In an Increasingly Controlled World, Bitcoin Stands as a Beacon of … – U.S. Global Investors

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Private property rights and freedom of speech are fundamental human rights, and yet—as many people in Canada, Europe and elsewhere are discovering—they are among the most fragile. If we fail to remain vigilant and take these rights for granted, we risk losing the privilege of owning our own property and expressing our own thoughts and opinions.
So said conference-goers who were kind enough to chat with me following my presentation this week at Bitcoin Amsterdam, Europe’s largest Bitcoin event.
I spoke about the differences between common law and civil law, using two island-nations—Singapore and Cuba—as case studies for both legal systems. A former British colony, Singapore embraced common law and free markets and therefore saw its GDP per capita surge from around $3,600 at the start of Lee Kuan Yew’s decades-long rule to above U.S. levels today. Over the same period, Fidel Castro’s Cuba—held back by a centralized/communist economy, strict state controls and lack of economic diversification—has experienced next to no growth. (You can read my 2015 article on the subject here.)  
During my presentation, I also traced the trajectory of common law from the signing of the Magna Carta in 1215 to the ratification of the U.S. Bill of Rights in 1791 and, eventually, the arrival of the Bitcoin whitepaper in 2008.
Think about it: The Magna Carta was primarily designed to prevent kings from abusing their power and unjustly seizing their subjects’ private property. Similarly, Bitcoin was created to protect individual’s wealth in the digital age. Whereas the former laid the groundwork for the rule of law and the rights of individuals in the face of centralized power, the latter seeks to extend these principles into the realm of digital finance and beyond.
It should come as little surprise, then, that Bitcoin conferences typically attract human rights activists such as the Human Rights Foundation’s (HRF) Alex Gladstein, Togolese writer Farida Nabourema, North Korean defector Yeonmi Park and others.
Despite the guardrails, many people worry that their basic rights are under threat—and in some very notable cases, they are.
In the last couple of years, everyday Canadians have had their bank accounts frozen for legally protesting vaccine mandates. They’ve had stricter regulations and censorship of online content imposed on them, and, more recently, they’ve seen global news providers restrict access to Canadian users.
Here in the Netherlands, the world’s second-largest exporter of food, farmers gathered in March to protest the government’s draconian crackdown on nitrogen emissions, fearing it would result in the culling of thousands of heads of cattle. Irish farmers were forced to do the same in July.
Meanwhile, there are growing concerns that central bank digital currencies (CBDCs) will one day be used to monitor and control people’s spending habits. Christine Lagarde, head of the European Central Bank (ECB), admitted as much back in April, saying that CBDCs would give governments some measure of “control.”
These examples represent breaches of the proverbial social contract in mostly high-income countries. In many parts of the so-called Global South, the situation is even more dire, with flagrant human rights abuses, currency collapses and political instability driving people to flee their homes in search of safety and a better life. Why else are we seeing record numbers of Venezuelan asylum-seekers turn up at the U.S.-Mexico border and huge waves of North Africans wash up on the banks of Italy?
“Bitcoin fixes this” is a common refrain at conferences like the one in Amsterdam. The digital asset may not end up as the panacea that many of its biggest advocates claim it is, but its decentralized nature, resistance to censorship and ability to empower individuals in the face of increasing government controls can’t be ignored.
As more and more people become disillusioned with traditional systems, the appeal of decentralized alternatives like Bitcoin becomes evident. That’s especially true now that there are signs we may be entering an era of 1970s-style stagflation (high inflation coupled with high unemployment), triggered by stubborn consumer prices, spiking bond yields, rising oil costs, workers’ strikes, record debt levels, unexpected Chinese weakness, a malfunctioning U.S. government and two wars.
Indeed, the parallels are striking.
In October 1973, Egyptian and Syrian forces unexpectedly attacked Israel in a bid to recover territory they lost to the country just six years earlier. Launched on Yom Kippur, the holiest day of the Jewish year, the short yet bloody conflict had significant economic consequences, including the first of two major oil crises of the 1970s, a global recession and a decade of stagflation.
Almost exactly 50 years later, a similar engagement is playing out after Hamas militants, in a surprisingly well-organized assault, successfully breached Israel’s border with Gaza, capturing a number of Israeli settlements for the first time ever and taking soldiers and civilians hostage.
With Israeli Prime Minister Benjamin Netanyahu warning of a “long and difficult war,” can we expect the same global consequences as before?
Analysts at Deutsche Bank appear to believe so. The bank forecasts a mild recession in the U.S. in the first quarter of 2024 as geopolitical risks remain elevated and rates stay high for an extended period of time, among other factors.
In its World Economic Outlook, out this week, the International Monetary Fund (IMF) also predicts lower rates of economic growth and strongly urges governments to cut deficit spending. Doing so, the IMF says, will take some of the pressure off central banks in their mission to tame inflation.
One of the most glaring signs that the economy isn’t working for everyone is the historic drop in housing affordability in the U.S. With 30-year mortgage rates now topping 8% in some cases, many Americans are priced out of owning their own home. According to real estate data provider ATTOM, single-family houses in a whopping 99% of U.S. counties are out of reach for the average American earning around $75,000.
Take a look at the chart below. Housing affordability has fallen even deeper below the magic 100 line for the first time in recent memory, according to the National Association of Realtors (NAR). (A value of 100 means that a family earning a median income makes just enough to afford a new home. A value under that means that new homes are no longer affordable.)    
Factors such as the increase in home prices and mortgage rates have pushed the standard portion of wages required for primary homeownership costs to 35%, ATTOM says. This is significantly higher than conventional lending standards, which recommend a 28% debt-to-income ratio. Basic homeownership expenses now consume more than a third of average wages.
The lessons of history, whether from the Magna Carta or the events of the 1970s, remind us of the cyclical nature of societal and economic shifts. As I said earlier, Bitcoin may not be a magic solution to all our problems, but I believe it represents a tool to safeguard our freedoms and assets in an unpredictable landscape.
This week gold futures closed at $1,941.50, up $96.30 per ounce, or 5.22%. Gold stocks, as measured by the NYSE Arca Gold Miners Index, ended the week higher by 7.49%. The S&P/TSX Venture Index came in off 0.83%. The U.S. Trade-Weighted Dollar rose 0.55%.
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This commentary should not be considered a solicitation or offering of any investment product. Certain materials in this commentary may contain dated information. The information provided was current at the time of publication. Some links above may be directed to third-party websites. U.S. Global Investors does not endorse all information supplied by these websites and is not responsible for their content. All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor.
Holdings may change daily. Holdings are reported as of the most recent quarter-end. The following securities mentioned in the article were held by one or more accounts managed by U.S. Global Investors as of (09/30/2023): 
Delta Air Lines
Wizz Air Holdings
easyJet PLC
COSCO Shipping Holdings
Boeing
Airbus SE
United Parcel Service (UPS)
FedEx Corp.
Louis Vuitton
BMW
Calibre Mining
Franco-Nevada
Wheaton Precious Metals
AngloGold Ashanti
Gold Fields Ltd.
Harmony Gold Mining
Dundee Precious Metals
Karora Resources
Air Canada
*The above-mentioned indices are not total returns. These returns reflect simple appreciation only and do not reflect dividend reinvestment.
The Dow Jones Industrial Average is a price-weighted average of 30 blue chip stocks that are generally leaders in their industry. The S&P 500 Stock Index is a widely recognized capitalization-weighted index of 500 common stock prices in U.S. companies. The Nasdaq Composite Index is a capitalization-weighted index of all Nasdaq National Market and SmallCap stocks. The Russell 2000 Index® is a U.S. equity index measuring the performance of the 2,000 smallest companies in the Russell 3000®, a widely recognized small-cap index.

