to any of his advisors, but if he did and I was one of his advisors, I’d encourage him to distance himself from the stock market.

Why?

President Obama got the advantage of the stock market high induced by low interest rate monetary heroin, and Trump is likely going to have to cope with the inevitable stock market crash and withdrawal.

President Trump is a Humpty Dumpty, perched upon the top of a stock market bubble, which is about to collapse.

President Obama had just 2 rate hikes over 8 years

President Obama began his presidency going into a time when the US Federal Reserve was providing extremely accommodative monetary policy. He then had near zero interest rates for the first 2,521 days of his presidency (just one month shy of 7 years out of 8) then the Fed Funds rate was hiked once for his last year.

Technically it was hiked a second time, but only for the last month he was in office and after Trump had won the election.

Effectively, rates were only hiked once in 8 years.

Rates have been hiked 3 times since Trump was elected

If you count the last rate hike during the Obama presidency, Obama had two rate hikes. If you consider the second hike during Obama’s Presidency was just 37 days before he would vacate the White House, he really only saw one rate hike.

Within 54 days of Trump’s inauguration the Fed raised rates from 0.50–0.75% range to the 0.75-1.00% range. Within 145 days of Trump’s inauguration, rates increased again to the 1.00-1.25% range. So Trump has began his presidency going into less accommodative monetary policy and has already seen 2 hikes during his presidency and 3 since he was elected.

Setting Trump up for a Fall

Virtually no one who lives inside the Washington, D.C. beltway likes Trump. The established powers in Washington hate Trump. The leaders in Trump’s own party hate him.

Trump’s whole presidency was based on spitting in the face of the established powers in the Imperial City of Washington, D.C.

Fed Chair Janet Yellen is a Democrat appointed by Obama and she was criticized by Candidate Trump during the campaign–if she is like virtually everyone else in the Imperial City then she can’t stand Trump.

Artificially low interest rates that are manipulated down by the US Federal Reserve and other central banks cause asset values to become artificially inflated in a bubble. President Obama received the “benefit” of these artificially low interest rates: the economy was able to limp along and the stock market continued to rise as valuations were artificially inflated by the cheap money.

In order for the US Federal Reserve to normalizes interest rates they need to pop the asset bubble they’ve created. I don’t know if the Fed realizes they’ve created a bubble, but if they do, then popping it on Trump’s watch would be ideal from their perspective.

What better way to get Trump out of office than to raise interest rates, pop the stock market bubble which would result in a recession and then ensure that President Trump is not reelected?

In the Machiavellian world of short term political expediency, Trump would do well to distance himself from the markets and put pressure on the fed to retain a more accommodative policy. It will make the problems worse but it will delay the pain. It’s certainly not the right thing to do but it’s what Presidents have been doing for decades.

Gold Update

Gold Update

Gold recently traded above $1,300 per troy ounce for the first time time in 2017. It immediately fell back down to the mid $1,280s. This is the third time the price of gold has been beaten back down when attempting to breakout above $1,300.

Price Resistance at $1,295 continues to hold. 

In April of this year I made some “predictive guesses” as to the price of gold. Thus far gold has traded around the purple dotted line that I anticipate will be the general price of the yellow metal.

The purple line is my predictive guess as to the price of gold, made in April of 2017.

My predictive guess calls for gold to trade up to $1,400 in November before tailing off again. I expect gold to continue to trend slowly upward in the long term, until there is some large external catalyst such as a stock market crash, physical supply shortage, war or currency crisis, that propels the price upward.

I think holding some gold in one’s physical possession is wise, it’s also important to hold some offshore out of one’s home jurisdiction. While I only hold a portion of my assets in physical gold and silver I think it’s an important component of a diversified portfolio.

Click here to learn about one of my favorite ways to own physical gold.

Bitcoin Fork

Bitcoin Fork

Bitcoin is going to undergo a hard fork.

What is a Hard Fork Anyway?

A hard fork in cryptocurrencies is when one cryptocurrency effectively becomes two and the number of units of currency is effectively doubled, albeit existing in two separate, incompatible blockchains. This has already happened to the second largest cryptocurrency by market capitalization: Ethereum.

Ethereum underwent a hard fork back in 2016, so there are now two blockchains, Ethereum and Ethereum classic, which both trace their origins back to the 30 July 2015 launch of Ethereum in a modern day Ship of Theseus paradox.

More information about hard forks.

Hard Forks are Logically Bad for the Price of a Cryptocurrency

As I’ve written about in the past in What I Dislike About Cryptocurrencies cryptocurrencies, like Bitcoin, aren’t scarce.

More correctly, cryptocurrencies are not very limited in supply.

There are currently 16,475,250 BTC in circulation and that number will continue to grow by design until 21 million are mined, at which point the supply of BTC will cease to grow.

So while only 21 million Bitcoins will ever exist on a given Bitcoin blockchain because of how the cryptocurrency is programmed, if Bitcoin forks, there will eventually be 21 million units of Bitcoin A and 21 million units of Bitcoin B.

In one sense the number of Bitcoins that will exist is 42 million. Now certain places might only accept Bitcoin A and not accept Bitcoin B and the price of Bitcoin B could drop to a low value and no one uses it. So in that sense there are still only 21 million Bitcoins. But when a cryptocurrency hard forks, some people favor one fork over the other and the price is lower than it otherwise would be if there was only one blockchain.

If Ethereum had not forked there would only be around 93 million ETH in existence right now. But because Ethereum did hard fork there are now 93 million ETH and 93 million ETC. The market capitalization of ETH is currently around $18.3 billion and the Market cap of ETC is around $1.3 billion. It’s beyond the scope of this article to posit how much the hard fork impacted the price of ETH, but I think it is logical to believe that the price of ETH would be higher if not for the hard fork.

Bitcoin Hard Forks

On August 1st Bitcoin is also going to fork, forming two separate and incompatible blockchains: Bitcoin (BTC) and Bitcoin Cash (BCH).

The market does not seem to care and Bitcoin is trading near all time highs around $2,800.

Time will tell what kind of impact this will have on the network and the price of the cryptocurrencies. If the hard fork does not go well and the network is adversely impacted I could see short term price drops. It’s possible (although I would guess unlikely) that Bitcoin Cash becomes more popular than Bitcoin and overtakes it in price. It’s also possible (and in my opinion much more likely) that it becomes a somewhat niche cryptocurrency like Ethereum Classic.

Bitcoin currently has a market capitalization of $46,622,650,965. It’s certain that after the fork both Bitcoin Cash and Bitcoin will not both have a $46.6 billion market capitalization.

While we wait and see what unfolds I’ve taken one important step. I had my modest BTC holdings at Coinbase. Coinbase is NOT supporting the hard fork.

So I’ve moved my BTC to Kraken. Kraken IS supporting the hard fork. By moving my BTC to an exchange that does support the fork I will get Bitcoin Cash in addition to Bitcoin.

The reason for this is because if one were to hold one BTC (Kraken uses the abbreviation XBT) at Kraken during the hard fork, Kraken will award the holder of that BTC one BTC as well as one BCH. Whereas if BTC is held at Coinbase no BCH will be credited.

I like Coinbase and I plan to move my BTC back to Coinbase after the hard fork takes place.

If you don’t currently own any Bitcoins and are interested in purchasing some, check out my easy to use walkthrough guide How to buy Bitcoins on Coinbase. Using my affiliate link when buying Bitcoins on Coinbase to get $10 worth of bitcoins free when you buy at least $100 worth of Bitcoin.