Published on June 14 2018

Why the World’s Most Expensive City Is Running to Bitcoin

By Justin Spittler, editor, Casey Daily Dispatch

You’ll never guess the world’s most expensive city.

It’s not Zurich. It’s not Tokyo. It’s not Seoul, either.

No. It’s Caracas, Venezuela. Strange, huh? After all, Venezuela isn’t a rich country. It’s in the Third World.

But there’s a simple reason why Caracas tops this list.

• Inflation is skyrocketing in Venezuela…

Now, it’s hard to say exactly how high inflation is in Venezuela right now. That’s because the government stopped publishing inflation data two years ago.

But independent economists have been tracking inflation in Venezuela. And the figures they’re reporting are astronomical.

According to Venezuela’s National Assembly, inflation hit 2,616% last year. That means prices for everyday goods and services in Venezuela got around 27 times more expensive in just 12 months.

And the situation has only worsened. On Monday, the National Assembly said that inflation in Venezuela is now running at nearly 24,600% per year.

The bolívar, Venezuela’s currency, is losing value so rapidly that many people can’t afford food or medicine. Some Venezuelans are even selling their own hair just to survive. It’s a tragic situation.

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• So Venezuelans are taking shelter in bitcoin…

I know because I met Venezuelans when I was living in Buenos Aires, Argentina. They moved there to escape their country’s economic crisis.

But before they did that, many of the Venezuelans I met exchanged their bolívars for bitcoin. And they certainly weren’t alone. Just look at the chart below. It shows the weekly bitcoin trading volume in Venezuela.

You can see that bitcoin trading volume in Venezuela has exploded, up 211% this year alone.

Venezuelans are loading up on bitcoin because the bolívar is in free fall, and because bitcoin is a decentralized currency. It’s not controlled by a government or central bank.

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• Of course, Venezuela is a small, poor country…

It will never move the needle on the price of bitcoin.

Still, Venezuela could emerge as the first country where a cryptocurrency effectively replaces a government-controlled paper currency. And that would encourage other people around the world to also seek shelter in bitcoin.

After all, Venezuela isn’t the only country with major money problems.

Just look at Argentina. Last year, its official inflation rate hit 25%. The year before, it was 37%. This means that everyday goods and services in the country are 71% more expensive than they were at the start of 2016.

Argentina’s currency, the peso, is in free fall, too. It’s down 27% against the U.S. dollar this year.

The same goes for the Turkish lira. It’s lost 18% of its value against the dollar this year.

I could go on and on. Even “stable” currencies like the U.S. dollar and the euro are approaching their intrinsic value of zero.

This is why I expect people all around the world to seek shelter in bitcoin in the coming years.

• And I’m not the only Casey analyst who thinks that bitcoin will emerge as a “crisis currency”…

Here’s what The Casey Report and Crisis Investing editor Nick Giambruno told me in a recent interview:

Bitcoin offers regular people a safe haven. They can use it to send and receive wealth while bypassing the unsound banks, worthless currencies, and government confiscation schemes of their home countries.

When a crisis hits, a government can easily steal money in the banks or steal purchasing power by printing currency units. But it cannot easily steal bitcoin or prevent people from using it.

In a crisis, bitcoin is invaluable to the common man.

In short, bitcoin’s role as a crisis currency could cause its price to explode in the coming years.

So consider speculating on bitcoin if you haven’t yet.

Just remember that bitcoin is still highly volatile. As always, never bet more money than you can afford to lose. It only takes a small stake to make a fortune in the years ahead.

Justin Spittler
Cusco, Peru
June 14, 2018


Sights From the Road

Regular readers know my story.

Last summer, I turned in my apartment key, sold most of my belongings, and hit the road. In short, I became a digital nomad.

This experience has brought me closer to some of the best money-making opportunities on Earth. I’ve also seen some incredible places along the way.

See for yourself. These are photographs that I’ve taken over the past couple weeks while traveling in Peru.

You might recognize the first place. That’s me at the top of Machu Picchu. I arrived there after a grueling four-day hike. But I’ll be the first to say that the view was totally worth the altitude sickness, lack of sleep, and blisters.

Here’s another one that I took at Salkantay Pass on my way to Machu Picchu. This is about 15,000 feet above sea level.

Finally, here’s a photograph of me in Paracas National Reserve, which is in Peru’s Ica region. This place was truly out of this world. It felt like I was on the surface of Mars, or on the set of some dystopian movie. It was haunting, but beautiful at the same time.


Reader Mailbag

Today, a reader responds to our recent Dispatch, “This Unstable Country Could Trigger an Explosive Cobalt Rally”…

Justin, in response to your article about cobalt, I wanted to add one point. For years, people complained about the United States acting in other countries (mainly the Middle East) to protect the supply of oil. Now, it looks like the United States might initiate wars in Africa to protect the world’s supply of cobalt.

It seems that the world is going from one resource to operate motor vehicles, and substituting it with another element (actually, two or more) to operate motor vehicles. And both of the main ones used in electric vehicles are also only found in a few places in the world, in quantities that are useful for the purpose. It looks like Africa may be turned into a gold mine of sorts in the near future.

—Kevin

As always, let us know your thoughts, including any suggestions you may have for the Dispatch, right here.


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