The Hang Seng Composite Index is a market capitalization-weighted index that comprises the top 200 companies listed on Stock Exchange of Hong Kong, based on average market cap for the 12 months. The Taiwan Stock Exchange Index is a capitalization-weighted index of all listed common shares traded on the Taiwan Stock Exchange. The Korea Stock Price Index is a capitalization-weighted index of all common shares and preferred shares on the Korean Stock Exchanges.

The Philadelphia Stock Exchange Gold and Silver Index (XAU) is a capitalization-weighted index that includes the leading companies involved in the mining of gold and silver. The U.S. Trade Weighted Dollar Index provides a general indication of the international value of the U.S. dollar. The S&P/TSX Canadian Gold Capped Sector Index is a modified capitalization-weighted index, whose equity weights are capped 25 percent and index constituents are derived from a subset stock pool of S&P/TSX Composite Index stocks. The NYSE Arca Gold Miners Index is a modified market capitalization weighted index comprised of publicly traded companies involved primarily in the mining for gold and silver. The S&P/TSX Venture Composite Index is a broad market indicator for the Canadian venture capital market. The index is market capitalization weighted and, at its inception, included 531 companies. A quarterly revision process is used to remove companies that comprise less than 0.05% of the weight of the index, and add companies whose weight, when included, will be greater than 0.05% of the index.

The S&P 500 Energy Index is a capitalization-weighted index that tracks the companies in the energy sector as a subset of the S&P 500. The S&P 500 Materials Index is a capitalization-weighted index that tracks the companies in the material sector as a subset of the S&P 500. The S&P 500 Financials Index is a capitalization-weighted index. The index was developed with a base level of 10 for the 1941-43 base period. The S&P 500 Industrials Index is a Materials Index is a capitalization-weighted index that tracks the companies in the industrial sector as a subset of the S&P 500. The S&P 500 Consumer Discretionary Index is a capitalization-weighted index that tracks the companies in the consumer discretionary sector as a subset of the S&P 500. The S&P 500 Information Technology Index is a capitalization-weighted index that tracks the companies in the information technology sector as a subset of the S&P 500. The S&P 500 Consumer Staples Index is a Materials Index is a capitalization-weighted index that tracks the companies in the consumer staples sector as a subset of the S&P 500. The S&P 500 Utilities Index is a capitalization-weighted index that tracks the companies in the utilities sector as a subset of the S&P 500. The S&P 500 Healthcare Index is a capitalization-weighted index that tracks the companies in the healthcare sector as a subset of the S&P 500. The S&P 500 Telecom Index is a Materials Index is a capitalization-weighted index that tracks the companies in the telecom sector as a subset of the S&P 500.

The Consumer Price Index (CPI) is one of the most widely recognized price measures for tracking the price of a market basket of goods and services purchased by individuals. The weights of components are based on consumer spending patterns. The Purchasing Manager’s Index is an indicator of the economic health of the manufacturing sector. The PMI index is based on five major indicators: new orders, inventory levels, production, supplier deliveries and the employment environment. Gross domestic product (GDP) is the monetary value of all the finished goods and services produced within a country’s borders in a specific time period, though GDP is usually calculated on an annual basis. It includes all private and public consumption, government outlays, investments and exports less imports that occur within a defined territory.
The S&P Global Luxury Index is comprised of 80 of the largest publicly traded companies engaged in the production or distribution of luxury goods or the provision of luxury services that meet specific investibility requirements.
The National Association of Realtors (NAR) Housing Affordability Index measures whether or not a typical family could qualify for a mortgage loan on a typical home. A value of 100 means that a family with the median income has exactly enough income to qualify for a mortgage on a median-priced home. 
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