Are You Part of Bill Gates’ “Greater Fool Theory?”

At a conference last week, Bill Gates brought attention to NFTs (Non-Fungible Tokens), which are unique digital images that are privately owned although indefinitely reproducible. It’s a form of financial security consisting of digital data stored in a blockchain. Gates pointed out that cryptocurrencies are based 100% on a financial theory known as the Greater Fool Theory which implies that people are able to sell overpriced securities to a “greater fool.” It’s not the first time he’s criticized cryptocurrencies, but as the week progressed, his concerns seemed to be verified, as Bitcoin and others fell to value levels well-below a third of their November 10, 2021 all-time high. Also, the Fed’s decision to increase interest rates contributed to the weeks’ quick response and rather dramatic effect on the stock market, as well as every category of NFT. 

As crazy as the crypto market seems to have been recently, the fireworks and volatility are nowhere near over. A bipartisan bill, called the Digital Exchange Act of 2022 (DCEA), is moving through House committees and may soon give the Commodity Futures Trading Commission (CFTC), authority over exchanges and stablecoins. The new requirements would not affect, or interfere with the U.S. Securities and Exchange Commission’s (SEC)’s regulatory power over digital asset securities offerings. It would only authorize the CFTC to register and regulate cryptocurrency exchanges that offer spot trading of crypto commodities, those that allow traders to buy cryptocurrencies at the current price. The bill would also classify cryptocurrencies which are not currently listed as securities, as digital commodities and bring them under regulatory control of the CFTC.

With the Ukraine/Russia War picking up speed, energy prices continuing to rise and inflation doing the same, so continued volatility in the stock and cryptocurrency markets are all but guaranteed. However, Bill Gates is isolating a position where every investor has found themselves, that is – trying to time the market. It is, has been, and always will be, the primary challenge for investors. But when it comes to long term investments, few investments offer the historic safety, security and upside potential that physical precious metals, like gold and silver provide. Precious metals nullify the bite of inflation and today’s metal prices only make the opportunity greater. Call the experts at American Bullion, at (800) 875-3534, because only a fool doesn’t want the safety and security that precious metals have to offer, especially during times of market volatility, rising energy prices and growing inflation.